Prepared remarks. We will open the line for questions. I will now turn the call over to Allie Summers, Senior Director of Investor Relations. Good morning, and thank you for joining us. Before we begin, please note that today's discussion includes forward-looking statements as defined under U.S. securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. For more information, please refer to our filings with the SEC, including our most recent Forms 10-K and 10-Q. These statements speak only as of today, and we undertake no obligation. Joining me this morning are Patrick S. Pacious, our President and Chief Executive Officer, and Scott E. Oaksmith, our Chief Financial Officer. Patrick will discuss our business performance and strategic progress, and Scott will review our financial results and outlook. I will turn the call over to Patrick. With that.

Thank you, Allie, and good morning, everyone. We appreciate you joining us today. In 2025, we delivered adjusted EBITDA of $626,000,000, up 4% year over year, and grew adjusted earnings per share, both in line with our expectations. These results reflect the continued strength of our higher-revenue brand mix, accelerating earnings contribution from our international portfolio, robust group demand, business travel growth, and sustained momentum across our partnership revenue streams. 2025 was also a year of meaningful progress in advancing our long-term growth strategy. We delivered 14% year-over-year growth in global hotel openings, expanded our international footprint at a double-digit pace, and further strengthened our leadership position in the attractive extended stay segment, achieving record U.S. openings. When we look at our existing hotels, the success of our overall strategy to improve product quality and strengthen franchisee economics can best be seen in the higher average royalty rate we were able to achieve across the U.S. portfolio, which increased eight basis points in 2025 and ten basis points in the fourth quarter. On the consumer front, we are particularly excited by the recent launch of the next evolution of our Choice Privileges loyalty platform, and the launch next quarter of a dedicated digital platform for small and midsized businesses. Our hotel development pipeline remains a powerful engine for future earnings growth supported by strong developer interest, with global franchise agreements awarded up 22% year over year in 2025. Today, 97% of rooms in our global pipeline are in higher-revenue brands, and these projects are expected to be roughly 1.7 times more accretive than our current portfolio, driven by RevPAR premiums, higher average royalty rates, and larger average room counts. Importantly, our advantage is not only pipeline quality, but execution speed. Our conversion-led model accelerates openings and revenue realization with certain hotels opening without ever appearing in quarter-end pipeline metrics. That execution strength is especially evident in the U.S., where pipeline conversion rooms increased 12% sequentially from September 30, 2025. Our conversion engine remains a key differentiator for Choice Hotels International, Inc., enabling those hotels to open about five times faster than new construction hotels. In the fourth quarter, U.S. conversion franchise agreements increased 12% year over year, and we expect conversion activity to be a core driver of improving U.S. net room growth in 2026. As we indicated on our last call, we have been actively optimizing our U.S. portfolio throughout the year. With developer demand remaining constructive, including full-year U.S. midscale and economy franchise agreements up 5% year over year, we accelerated the selective exit of underperforming hotels in the fourth quarter. These properties generated royalties well below our portfolio average, and ranked predominantly in the bottom quartile of guest satisfaction within their brands. This improving portfolio mix strengthens the system's earnings profile, and positions us to backfill those markets with higher-quality hotels that deliver stronger unit economics for owners and more durable long-term growth for shareholders. With a larger hotel conversion pipeline, and a higher volume of conversions expected to open in 2026, and based on current year-to-date trends, we believe U.S. net rooms growth is positioned to return to positive territory this year. Looking ahead, increasingly constructive on U.S. lodging demand in our segments. Our core customer continues to prioritize travel within their overall spend with a clear focus on affordability. Choice has long been strategically positioned at the center of value-driven travel, and in the current environment, that consumer recognition supports our ability to capture incremental share within the segment. As gas prices have declined to their lowest level in five years, bringing them back within pre-pandemic ranges, road trips are becoming more budget-friendly for our consumers. In addition, tax relief expected to reach middle-income households this year has historically provided significant stimulus for travel within our segments. Importantly, the timing of the relief aligns with the start of the summer travel season, the most meaningful period for our owners. Furthermore, upcoming national events, the 2026 FIFA World Cup, the U.S. 250th anniversary, and the Route 66 Centennial provide additional demand catalysts. More broadly, we are benefiting from a limited new supply industry backdrop and steady workforce-based travel demand tied to infrastructure, manufacturing, and data center investment alongside favorable long-term demographic trends. With expected continued demand growth in several of our strong consumer segments, including retirees, road trippers, and America's blue- and gray-collar workforce, combined with an improved portfolio of purpose-built hotels to serve them, we believe Choice is well positioned to capture this demand and deliver durable long-term growth. Turning to our business outside the U.S., we view specific international markets as an increasingly driver of our growth. And in 2025, our international business delivered exceptional results. Over the past several years, we have deliberately built the foundation for scalable, high-return international growth. Today, directly franchised rooms represent more than 40% of our international portfolio. That number is up over 20 percentage points over the past three years, materially enhancing earnings per unit and overall economics. With that foundation in place, momentum accelerated in 2025. We delivered 37% growth in international revenues, driven by portfolio expansion and positive RevPAR growth across every region. We expanded our international system by 13% year over year to approximately 160,000 rooms, outpacing our prior growth assumptions supported by an 82% increase in hotel openings. In the Americas outside the U.S., RevPAR increased 5.4% year over year in 2025. Within that region, Canada remains a key focus with the rooms pipeline growing 49% year over year. As we continue to enhance the Choice value proposition in Canada, under a direct franchising model, we see a meaningful opportunity to drive both system growth and stronger franchise economics over time. In EMEA, rooms increased 13% year over year to approximately 70,000, including nearly doubling our footprint in France through direct franchising. Taken together, our international business is entering its next phase, with greater scale, stronger unit economics, and a meaningful runway for sustained growth. Another important growth engine for us is the U.S. extended stay segment. In the fourth quarter, we delivered our tenth consecutive quarter of double-digit system growth. Today, the extended stay segment represents more than 40% of our U.S. pipeline and is characterized by longer average stays, higher margins for owners, and greater earnings stability across cycles. In 2025, we achieved a record number of U.S. extended stay hotel openings, up 8% year over year driven by our Everhome Suites brand. Despite a challenging construction environment, we ended the year with approximately 57,000 extended stay rooms in the United States. With continued investment in manufacturing capacity and data center infrastructure nationwide, and the largest under-construction hotel pipeline in the economy and midscale extended stay segments, we believe Choice is well positioned to extend its leadership in this structurally resilient category. Our portfolio strategy is also strengthening our economy brands. Our guest satisfaction scores improved significantly across the segment, and as quality improvements take hold, we are replacing lower performing assets with higher-quality, more profitable hotels, enhancing brand equity across the category. As a result, our economy transient hotels outperformed their chain scales in RevPAR and gained RevPAR index share versus competitors in 2025. That performance reinforced developer confidence, with our U.S. economy transient rooms pipeline expanding 6% quarter over quarter and U.S. franchise agreements awarded up 13% year over year in 2025. These trends are expected to drive improvement in the segment's net room growth trajectory. In our midscale segment, developer interest remains strong with global franchise agreements awarded up 14% year over year in 2025. The redesigned Country Inn & Suites by Radisson prototype, optimized for cost efficiency and conversion flexibility, has reinvigorated the brand, driving a 50% increase in U.S. franchise agreements in 2025, and expanding the U.S. pipeline by 18% year over year. With that momentum and a compelling owner value proposition, we believe the brand is well positioned for growth in 2026. Let me now turn to the efforts we are focused on that are strengthening franchisee economics and driving higher customer lifetime value. Among our targeted investments, two key areas are business travel and guest loyalty. In business travel, we have expanded our global sales capabilities and deepened relationships with corporate accounts. Business travelers now represent roughly 40% of total stays, supporting a balanced mix across cycles. In 2025, group revenue increased 35% year over year, and small and mid-sized business revenue grew 13%, led by resilient sectors such as construction, utilities, and high-tech manufacturing. Our AI-enabled RFP tools are accelerating hotel responsiveness and driving high-value bookings. And next quarter, we expect to launch a dedicated digital platform for small and midsized businesses targeting an estimated $13,000,000,000 addressable market. We also continue to elevate the lifetime value of the guests we serve. Today, half of our U.S. guests have household incomes above $100,000, and one in five exceeds $200,000, an increasingly attractive customer base for our franchisees and partners. Loyalty remains a powerful driver of customer lifetime value. Choice Privileges now exceeds 74,000,000 members, up 7% year over year. With international enrollment up 11% in 2025, our strongest year internationally. Our most loyal members stay nearly twice as often, spend more per stay, and are significantly more likely to book direct. In January 2026, we launched the next evolution of Choice Privileges, broadening how members earn and engage. We introduced a faster path to status by reducing night thresholds and added a spend-based pathway that allows co-brand card usage to contribute toward elite qualification. We also introduced a new top-tier status and added return-and-earn bonuses to encourage additional stays within the same year, reflecting research that shows our travelers value more frequent and attainable recognition. Together, these enhancements are designed to increase repeat frequency and deepen co-brand card engagement, enabling Choice to capture a greater share of demand within our core customer base. Early indicators are encouraging, with post-launch enrollment trending at a faster rate than last year. We are also actively expanding how travelers discover and book our hotels by partnering with leading technology platforms as AI reshapes travel search and booking behavior. We remain highly visible as consumer search behavior continues to evolve. As we look ahead, Choice is well positioned for continued growth. Our disciplined execution, technology-forward strategy, and asset-light, fee-based model continue to generate substantial free cash flow, enabling us to reinvest in high-return initiatives while delivering value to shareholders. With a higher-quality portfolio, a more accretive development pipeline, expanding international business, and targeted investments that strengthen franchisee economics and guest lifetime value, we believe Choice is positioned to grow market share and deliver durable earnings expansion. With that, I will turn the call over to our CFO. Scott? Thanks, Pat, and good morning, everyone.

I will cover three areas this morning: our fourth quarter and full year 2025 financial results, our balance sheet and capital allocation priorities, and our outlook for full year 2026. For full year 2025, we delivered adjusted EBITDA of $626,000,000, up 4% year over year and in line with the midpoint of our guidance range. Adjusted earnings per share for the full year was $6.94 per share, also in line with the midpoint of our guidance range. Growth was driven by our continued leadership in the higher-revenue extended stay segment, robust average royalty rate, significant expansion of our international business, and strong partnership revenue performance. These results reflect the strength of our diversified revenue streams and the early returns from our targeted strategic investments. In fourth quarter 2025, revenues, excluding reimbursable revenue from franchised and managed properties, increased 2% year over year to $234,000,000. Adjusted EBITDA was $141,000,000, and adjusted earnings per share rose 3% year over year to $1.60. Let us turn to the three key drivers of our royalty fees: rooms growth, RevPAR performance, and average royalty rate. In the fourth quarter, we grew our global rooms by half a percent year over year, led by 1.2% growth in our higher-revenue segments and highlighted by a 42% increase in hotel openings. In the U.S., we opened more than 22,000 gross rooms during the year, and our conversion pipeline increased 7% year over year as of December 31. This healthy level of openings and development activity provided us flexibility to accelerate select hotel exits. From an economic standpoint, the trade-off is clear. In 2025, hotels that exited the system generated U.S. RevPAR more than 20% below the company average. Improving portfolio mix enhances long-term earnings quality, and positions U.S. net rooms growth to return to positive territory in 2026. We also saw continued strength in franchisee retention, with U.S. contract renewal activity in 2025 matching prior all-time highs, reflecting sustained confidence in the Choice brands. Across our focus segments in the fourth quarter, developer interest for our extended stay brands remained robust with 26% growth in global extended stay franchise agreements year over year. As of today, we have 27 Everhome Suites hotels opened in the U.S., including 18 opened during 2025, with 38 additional projects in the U.S. pipeline. In midscale, we increased global hotel openings by 47%. We also executed 18% more global midscale franchise agreements year over year, driven by our Quality Inn, Country Inn & Suites by Radisson, and Sleep brands. In the upscale segment, we expanded our global rooms portfolio by 7% year over year, highlighted by 48% more global upscale hotel openings. Our Ascend Collection hotel openings increased 58% year over year, and the brand now exceeds 75,000 rooms worldwide. In the U.S., we more than doubled Radisson franchise agreements year over year and grew rooms pipeline by 32% quarter over quarter. I also want to recognize our teams for completing the integration of our Canadian operations in just six months. We transitioned the business to a direct franchising model, enabling franchisees to fully leverage Choice's commercial platform while enhancing our effective franchise agreement economics over time. We are already seeing early momentum on the development front, including a recent multi-unit agreement for approximately 700 upscale Ascend Collection rooms in Quebec. Turning to RevPAR performance. Our global RevPAR declined 4.6% year over year in the fourth quarter on a currency-neutral basis. As discussed on the prior call, this was driven by the tougher hurricane comparison in the U.S. Southeast from the prior year. International performance remained strong, with RevPAR up 3.2% year over year on a currency-neutral basis. The Asia Pacific region led with 11% growth. In the U.S., we lapped a 540 basis point hurricane-related benefit from the prior year. Excluding that impact, U.S. RevPAR declined 2.2% year over year, representing a modest sequential improvement from the prior February. Results were also affected by the government shutdown and continued softness in international inbound travel. Despite these pressures, we achieved occupancy share index gains versus our competitors on a full-year basis. Excluding hurricane-related distortions, our U.S. extended stay segment outperformed the industry RevPAR by 30 basis points, and our U.S. transient economy segment outperformed its chain scale RevPAR by 80 basis points, while gaining RevPAR index share versus competitors in 2025. Moving to royalty rate, our third driver of royalty fee growth. In 2025, we exceeded our full-year U.S. average royalty rate guidance, finishing the year up eight basis points, including a 10 basis point increase year over year in the fourth quarter. This expansion reflects our success in growing higher-revenue brands and the continued improvement in our franchisee value proposition. We remain confident in the upward trajectory of system-wide royalty rates, supported by sustained demand generation investments and a development pipeline characterized by higher contracted royalty rates and stronger unit economics. Turning to our partnership business, which remains a key priority. In 2025, we delivered a 14% year-over-year growth in partnership revenues, including 16% growth in the fourth quarter. Performance was driven primarily by co-brand fees, increased supplier and strategic partnership fees. As we enhance our franchisee-facing service offerings, adoption remains strong, supporting durable growth in our non-RevPAR franchise fees across the broad range of services we provide. Together, these revenue streams meaningfully diversify our earnings base and represent an attractive, high-margin growth opportunity going forward. At the same time, we remain focused on margins through improved productivity and operational efficiency. Adjusted SG&A increased approximately 3% for the full year, in line with our guidance, to $283,000,000, reflecting cost discipline while continuing to invest in strategic initiatives. Now turning to the balance sheet and capital allocation. We ended the year with total liquidity of $571,000,000, and net debt to trailing twelve-month EBITDA of 3.0x, and we are comfortably within our targeted gross leverage range of 3.0x to 4.0x. For full year 2025, we generated more than $270,000,000 of operating cash flow, including nearly $86,000,000 in the fourth quarter. This cash generation combined with our strong balance sheet provides meaningful financial flexibility. Our capital allocation framework remains consistent and disciplined. We prioritize high-return organic investments that strengthen our brands and drive long-term growth, evaluate selective acquisitions where returns are compelling, and return excess capital to shareholders. Our dividend reflects a stable During the year, we repurchased approximately 1,000,000 shares representing more than 2% of our shares outstanding and ended the year with approximately two to scale Cambria Hotels and Everhome Suites while recycling capital at the appropriate time. In 2025, we generated $32,000,000 in net proceeds from recycling activities, and our hotel development-related net outlays and lending declined $46,000,000 year over year to $103,000,000. Looking ahead, as both brands approach critical scale milestones, we expect hotel development net capital outlays to continue to decline significantly. This reflects the delivery of our final company-developed Cambria in 2026, and our planned tapering of new ever growth to return to positive territory alongside continued international expansion consistent with the normal timing of same-year conversion openings. U.S. net rooms growth is expected to be more heavily weighted towards the latter part of the year. Global RevPAR is anticipated in the range of negative 2% to positive 1% year over year in constant currency, with U.S. RevPAR between negative 2% and positive 1%. Average royalty rate growth is expected to be in the mid-single digits year over year, and adjusted SG&A is projected to increase in the mid-single digits. Our outlook excludes the impact of any additional M&A or other capital markets activity, share repurchases completed after December 31. We remain focused on investing in high-return initiatives that enhance our long-term growth trajectory.

Yeah, Mike, I would just add that, you know, the strategy underlying it all is as the value proposition for our franchisees has gotten better, the amount of key money per deal to attract new entrants is declining. And as Scott said, obviously, as more hotels open and that key money actually gets used, that is a positive sign. And then just back on the capital for both Cambria and Everhome, you know, the final chapter in all of this is to recycle it back to back to either higher investment initiatives or return it to shareholders. So we are really entering that phase with Cambria, and we will be doing that this year with Everhome.

Thanks. Good morning, everyone. First question, just for Scott, just one more on the spending outlook. Maybe you could just walk us through expectations for key money spending, CapEx, and also JV investments in 2026 as well.

Sure, Michael. Thanks for the question. So in terms of key money, as you saw in our release, we did some less key money in 2025 than we did in 2024. We were about net $83,000,000 compared to $112,000,000 in the prior year. So we were pleased to see that our average key money check size for our domestic system was down year over year, as well as the number of deals that needed key money to be signed. For 2026, we do think we will see an acceleration of openings. So do expect key money to increase off that base. The $83,000,000 did include some recovery. So our net outlay for gross outlays for key money was about $92,000,000. We would expect for 2026 for that number to be somewhere between $105,000,000 and $110,000,000 for key money. In the recyclable capital, we had really, really good success of continuing to pull down that use of capital there. Capital for 2025 was about $103,000,000 net, 30% lower than it was in the prior year. And as I said in the prepared remarks, we are tapering down the use of that key of that recyclable capital. So we expect that to drop another 70%. So we are guiding to a net use of capital of about $20,000,000 to $45,000,000 next year. So that will be a decline from the $103,000,000 we spent this year. So as we have been talking to the street the last couple of several years, the real capital is really around launching the growth of both the Cambria and the Everhome Suites brand. We have been very pleased with how those brands have grown with Cambria now over 75 hotels and Everhome really with a strong start. We feel we are in the place now we can start tapering that capital. And as we taper the outlays, we also expect to see recycling improve here over the next couple of years as a transaction market improves in the overall U.S. hospitality industry.

Yeah, Mike, I would just add that, you know, the strategy underlying it all is as the value proposition for our franchisees has gotten better, the amount of key money per deal to attract new entrants is declining. And as Scott said, obviously, as more hotels open and that key money actually gets used, that is a positive sign. And then just back on the capital for both Cambria and Everhome, you know, the final chapter in all of this is to recycle it back to back to either higher investment initiatives or return it to shareholders. So we are really entering that phase with Cambria, and we will be doing that this year with Everhome.

Got it. That is helpful. And then one related question, just sort of on the buyback front there. Just where does the balance sheet need to get to in order for you guys to be more aggressive or more programmatic with buybacks going forward? That is all for me. Thank you.

Yeah, when you look at last year, you know, we took kind of a pause after we bought the other half of the Canadian JV. I mean that was basically about $100,000,000 worth of money going out to acquire that business. A market we have been in for seventy years, thirty years of that in a joint venture. And we have seen a really fantastic early results in that. As Scott mentioned, we got the integration of that done at the end of 2025. So we took a strategic pause during the summer months and then resumed it in Q4. I think when we look at it, we are always doing our normal investment prioritization and looking at ways to invest back in the business, looking at M&A as an opportunity. And then as those things provide additional capital, we look for share returns and dividends. So, that is kind of the way we look at it. You have seen our net debt to EBITDA ratios are in the range where we feel very comfortable. So that is how we will be thinking about it as we move forward in 2026.

Hi, good morning. Thanks for taking the question. I wanted to ask about your commentary around U.S. rooms growth returning to positive this year, just given that would be quite an improvement from where it was at least organically in 2025. Any more color on that or specific brands that you think will drive that?

Yeah, Lindsay. It is a great question. As we mentioned in the remarks, we saw an increase in our both midscale and economy franchises awarded. They were both up 5%. That coupled with our conversion pipeline increasing by 12% in the fourth quarter And then as we mentioned, you know, we are seeing improvement in guest scores as well. So the brand quality is getting better. That gave us the confidence in the fourth quarter to take some very targeted, deliberate and ultimately value accretive exits, which was really the story towards 2025. We look at 2026, there is a lot of constructive things that we see both in our pipeline today with regard to the brands, as you mentioned, the ones that we are really seeing a lot of uptick from a conversion perspective are Quality, Clarion, Clarion Pointe, College Roadway, and Ascend. Those brands from a conversion perspective really performed well for us. We are also seeing, as I mentioned in the remarks, Country Inn & Suites by Radisson. The redesigned prototype there is driving a lot more both new construction and conversion interest for that brand as well. So those are the drivers we expect to be from a brand perspective that will help us get back to that sort of positive territory we mentioned.

Awesome. That is clear. Thanks. And then just on the RevPAR side of things, you know, in terms of what you are forecasting for domestic RevPAR outlook, you called out a couple of tailwinds or potential tailwinds from World Cup and stimulus, etc. I am just curious how much of that is kind of baked into what you are expecting for U.S. RevPAR growth this year or whether that is more kind of incremental upside if those come through?

I would say some of these, if you look at the impacts that hit us last year, they were all transitory, whether it was the government shutdown, the lapping hurricane impact we had in Q4, which is continuing here into Q1 of 2025. So we have that comp for 2026. And then weaker inbound travel from international markets. When I look at the potential for the upside here, it is really some things that are a little bit harder to measure. If we look at the tax relief, the early returns are looking great. So far, the tax refunds that U.S. citizens are getting are up 11%. And the overall tax relief that has come back so far this year on a year-over-year basis is up 18%. So we do know that the consumer has that stimulative backdrop for the first half of the year here, which we think will be a real positive for us. When you look at international inbound, the dollar is the weakest it has been in four years. So, international inbound travel to the U.S. is on sale from that perspective. And that also makes travel outside of the U.S. more expensive. So we would expect U.S. travelers to stay at home. So those things are not necessarily baked in because they are a little bit harder to put into our guidance. But when we look at sort of where we are in the midpoint of that range we gave, that is sort of the backdrop for how we thought about some of the demand catalysts. But as I said, you know, last year's weakness was primarily transitory. It was not structural. And we are very constructive on what we see from a RevPAR perspective in 2026.

I wanted to go back to the RevPAR expectations for 2026. It does sound there is some hope for stimulus in there and certainly midscale and upscale seem to be promising. But I guess kind of as you think about the RevPAR cadence for the year, how should we think about it progressing as it relates to that guidance that you have laid out?

So one thing I think to look at, and we mentioned this on the prior call when we saw it in 2025, is the fact that our occupancy index for the entire year was positive. So when we have looked at cycles in the past, the first thing to recover is occupancy then followed by rate. So from the standpoint of going into the year, that is a really positive green shoot. The second thing, we mentioned this on the last call, and again, we saw it in Q4, is the performance of the economy segment. Is that segment improves and midscale improves and you get sort of an upward trajectory there. Again, we saw that from a RevPAR perspective and from a RevPAR index perspective. We saw better performance in Q4 for our economy brands. And then I would just say, as you look at the first six weeks of the year here, if we look at the markets outside of the U.S., we are already seeing a 1.7% increase in RevPAR year to date. So that is without the hurricane impact in it. And then we look at what is in that 1.7, again, it is driven by a 2.3% occupancy gain. So we are seeing that strength in our hotels able to sort of fill the rooms. And that usually then leads to the impact for the ability for them to to begin to move ADR in the right direction. I think as the year lays out, traditionally our Q2 and then our Q3, our Q3 is usually our highest demand RevPAR. And as I said in the remarks, that aligns nicely with the tax relief. It aligns with the gas prices for road trippers as well. So, we would expect that RevPAR increase to sort of improve as we move into the year in addition to the lapping of the hurricane impact that we are going to see here in Q1.

Dan, just to add a little bit more color. We do expect Q1 RevPAR will still be negative given those hurricane impacts that we had. It really is about 340 basis points to our results in the first quarter of last year. So we will be lapping that, but we expect an inflection point in Q2 as we lap those hurricane comps that Pat mentioned. So you will see kind of a more of a negative RevPAR in Q1 with improving as the year goes on to reach our overall guidance. But Pat mentioned, we are very optimistic given what we have seen on the non-hurricane states given that that is positive RevPAR for those through the first one point months of the year.

Got it. And then just for my follow-up, I think about the footprint you have talked about in the past removing some of the lower performing properties off the platform. Maybe that were not complying with the guidelines or just underperforming in general. Have you basically cycled through that element of your kind of culling the footprint? Or is there more to go there just as we think about that pathway to achieving U.S. domestic rooms growth in 2026? Yeah. It is something we do naturally. So it is always there as potential owners, you know, are not performing or an asset becomes the owner wants to move that to a different either go independent or make it a different product altogether. So that is a natural, but we did accelerate some of that, or, I would say, took some targeted ones in the fourth quarter. That was more of a one-time looking at where we can clean out markets where we know there is opportunity to backfill that with a higher quality, better performing hotel. That impacts our average royalty rate. It impacts our guest satisfaction scores when we are able to upgrade the portfolio. And it is something that the company has been doing for years, but in the fourth quarter, we saw some real positive signs from a growth perspective on the pipeline and also on new deals. Which gave us more confidence in the ability to take out some of the lower performers. So I would say it was more of an outsized number in the fourth quarter. But our normal churn rate is 3% to 4% is kind of where we would likely get back to. Is there any way to just give the fourth quarter number for that?

Or the additional or the overall just for the amount that we are kind of taking out as part of this initiative so we can kind of better get an idea of the organic. It was about 20 hotels. It is, when you look at that, it is about 30 to 40 basis points of net unit growth.

Morning, everybody. Thanks for the question. Pat, I think you may have just touched on this a bit. But I wanted to get a sense for you know, often when there is kind of a period of removals, you know, it lasts for a period of time. How how long do you expect this sort of offsetting removal process to take before we sort of settle into what presumably know, new unit growth would go up?

Yeah. Well, that is why we feel we are going to get back to a positive note this year in the U.S. We will be positive overall, but in that U.S. nug number, really we are looking at what is in our pipeline today. The franchise agreements we sold last year, which were, as I said, in these primary areas where we are taking these additional exits, they are up 5%. So we have seen that, and they are in the conversion as part of the pipeline, which was up 12% in the quarter. So that gave us the opportunity to say, we know we have opportunity and interest for these markets for these brands, and so exiting these underperformers and the ability to backfill them is the strategy. When you look at our conversion hotels, they open anywhere between three and seven months. So, again, there is a lot of that that will be sold this year. That is not yet in the pipeline that will open this year. So that is a historical fact about the type of hotels, as I mentioned, the speed of execution within our pipeline. So that is the way we think about it, David. I would say that what we did in Q4 was elevated more so than what we would normally do.

I think, David, the other thing you are saying is we have been in a few years of no new construction, you know, across the U.S. industry. So, you know, the normal processes Pat is talking about that we always want to make sure that we are making sure our portfolio is performing well, is a little bit more enhanced in terms of terminations just because you do not see the new construction coming in. Typically, we have about one-third of our openings new construction. In the last couple of years, it has been more in the 15% to 20% just given the tougher U.S. development environment. So calling of our system and our exits here, sure we keep brand quality up. It is just a little bit more pronounced. But we expect our termination rate as we go forward in 2026 and 2027, to trend back to historical normals.

Thank you very much.

Thank you.

Thank you. Your next question comes from Robin Margaret Farley from Unibank Switzerland.

Thank you. Great. I wanted to ask about your RevPAR guidance, just that the global is at the same rate as U.S., but you know, your international RevPAR has been growing above the U.S. rate. I think we see that broadly. So just wondering why you are not seeing something at or expecting something at a higher rate in your international markets?

Well, I think the first part of it, Robin, is the size of the international market relative to the U.S. So as we saw last year, we had very strong international RevPAR growth. But relative to the U.S., it was offset. So that is one factor in it. I think the second is many of the growth we had this year are going to be ramping hotels next year. So we are factoring that into our RevPAR thinking in the 47 countries that we are in outside of the U.S. So it is a bit of a story about it is a small contributor today, and there is obviously a lot of variability in the 47 markets that we have that we have hotels in.

Yeah. And, Robert, in terms of the royalty rate, we have contracts we have been doing, we have seen some improvement in the royalty rate. Our royalty rate in our direct markets is about around 2.7% across the international markets. When we do go to market in an MFA agreement, a master franchise agreement, obviously, the royalty rates are lower, given that our partners are responsible for servicing brands in the local markets. And those rates are more around 0.5% to 1%. So we will continue to evolve our disclosures and we will look to give more forward-looking guidance on what that royalty rate looks like going forward. But those are, if you are looking to model some broad numbers to use.

Hi. Good morning, everyone. Thank you. Sorry if I missed this. Did you give a outline or a guided range for expected return of capital such as combination of share repurchases and dividends? And if not, would you be able to do so? Thank you.

We did not give any guidance as we typically do not. You know, we think about our capital allocation. Obviously, we have talked many times on the call, is we first and foremost always look to invest our capital back into the business organically as we think that is the highest return to shareholders. You know, if there is meaningful and accretive M&A, we certainly look at that. And then with our excess cash flows, we do return those to our shareholders through dividends and share repurchases. But we typically do not provide guidance on that. We will continue to evaluate those opportunities, and as the year goes on, we will report on how we allocate that capital. But we, as we typically have not, we did not give guidance.

Thank you for the suggestion. It is helpful. So we are really seeing a lot of interest for these markets for these brands. And so exiting these underperformers and the ability to backfill them is the strategy. When you look at our conversion hotels, they open anywhere between three and seven months.

Yes. Thanks. Good morning. I was hoping you might speak a little bit more about conversions in terms of how they are breaking down from independents or other branded companies, potentially how you think about interbranded conversion. I know that is separately. And maybe a little bit of regional color there. And I a second part of this, and I think I understand. From your comments, you may have a different take on it. I was listening to a CEO interview at ALIS, and he talked about how giving lender comfort and more conversion options that conversion levels were going to be structurally higher, that there was a change there. And I would love to get your thoughts on that. Thank you.

Sure. Yeah. Definitely, when you see where the marketplace has been, kind of a flattish RevPAR for the last couple of years and interest rates being high, that has driven new construction down. So it has become much more of a conversion model. That is an area that Choice Hotels has led on for years. They do pick up in times like the global financial crisis, the pandemic, and even in the last couple of years as new construction projects have just been harder to finance. So it is an area where of strength for us, where the conversion opportunities come from, for us, you know. I always say when times are a little tough for hotel owners, independent hotels come in out of the rain. They want to come into a brand that has a proven brand, but it has got a loyalty program, revenue management, an opportunity to lower their costs through the use of our tools and our procurement programs and the like. So those are the types of hotels we normally see. And that is why brands like Ascend do well in times like this. Ascend had a very good year last year. Brands like Quality Inn, our economy brands, kind of picking up new units. So that is where the growth coming from into those brands, but it is primarily coming from I would say independence, and then there are some other branded conversions. That is the usually the second highest contributor to our new conversion or new entrants model that are from the conversion hotels. Well, thank you operator, and thanks everyone for joining us this morning. We look forward to hearing you again in to speaking with you again in May when we report our first quarter results. Have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation. You may now disconnect.