Choice Hotels International Inc (CHH) May 21, 2026 Annual General Meeting Transcript

Hello, and welcome to the annual meeting of shareholders of Choice Hotels International Incorporated. Please note that today's meeting is being recorded. During the meeting, we'll have a question and answer session. You can submit questions or comments at any time by clicking on the Q&A icon. It is now my pleasure to turn today's meeting over to Jeff Lobb, Senior Vice President, General Counsel, and Secretary of Choice Hotels International Incorporated. Mr. Lobb, the floor is yours.

Thank you. Good morning, everyone. Welcome to Choice Hotels International's 2026 Annual Shareholders Meeting. I'm Jeff Lobb, the company's general counsel and secretary. I'm pleased to welcome everybody who's called in to join us this morning. As we've done in the past, at the conclusion of our formal portion of the meeting, we'll have a short Q&A session with Dom Dragozich, our newly appointed interim CEO. Shareholders who've signed in using their control number can submit questions through the meeting portal and will endeavor to answer appropriate questions as time permits. I am now calling this meeting to order. The Choice Hotels Board of Directors set March 23, 2026 as the record date for this meeting. The only holders of shares of our common stock at the close of business on that record date were entitled to notice of and to vote at this meeting. On the record date, there were 45,757,096 shares of our common stock outstanding and entitled to vote. I'd like to welcome the members of our board of directors that are present this morning at our meeting, and that includes our esteemed chairman, Stuart Bainham, Jr. I'd also like to welcome Pam Masterson and Jordan Dodonna of Ernst & Young, company's independent registered public accounting firm. Sharon Houle, our newly appointed Assistant Corporate Secretary, has been appointed as Inspector and Judge of this election. Sharon has previously delivered her oath to the Chairman, and Sharon will now give us a report on the attendance.

A total of 43,441,614 shares of Choice Hotel International, Inc.'s common stock are present at this meeting in person or by proxy, representing approximately 95% of the outstanding common stock of the company. Therefore, a quorum is present, and this meeting is authorized to transact any business that may properly come before it.

Thank you, Sharon. We've delivered to our chairman for filing affidavits to the effect that on or about April 22nd of 2026, a notice of this annual meeting of shareholders, proxies, and the proxy statement were mailed to all shareholders of record on the record date. A complete list of shareholders who own shares of the company's common stock on the record date, which was duly certified by the company's transfer agent, ComputerShare, was available for inspection by shareholders on the meeting portal. It's now my pleasure to introduce Stuart Bainham, Jr., Chairman of the Board of Directors. In accordance with the bylaws of the company, Stuart will preside over the meeting. Mr. Chairman?

Thanks. Thanks, Jeff. very much and welcome everybody to choice hotels annual shareholders meeting before we get into the voting i just wanted to acknowledge the company's announcement yesterday regarding a leadership transition i'm going to speak a little more about the changes uh after we've completed the formal voting course of the meeting um but let's now uh proceed to the business of the meeting The polls are now open, and I'm going to introduce each item of business. I think there's four items of business here before this morning. First, though, a quick housekeeping note, and this is important. If you previously sent in your proxy or have already voted by phone or Internet, you do not need to take any further action unless you wish to change your vote. So shareholders who have signed in using their control number and who have not yet voted or who wish to change their votes, you may do so by clicking on the vote icon on the meeting portal and following the instructions there. Any votes received prior to the polls closing will be, of course, collected and delivered to our election inspector. So we're going to begin with the election of 11 directors. Each will serve a one-year term until the 2027 annual meeting or until their earlier resignation. Before we move to the boat, I'd just like to express my thanks to the current board members for the significant contributions each of them provides to the company. I'm really honored. You'd expect me to say this, but it's really true. I'm really honored to serve alongside these individuals as chair of the board. The board's nominated the following individuals for re-election, Brian Bainham, I'm going to vote for him, William Jews, Monty Cook, Eliza Lansman, Pat Peaches, Irwin Shames, Gordon Smith, Maureen Sullivan, John Tague, Donna Vieira, and me, Stuart Bainham. So if you're interested in learning more about the background of these individuals, if you're not that familiar with them, there's quite a bit of good information in our proxy statement. So a majority of shares now is required to elect the nominees for director. Sharon, I think you have a count already because you've been counting these proxies the last few days. Could you report, please, on the preliminary results of the voting?

Of course. A majority of the shares represented at the meeting voted in favor of each of the nominees for election to the board. Therefore, each of the 11 named nominees are elected for a one-year term that expires at the 2027 annual meeting.

Thanks, Sharon. No surprises there, and congratulations to each on your election. Now, secondly, second item of business, as required by the Dodd-Frank Act, the second item, is to seek a shareholder advisory vote regarding compensation of the company's executive name, executive officer. The vote is advisory. However, the board's compensation committee will certainly consider the outcome of the vote as it continues to think through the company's executive compensation program. The majority of shares represented at the meeting is requested. Karen, you've got some results, I think.

I do. A majority of the shares represented at the meeting voted in favor of the proposal. Therefore, the advisory vote on executive compensation has been approved.

Okay. Was it a close vote or was it a large majority?

A large majority.

Okay. Thank you. The third item on the agenda is to approve an amendment of the certificate of incorporation increasing the board size range from 3 to 12, which it currently is, to 5 to 15 members of the board. A majority of the outstanding shares is required to approve the proposal. Thank you. the amendment to the certificate of incorporation increasing the board size range from 3 to 12 to 5 to 15 was approved by a majority of the outstanding shares thanks sharon you're doing a commendable job much appreciated the fourth and last item on our business agenda is to ratify the appointment of Ernst & Young as the company's independent registered public accounting firm for the current fiscal year, the fiscal year ending December 31, 2026. A majority of shares represented at this meeting is requested. Sharon, what's the count on this one?

Okay. A majority of the shares represented at the meeting voted in favor of the proposal. Therefore, the appointment of Ernst & Young as the company's independent registered public accounting firm for the fiscal year ending December 31st, 2026, has been ratified.

Great. Great job, Ken. Thank you. There's no other business that has been brought before this meeting, so the polls are now closed and the formal business portion of the annual meeting is concluded. I just want to take a moment and recognize our announcement yesterday regarding leadership changes at the company. First, I just want to thank Pat, Pat Peaches, for his 21 special years of his very meaningful contributions of choice, including his outstanding service as a president and CEO since 2017. team. Pat has led the company through really remarkable change and was a pierced leader during the pandemic for all our stakeholders, our franchisees, our associates, and certainly our shareholders as well. So the company will be forever grateful to Pat as we transition to this next stage of the company. Happily, Pat has agreed to continue to serve as an advisor to the company through August and will be of invaluable assistance to Dom, our interim CEO. And we're delighted to welcome Dom Zagacic as our interim CEO and know Dom's strategic, financial and operational experiences at the company the last roughly nine years, I think, will ensure a smooth transition with continuing focus on executing our strategic priorities to deliver long-term value for all of our stakeholders, our franchisees, guests, associates, and shareholders. I'm going to turn things back over to you, Jeff. and I know you're going to facilitate the Q&A session, so thanks much.

Thank you, Stuart. As I previously mentioned, due to time limitations here this morning, we may not be able to address every question that we receive right now. It looks like we will have plenty of time, but if we don't, I apologize in advance if we don't get to a question that any shareholder submits. Just some legal housekeeping. keeping, please note that Dom's remarks and any responses to shareholder questions may contain forward-looking statements. Actual results could differ materially from those projected or stated. We undertake no obligation to update or revise publicly any of the forward-looking statements, whether because of new information, future events, or other factors. Or we refer to the information contained on the slides on the webpage that contain more information about risks, that could impact our results. Before we open up for Q&A, Dom, would you like to make any general remarks? Sure.

Thank you, Jeff. And a warm welcome to all of our shareholders for joining us today. On behalf of the entire Choice Hotels International team, thank you for your continued investment and confidence in our company. I'm excited to help drive the next phase of Choice's growth and look forward to collaborating with you, our shareholders, as well as our amazing franchisees and associates. Choice Hotels continues to execute a clear strategy, drive franchisee economics and rooms growth to deliver high-quality earnings, strong cash flows, and more durable shareholder returns. In full year 2025, we achieved yet another year of record profitability, delivering adjusted EBITDA of $625.6 million, dollars, up four percent year over year. These results were driven by our higher revenue brand mix, continued portfolio optimization, and the continued strengthening of our franchisee success system. In Q1 2026, we delivered record first quarter revenues of $340.6 million while driving strong development and RevPAR performance. In fact, we had the highest number of U.S. hotel openings in any first quarter over the last five years, and excluding the 2025 hurricane impact, we drove nearly 2% year-over-year rev part growth. Additionally, our development pipeline is well-positioned to drive future growth. With 97% of the rooms in our higher revenue brands, our pipeline properties are expected to be roughly 1.7 times more accretive than our current portfolio. Our ability to create value starts with the strength of our franchisee model and ability to drive the right customer through the right channel for our owners. From revenue delivery and distribution to personalized operating support and targeted brand investments, we are continuously strengthening our franchisee success system. The work we have done over the past several years has positioned us as a more accretive asset-like company. As we move forward in 2026, three main themes will capture the essence of what's happening at Choice Hotels. First, we're seeing steady net rooms growth in the U.S., with more hotels opening and fewer exits from our portfolio. Second, franchisee unit economics are improving, meaning our owners are seeing better returns thanks to stronger revenue and lower costs. And third, our capital intensity is declining, which means we're investing smarter and returning more value to our shareholders. Our growth would not be possible without the dedication and commitment of our franchisees, the Choice Hotels Associates who support them, and our board with its leadership and oversight. So thank you to all of them. And thanks again to our shareholders for your trust in Choice Hotels International. And now we're happy to answer any questions.

Thanks, Dom. We've got a question here about artificial intelligence. Can you talk about how Choice is utilizing AI in our business? Absolutely, too, Jeff.

And it seems to be the question of the day every day. So, yeah, we utilize AI really in every facet of our business, from how our guests shop for, how they book our hotels, really with greater ease, you know, to how we drive our owner's unit economics by developing, deploying cutting-edge AI-driven capabilities to really help them run their businesses more effectively. We also do it by improving how our associate productivity increases day in and day out. You know, a great example of this, Jeff, is really the recently launched platform called EasyBid to capture more group business. It's really enabled our hotels to improve their response times to group RFPs by about 30 percent is what we're seeing in the early results. And we've already seen that translate into conversion rates that are about 250 basis points higher, actually. Just last week, we launched Choice Hotels Business Direct to win more midweek business from small and medium-sized businesses. And when you take a step back and think about it, nearly half of the U.S. workers, they're employed by SMBs. And so these new AI-enabled digital booking platforms, they really enable these businesses to book stays direct on choicehotels.com. So those are just two of many examples of how we're really harnessing AI to drive demand, really drive that top line for our hotels. Thanks, Tom.

It appears as if we do not have any further questions. So with that, that concludes our Q&A session as well as today's meeting. Once again, thanks to everybody who called in to participate in our virtual meeting. The meeting is concluded.

To close the meeting, you may now disconnect.