Ladies and gentlemen, thank you for standing by. Welcome to Choice Hotels International's second quarter 2026 earnings call. At this time, all participants are in a listen-only mode. Following the 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 to update them. A reconciliation of any non-GAAP financial measures used in today's remarks is included in our earnings press release, available in the Investor Relations section of choicehotels.com. Joining me this morning are Dom Dragisich, our interim Chief Executive Officer, and Scott Oaksmith, our Chief Financial Officer. Dom will discuss our business performance and strategic progress, and Scott will review our financial results and outlook. With that, I'll turn the call over to Dom. Thank you, Allie. Good morning, everyone. The second quarter marked encouraging progress across our key priorities, highlighted by a 6% year-over-year increase in adjusted EBITDA. Most importantly, U.S. net rooms growth improved sequentially for the second consecutive quarter and is now nearly flat year-over-year. This reflects our strongest first-half performance since 2021. These improving net rooms growth trends in the U.S. and continued international momentum led to global rooms growth of 2.6% in the second quarter. We also continued to drive strong franchise agreement results during the quarter, reinforcing our confidence in future global and U.S. rooms growth. U.S. RevPAR increased 1.3% year-over-year, reflecting strengthening demand trends and benefiting in part from the FIFA World Cup. The RevPAR improvement we saw during the second quarter, together with the trend since quarter end, show we are moving in the right direction. I am confident this business can perform at an even higher level as we continue to realize greater value from the investments we've made in our commercial engine and technology platform while maintaining a renewed focus on execution. Disciplined capital allocation also remains a key priority for Choice. In the first half of the year, capital outlays for hotel development declined 80% year-over-year as we continued our transition back to a pure-play, asset-light franchising model while maintaining flexibility to make targeted investments in attractive franchise growth opportunities. There is still more work to do, but the progress we have made this quarter and the underlying operating trends we're seeing give us greater confidence in the outlook for the balance of the year. As a result, we're raising our full-year outlook across several metrics, including adjusted EBITDA, U.S. and global RevPAR, U.S. royalty rate, and global net rooms growth, which Scott will cover shortly. Now, before I go into the quarter in more detail, I'd like to briefly share how I'm approaching this role. My focus is simple: execution. We have a meaningful opportunity to improve, and my job is to close the gap between where we are today and where I believe this business can perform. Since stepping in, I spent most of my time listening to our franchisees and teams across the company. Those conversations have reinforced three priorities for me: staying close to our franchisees and the guests they serve, moving with greater urgency across the business, and being disciplined about where we invest our time and capital. Years of working across the business have given me firsthand insight into our strengths, where we can perform at a higher level, and where better execution will make the biggest difference. What's needed now is greater speed, discipline, and accountability to deliver stronger results for our franchisees and shareholders. Over the past several years, we've invested in building a stronger commercial engine and technology platform. Today, I believe our biggest opportunity is realizing the full potential of what we've already built, turning those investments into stronger operating performance, improved franchisee profitability, better guest experience, and ultimately greater long-term shareholder value. We'll be candid about where we're making progress and where we still have work to do. Ultimately, you'll measure us by the results we deliver, and that's the standard I hold us to. The way we'll achieve those results is by executing a business model that creates value for our franchisees and, in turn, our shareholders. At Choice, we strengthen franchisee economics by lowering owners' costs and delivering higher RevPAR through our commercial capabilities. Stronger franchisee economics support rooms growth, and in turn, more durable earnings and free cash flow. That gives us the flexibility to invest in the business while continuing to return capital to shareholders. My job is making sure we deliver on that consistently. In my conversations with franchisees, one message comes through consistently. They want a partner that lowers their costs, increases their revenue, and helps them operate more effectively. Technology has been helping us deliver on each of those priorities, building on several years of investment in our commercial engine and cloud platform. More recently, AI has helped us move even faster. On costs, we've reduced prototype costs by up to 25% across key mid-scale brands. Country Inn & Suites by Radisson is a good example. The redesigned lower cost prototype is driving renewed development momentum, with franchise agreements up 11% year-over-year in the first half of 2026. We're also leveraging the scale of the Choice system to lower owners' ongoing costs through a new FF&E procurement program, which is expected to reduce cost up to an average of 20% across the program's FF&E and building product categories. On revenue, demand is strengthening. I believe our biggest opportunity is earning a greater share of that demand by leveraging the commercial and technology investments we've made, particularly among our core value-oriented travelers. Earlier this year, we relaunched Choice Privileges to better serve that traveler by making our loyalty program more rewarding and better aligned with how our members travel. While it's still early, we're seeing encouraging signs. Membership grew 7% year-over-year to 77 million, while loyalty contribution increased more than 250 basis points during the quarter. Importantly, members acquired since the relaunch are already generating higher average revenue than comparable members acquired a year ago. We are also seeing early traction from our recently launched Business Direct platform for small and medium-sized businesses. Approximately 60% of enrolled businesses are new to Choice. Nearly 90% of room nights occur midweek. More broadly, revenue from small and medium-sized business travelers increased 8% year-over-year in the second quarter. I mentioned AI allowing us to move faster. We are also using AI to deliver tangible benefits for our franchisees. Our AI-enabled EasyBid platform improved group RFP conversion by 360 basis points, contributing to 16% year-over-year growth in group revenue in the second quarter. Inside the hotel, our AI teammate CHARLIE within our property management system reduced requests for operational support by about 40% in an early pilot, freeing up staff to spend more time with guests. There's more ahead in how AI reshapes hotel discovery and booking. We're continuing to refine our content and data so Choice properties are discoverable and desirable wherever guests are searching next. We're working directly with the major AI platforms shaping that shift. It's early, we intend to be ahead of that curve. I believe technology and AI are becoming the engine that powers everything we do, not as separate initiatives, but as capabilities embedded across every part of the business. That's how we create more value for our franchisees and ultimately our shareholders. Turning to RevPAR, the demand environment was constructive, supported by our value-oriented brands, resilient workforce-related travel, and our Extended Stay portfolio. We also benefited from major event-driven travel over the past two months, including the FIFA World Cup. Importantly, the World Cup brought in a meaningful number of first-time Choice guests and international travelers, expanding our reach into segments where we have historically been underrepresented. While the demand environment was constructive, our objective is not to rely on market tailwinds alone. We are focused on improving our competitive RevPAR performance by earning a greater share of demand through the commercial capabilities we've built and will continue to strengthen. That's how we'll deliver more consistent performance over time. Net rooms growth remains my top operating priority. U.S. net rooms growth improved sequentially as second quarter openings reached a seven-year high, while exits declined to their lowest level in six years. The decline in exits reflects the growing value we're delivering to our franchisees through the Choice system, along with stronger franchisee engagement and improving owner economics. Our conversion-led development model continues to differentiate Choice through faster openings, lower owner investment requirements, and earlier royalty generation. That advantage was evident again this quarter as our U.S. conversion pipeline expanded 6% sequentially. Importantly, about 75% of the U.S. agreements we've signed year-to-date are expected to open this year, providing strong visibility into near-term growth. International net rooms continue to grow in the double digits, providing another avenue for durable earnings growth over time. Global franchise agreements increased 20% year-over-year during the quarter, reflecting continued demand across both our conversion-led and our higher-revenue brands. Taken together, these trends reinforce my confidence that we're building a stronger foundation for sustained global and U.S. net rooms growth. Beyond driving net rooms growth, we're also focused on disciplined capital allocation to maximize long-term shareholder value. Returning to our pure-play asset-light franchising roots remains an important part of that strategy. As development outlays continue to decline and market conditions improve, we expect to pursue additional capital recycling opportunities. Together, those actions strengthen our financial flexibility, allowing us to allocate capital towards the highest return opportunities while continuing to return excess capital to shareholders. We're encouraged by the progress we've made this quarter. Our focus now is on staying disciplined, holding ourselves accountable, and following through on the commitments we make. Stronger franchisee economics and thoughtful capital allocation put us in a better position to deliver durable earnings growth and long-term shareholder value. I believe this business has significantly more potential, and delivering on that potential is what I'm focused on every day. With that, I'll turn the call over to Scott. Good morning, everyone, and thanks, Dom. It's great to have you back on our quarterly earnings calls in your new role. Our second quarter results demonstrate that improving U.S. operating fundamentals and the increasing contribution from our international business are translating into solid earnings growth. For the second quarter, adjusted EBITDA increased 6% to $175 million, primarily reflecting higher U.S. royalties from improving RevPAR and royalty rate expansion, growth in our franchisee programs and services revenues, and higher partnership revenues, as well as the continued benefit of our transition to direct franchising in Canada. These benefits were partially offset by higher SG&A expenses, which I'll discuss in more detail shortly. Our adjusted earnings per share increased 5% to $2.02, while revenues, excluding reimbursable revenue from franchised and managed properties, increased 7% year-over-year to $277 million. I will focus on three key operating priorities before discussing how they are shaping our updated earnings outlook. First, the improving trajectory of U.S. net rooms growth, supported by our stronger openings and lower exits. Second, the acceleration of RevPAR from the first quarter and continued U.S. royalty rate expansion. Third, lower development spend as investments associated with Cambria and Everhome continue to moderate. Net rooms growth remains one of our most important drivers of our long-term earnings growth, and operating indicators across our development funnel continued to improve during the second quarter. Global rooms increased 2.6% year-over-year, driven by a 16% increase in room openings. In the U.S., gross room openings increased 27% year-over-year and 9% sequentially. At the same time, room exits declined 50% year-over-year. Franchise agreements awarded in the U.S. increased 30% year-over-year in the second quarter. We also shortened the average time from signing to opening for conversions by nearly one month, reinforcing the speed and efficiency of our development model. The important point is that the key stages of our U.S. development funnel are moving in the right direction, from stronger signings and faster conversions to higher openings and lower exits. Additional information on our U.S. net rooms trends is included in today's supplemental materials on our investor relations website. Choice's conversion capabilities continue to provide an important competitive advantage, with conversions expected to represent approximately 90% of our 2026 U.S. openings. Conversions generally enable owners to open hotels faster and with less capital than new construction, which remains important in the current development environment. During the quarter, U.S. conversion franchise agreements increased 82% year-over-year, reflecting the value of our conversion model delivers to hotel owners. Extended Stay remains a key growth driver, with 12 consecutive quarters of double-digit rooms growth and representing more than 40% of our U.S. pipeline. Within our midscale and economy transient brands, developer interest also continued to strengthen. U.S. franchise agreements awarded increased more than 40% year-over-year, and the pipeline for these brands continues to build. Taken together, these trends reinforce our confidence that U.S. net rooms growth will return to positive territory in 2026. Our operations outside the U.S. continue to perform well, with international net rooms increasing 13% year-over-year, reflecting growth across our EMEA, Asia-Pacific, and Americas regions. In Canada, net rooms increased 5.4% year-over-year. Our transition to a direct franchising model is producing both an immediate earnings benefit and a longer-term growth opportunity as the pipeline continues to expand. Turning to RevPAR. Global RevPAR increased 1.7% year-over-year on a currency neutral basis in the second quarter. In the U.S., RevPAR increased 1.3% year-over-year during the quarter, supported by improving occupancy and rate trends. Together with encouraging preliminary third quarter trends, this supports our improved full-year outlook. As anticipated, the FIFA World Cup contributed approximately 60 basis points to second quarter RevPAR. Because the event was concentrated in the second quarter with only limited activity in our markets during the third quarter, we estimate the full-year benefit at approximately 30 basis points. Extended Stay continues to benefit from a diverse mix of longer stay demand drivers, including workforce related travel, relocations, infrastructure investment, and manufacturing activity. Approximately 45% of our U.S. Extended Stay portfolio is located within 10 miles of major data centers. Where those hotels generated approximately 100 basis points higher RevPAR growth than the system average during the second quarter. This highlights the benefits of our portfolio's exposure to durable project-based sources of demand. International RevPAR was up 2.1% year-over-year on a currency-neutral basis, led by the Caribbean and Latin America, and supported by continued strength across Canada and Asia-Pacific. In addition to RevPAR and net rooms growth, we are also increasing the earnings contribution from each hotel in our system. During the second quarter, our U.S. average royalty rate increased 11 basis points. The increase reflects continued mix shift towards higher revenue brands and the benefits of the franchisee focus initiatives Dom discussed. Our non-RevPAR fee streams also further diversify our earnings base. Franchisee adoption of our services continued to grow during the quarter, particularly our cloud-based property management system and revenue management solutions. Partnership services and fees increased 6% to $28.7 million in the quarter, mainly driven by higher procurement revenues. Together, royalty rate expansion and growth in our partnership services and fees reflect our strategy of creating more value for franchisees while generating higher fee revenue from each hotel in our system. Adjusted SG&A increased 7% during the quarter. The increase in our operating costs reflect our transition to direct franchising in Canada, which also contributed to the higher international earnings I discussed earlier. The remaining increase primarily reflected higher account receivable reserves. We expect adjusted SG&A growth in the second half of the year to moderate from the first half run rate, positioning us to deliver our full-year guidance. Turning to capital allocation, our framework remains unchanged. We prioritize high return investments, maintaining a stable dividend, and returning excess capital to shareholders through share repurchases. Our wholly owned hotels were originally developed to establish and scale the Cambria Everhome brands or were acquired as part of the Radisson Americas acquisition. Today, we wholly own 19 operating hotels and one hotel under construction. With no additional wholly owned hotels in our pipeline, we have substantially completed the capital-intensive phase of building them. As a result, future growth will be driven through our franchise model rather than hotel ownership. Reflecting that transition, capital outlays for hotel development declined 80% year-over-year in the first half of the year. We are now well-positioned to monetize those assets while continuing to grow through our franchise model. We currently expect the first disposition to occur in the first half of 2027, subject to market conditions. Turning to our balance sheet, we ended the quarter with total liquidity of $475 million and net leverage of 3.1 x adjusted EBITDA, comfortably within our target range of 3x -4x. During the first six months of the year, we generated $67 million of operating cash flow compared to $116 million in the prior year period. The year-over-year change primarily reflects two factors. First, franchise agreement acquisition costs increased as U.S. room openings grew 27% year-over-year. Second, operating cash flow was affected by higher marketing and reservation system reimbursable expenses driven by increased investment in franchisee-facing tools and guest delivery capabilities. Year-to-date, through July 31st, we've returned $172 million to shareholders, including $133 million through share repurchases and $39 million through dividends. We continue to expect repurchase between $175 million and $225 million of shares in 2026. Based on our second quarter performance and the underlying operating trends we've discussed today, we are raising our full-year guidance for adjusted EBITDA, U.S. RevPAR, U.S. average royalty rate, and global net rooms growth. We are also raising the lower end of our global RevPAR guidance range. We now expect full-year 2026 adjusted EBITDA of $635 million - $650 million. The increase primarily reflects stronger U.S. RevPAR, improved global net rooms growth, and continued U.S. royalty rate expansion. For modeling purposes, I'd note one item for the third quarter. The year-over-year adjusted EBITDA comparison includes approximately $9.5 million of liquidated damages within our other revenue line recognized in the prior year quarter that are not expected to recur, reflecting continued improvement in our franchisee retention. While our operating outlook has improved, we have updated our adjusted diluted earnings per share guidance to $6.86-$7.10, primarily reflecting higher expected interest expense and a higher effective tax rate, partially offset by the benefit of share repurchases. We now expect full-year 2026 U.S. RevPAR growth of 0%-1.25% and global RevPAR growth of 0%-1%, reflecting stronger underlying operating trends and continued commercial execution. Consistent with that outlook, U.S. RevPAR trends remain encouraging, and we currently expect third quarter U.S. RevPAR growth to exceed second quarter levels before moderating in the fourth quarter. We now expect U.S. average royalty rate expansion of 7-9 basis points for the full-year, a range that incorporates tougher comparisons in the second half of the year. On net rooms growth, we now expect global net rooms growth of approximately 1.5% for full-year, up from our prior expectation of approximately 1%. This reflects increasing confidence in the trajectory of U.S. net rooms growth together with stronger international performance. We remain on track to deliver positive U.S. net rooms growth for the full-year, supported by both stronger gross openings and an expected 250 basis points improvement in our U.S. net exit rate compared with last year. We expect the third quarter U.S. net rooms growth to remain broadly consistent with the second quarter levels, with a more meaningful step-up expected in the fourth quarter as conversion openings seasonally increase and comparisons become more favorable. Adjusted SG&A for the full-year is expected to continue to grow in the mid-single digits, benefiting from operating efficiencies across the business, including the continued scaling of AI-enabled tools. We are also investing more this year in franchisee-facing tools and guest delivery capabilities, which has increased our net reimbursable deficit expectations relative to last year. As a reminder, these programs are structured to operate at a break-even over time. Overall, the progress we've discussed this morning reinforces our confidence that improving execution is translating into stronger operating performance, positioning us to create long-term shareholder value. With that, Dom and I are happy to take your questions. Operator? Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Your first question comes from the line of David Katz with Jefferies. David, your line is open. Please go ahead. Hi, good morning. Thanks for all of the commentary, appreciate it. I'm sure that there's some nuance and complexity to having royalty rates go up and at the same time delivering greater value to franchisees. Can you help us unpack how that exactly works and why the royalty rate is up during a period of time where you're very obviously trying to increase the value proposition to franchisees? Thanks, David. I'll kick things off, and if Scott wants to add anything, he certainly can. I think first and foremost, this really goes back to the higher revenue per unit algorithm that we have. When you take a look at the effect of royalty rates increasing, a lot of that is really represented by the mix shift, right? Basically what's churning out of the portfolio is effectively your transient economy brands more heavily than what's coming into the portfolio. When you think about adding Comfort, etc, and that mid-scale, upper mid-scale segment, you effectively have that higher royalty rate across that portfolio. I think the other is really just the value that we are driving for our franchisees. The focus has always been on driving franchisee profitability. That comes through a lot of different approaches. I think you heard that in the prepared remarks with regards to prototype costs being down 25%, our loyalty contribution has increased 250 basis points. FF&E is down 20%. You've got CHARLIE sitting in the property management system at this point. There's a lot of other things that we've done to work with our franchisees to reduce their fees. I know one question has been in the past, just with regards to how do you incentivize higher guest review scores, and we do have programs out there right now to reduce business as usual fees and other loyalty fees associated with those properties that are driving those higher guest demand scores. Again, we're working very closely with our franchisees, and candidly, we think that the increased value that we're providing is showing up in the stronger development results. If I could ask, because these are contractual rates. As some of our older fee contracts have burned off or have been replaced with these new higher royalty rates that were put in really back in 2016, 2017. You're seeing that move to more of the franchise agreements in the construct that we have today. This isn't raising rates on existing franchisees, but more contractual as new hotel owners come into the system and pay the published rack rates that we have today. Thank you very much. Appreciate it. Thank you. Your next question comes from the line of Lizzie Dove with Goldman Sachs. Lizzie, your line is open. Please go ahead. Good morning, and thanks for taking the question. I just wanted to ask about the U.S. rooms growth trends, which looked pretty encouraging this quarter, and in the deck you posted, I think there was some interesting information about U.S. rooms exit this year versus last year, which seemed to improve a lot. Could you maybe just unpack that a little more? I'm curious how much of this is maybe that revenue intense strategy coming to an end versus just kind of underlying improvement under the hood and kind of what you're seeing there? Thanks. Thanks for the question. As I had mentioned, just with regards to the net rooms growth, this continues to be my top priority, I think the entire management team's top priority. The first thing I would just say is consistent progress leads to our confidence. Right now we are confident that we're doing the right things to drive that sustained net rooms growth well into the future. I think you mentioned the Q2 results specifically that we posted on the website, really it's the strength that we saw in Q2 that reinforces that confidence. Our openings for the quarter were up 27%, our exits were down about 50%, franchise agreements were up 30%. What's great about the franchise agreements is we have visibility, very strong visibility for the remainder of the year because 75% of those agreements that we sold this year, given the speed of the conversion engine, will open this year. Again, we've got pretty good line of sight here over the course of the next six months. Obviously, it's early innings, but we're very much encouraged by that progress. I do believe that we're going to continue to see that acceleration. One thing you did mention, Lizzie, obviously the confidence is even better because of the mix, right? You talked about the revenue intensity. When you take a look at those net rooms growth figures that are in the higher revenue intense segments, we're actually seeing about 100 basis points higher. It's 3.6% versus the 2.6%. One of the things also you mentioned is that coming to an end. I think this is really important, just sitting in the seat that I'm sitting in today. I absolutely think the net rooms growth algorithm can and should be a both/and. We're going to continue to drive higher quality units with a higher revenue per unit. There's no reason why we shouldn't be winning in the economy segment and that lower mid-scale segment as well. We're going to continue to see improvements there. That's the goal. The reality is we're going to continue to see improvements on the retention side as well, because retention is equally as important as the development algorithm. Again, overall, this is an area that we're very satisfied with the continued progress. We are going to continue to push on this and then try to drive acceleration in the back half. That's helpful. Thank you. Thank you. Your next question comes from the line of Daniel Politzer with JPMorgan. Daniel, your line is open. Please go ahead. Good morning, everyone. Thanks for the question. I wanted to talk about the RevPAR for the quarter, I think domestically up 1.3%, which lagged your weighted chain scale mix. I guess, how do we reconcile that? Similarly, I think you mentioned on the third quarter and fourth quarter the cadence. It looks like the fourth quarter RevPAR comparison is by far the easiest of the year. Why should we think about RevPAR decelerating from Q3 to Q4, if I have that right? Yeah, I'll start at the top and just with regards to what we're seeing in the context of the current RevPAR performance, then Scott can walk you through the Q3 and Q4 in terms of what we're assuming from a modeling perspective. On the RevPAR side, I would say we're encouraged by the sequential progress. Totally agree with there's still more work to do here as well. The reality is when you think about what we've invested in, we talked a lot about the $60 million of investments in the commercial engine, that ultimately will be a huge driver for sustained RevPAR within the future. Now it's just a matter of really executing, activating. We talked about EasyBid, Business Direct Loyalty. Those are the types of things that we're encouraged by. Candidly, we're encouraged by the broader macro backdrop, which we can certainly get into as well. While we saw the sequential improvement, when you take a look at just from an index perspective, there was a gap, right? I think when you peel back the onion, we are under-indexed in urban markets. We're under-indexed in business transient, which had a pretty big bounce back in Q2, and obviously there was a World Cup tailwind as well. Having a lower number of units in those markets created that sort of gap. We are encouraged by one trend that we are seeing very much in that occupancy, we're continuing to drive occupancy index gains. Our biggest opportunity at this point right now is rate. When you take a look at the sequential improvements, it wasn't just quarter-over-quarter. We actually saw July improve by about 100 basis points versus June as well. We're seeing progression there. There is some lumpiness and some timing phenomena in the back half of the year that I think Scott can hit on as well. Yeah, Dan, our second half of the year RevPAR guidance for the full six months is about 1.5%. As we mentioned on the call, we think that'll be a little stronger in Q3. As Dom mentioned, we did see July up about 100 basis points. There are some calendar shifts in the August timeframe with the Labor Day holiday pushed deeper into September and fewer weekend days in August than previous, which mitigates a little bit of our RevPAR performance given the higher concentration of leisure travel that we have. We do see that moderating a little bit in Q4. As we've talked about in the past, our booking windows are fairly short, so we don't have a lot of visibility into that Q4. I think when we gave our guidance of up to 1.25%, that does assume a little bit stronger Q4, if that were to take place. Got it. Thanks so much for all the color. Thank you. Your next question comes from the line of Michael Bellisario with Baird. Michael, your line is open. Please go ahead. Thanks. Good morning, Dom. Welcome back to the call. First question, can we dig into the, I think you said moving with greater urgency is one of your priorities. Just maybe help us understand what people and processes have changed so far, what have you already seen impact in Q2, and what's still to come? Yeah. I think broadly speaking, stepping into the role really just reinforced rather than fundamentally changed a lot of the thinking that I had, right? I think one of the most important elements, and I mentioned this in my prepared remarks as well, it really is staying close to our franchisees. That's what matters most, really grounded in those relationships, the franchisee success system, owner economics is the linchpin. I talked a little bit about the net rooms growth side of the house as well, and where we made some significant changes, frankly, was on the retention side of the equation. I think from a people, process, and systems perspective, there were several investments that we made back half of last year, and that's paying dividends today. I think you see it in the 50% reduction in this quarter alone with regards to the exits. The last is really around just the commercial and technology capabilities. I think AI is obviously the flavor of the day, so to speak, and I don't think it's just a flavor. I think it's going to be sustained, and we see that as the next part of our technology evolution, so making sure that we're holding those teams accountable. I think what has changed is really just importance of accountability and communication, both internally and with all of you. I don't think we should ever be sitting on a quarterly earnings call and have surprises. That's going to continue to be something that I urge the team to do as well. We simplified parts of the organization by just realigning some of the functions that naturally work together, single points of accountability around key operating priorities. At the end of the day, that's about reducing friction, making faster decisions, and translating all the things I just talked about into results. Ultimately, you're going to evaluate us based on the results that we deliver. Got it. That's all very helpful. Just on your guidance, if I could ask a second one here, just maybe remind us of your philosophy around and sort of conservatism. I think you just sort of touched on communication too. Any puts and takes to call out with EBITDA up only 0.5 percentage point, but RevPAR up by more than that, plus better net unit growth and a higher expected royalty rate expansion. Anything to call out there in the back half? Thanks. Sure. I think at the highest level we did beat the internal forecast that we had, and when we flowed that beat through. Very much encouraged by the trends we're seeing across every core revenue driver, rooms, RevPAR, effective royalty rate. To Scott's point, some of this is timing related. There are a couple puts and takes, specifically in the back half, and I think Scott mentioned that in his prepared remarks as well. In Q3 of last year, we did have elevated liquidated damages that are tied to exits. We brought this number down, which actually is a good news story for the algorithm. Obviously, there's a one-time reduction in revenue associated with that. Given the fact that we are more encouraged by the rooms progress, that's going to be a better long-term value driver for us. We're pretty excited about that one. I would say we're taking a more cautious approach, to EMEA in particular, to Europe, and just given what you're seeing overseas. The reality is, if we continue to execute the way that I know we can, you could possibly push to the higher end of the guidance. As of right now, the midpoint is effectively where we feel most comfortable. Helpful. Thank you. Thank you. Your next question comes from the line of Shaun Kelley with Bank of America. Shaun, your line is open. Please go ahead. Hi, good morning, everyone, Dom, welcome back to the public calls. If I could just maybe have you guys elaborate on two areas. First one, Dom, maybe a high level sort of owner health and sort of the costs. I think all-inclusive costs of franchising to owners has been a theme kind of throughout the entire lodging industry this quarter. I'm kind of curious on how that impacts your philosophy or your thinking, sort of how you maybe weight your brands and your offering relative to some of the other things that are being done out there as you're starting to see other franchise companies starting to kind of use some of their heft and weight to try and get I think slightly better deals for their franchisees or charge them all-in fees that are a little lower. That's kind of the high level one, and then maybe one for Scott, if you could just quickly give us thought, I think on the key money environment. On the one side, I think you said that contract acquisition costs were up pretty materially in the first half of the year, but on the other side, I think all in capital intensity with CapEx and some of the renovation stuff you're doing is down. Just trying to weigh those two factors and think about key money investment for the balance of the year. Thanks. I'll start at the high level, and then Scott could hit the second part of your question. I mentioned a little bit of this in I think the first question, but when you take a look at what we're doing to lower the cost for our owners, we don't have perfect visibility into their P&L. I'll start with the bottom line up front. We believe it's still in that teens in terms of owner returns and whatnot. We're seeing the improved value proposition showing up in the development results. When you take a look at where we were last year versus this year, we're lowering the cost of customer relations. We're exploring insurance options. We've reduced, or are in the process of having conversations with regards to reduced commissions. The cost of prototypes being down 25%, FF&E down 20%. All in all, we feel like our value proposition is very much competitive against the competition, and that's really, again, showing up, I think, in the 30% higher development results this quarter versus where we were last year. Again, the profitability is going to continue to be core to who we are and what's been very consistent in every conversation I've had with franchisees, and I've probably talked to hundreds since I've stepped into this role now at this point. They want the lower cost, and those are all the things that I just talked about. They want to see stronger top line and a lot of those commercial capabilities that I talked about as well. We are confident that it's going to show up in top line gains in the long term. They want tools that makes their lives a lot easier. The one piece of feedback that we've gotten in particular is this AI enabled teammate, CHARLIE, within the property management system, and that alone has reduced operational requests to corporate by 40%. If you have the ability to replace some of that FTE time so that they could go spend with their guests, etc, that's a net benefit. Again, we feel like we're well-positioned. We're going to continue to pound the pavement in the context of our development this year and looking forward to continuing to drive their profitability. Yeah. Shaun, in terms of your question about capital intensity, as you mentioned, the key money was up from the first half of 2025 to the first half of 2026, was really driven by the rise in the number of room openings we've had during the quarter. We were up about 27% in room openings in the U.S. compared to the prior year. Additionally, the mix of hotels that opened this shift, that we've seen a lot more stronger growth in our core brands of the midscale, upper midscale and upscale, which bring us higher revenues, but also sometimes slightly higher key money checks. Overall, we feel really good about where we are in terms of the amount of key money that it takes to win a deal. We haven't seen that increase. We really have a disciplined strategy against that, we underwrite those to really attractive returns with reasonable payback periods. What you're really seeing is a healthier pipeline coming in, and more openings. With that, we do believe that our use of key money will be slightly higher than we originally talked about earlier in the year, probably in the order of $15 million-$20 million higher. On the flip side, as you also mentioned, we are seeing less capital intensity as we wind down the development programs for both our Cambria and Everhome Suites programs, which were the use of that capital was down 80% for the first half of the year. We expect that to be down about 70% for the full-year. As we wind up the more capital intensive phase of building out those brands and return to asset light franchising, which is our core offerings, we will move now to start exploring the sale of those assets. As we said in the prepared remarks, we have started to evaluate the timing of those sales. We do expect some of the first ones to happen in the first half of 2027. Shaun, the only thing that I would add- Thank you so much. On the money side of the house, too, is we've been very, sorry, Shaun. I was just saying that the only thing I would add just on the key money is that we've been pretty disciplined in the context of tying that key money more closely to our property improvement plans. Just in terms of obviously the cost to convert is a huge consideration for any owner, and so being able to effectively offer them a property improvement plan that allows them to convert a project that is lower in cost, but also ties that key money to ultimately improve the product and drive the better guest experience, AI benefits, and otherwise, something that we're being very disciplined in doing. Again, feeling good about the way that we're using the key money to improve the product portfolio. Thank you both. Thank you. Your next question comes from the line of Patrick Scholes with Truist Securities. Patrick, your line is open. Please go ahead. Hi. Good morning, everyone. Congratulations on the net rooms growth improvement. I'd like to just step back and ask a high-level question here. When I think about two or so years ago with the failed Wyndham takeover, one of the things that really percolated up that maybe wasn't as well-known was some dissatisfaction from your franchisees, or I should say less than ideal franchisor-franchisee relationships versus perhaps that of some of your peers. In that regard, I recall around that time you folks had dropped out of the AHLA organization. Would you ever consider rejoining that organization, that certainly being the largest franchisee organization out there? Thank you. Yeah, thanks for the question. I think first and foremost, we've said this previously, but we paused the membership. We never paused the relationship with AHLA. So, I think that's first and foremost. Okay. We continue to work with them very collaboratively, in the context of those items that ultimately support the broader franchise business model, that ultimately support the hotel industry. There are many things, and candidly, the vast majority, 99.99% of the things that we are more aligned on. I think there was one element in particular where all the hotel companies paused that membership. Not saying that if there was an opportunity to rejoin that we wouldn't. It's a conversation that we would certainly entertain. The reality here is we work very collaboratively with our self-elected owners' councils to really address those items that our franchisees are dealing with day in and day out. Many of those members are also members of AHLA, so again, there's a collaborative effort on that side as well. Broadly speaking, we feel like the relationship that we've had with our franchisees has never been better. We continue to see that, and we had that experience at our franchisee convention just two months ago, and we're encouraged by the continued feedback that we're getting from our franchisees with regards to everything that we're doing to allow them to operate their businesses more effectively, to drive their profitability. It's showing up. I think it's showing up on the retention side of the house, and there's a reason why we believe that the numbers are down 50% in terms of the exits from the portfolio year-over-year. That's because of not just the performance that we're driving, but the broader relationship that we have with them and the trust that they have in us. Okay. Thank you. Follow-up, not so much as a question, but just passing on quite a few thoughts or requests from a number of shareholders this morning. Certainly, what I'm hearing is we, myself and shareholders, certainly would encourage more granularity, and you've certainly talked about from a high level on this. Certainly more granularity to address RevPAR improvement. When we look at the index of your performance, it looked to be about 300 basis points below. I get it, some of it may be location or customer, but I don't think that explains the whole thing. Certainly going forward, providing as much granularity as far as your plan to improve that would certainly go a long way. Just passing that on, and I appreciate your consideration. Thank you. Absolutely. Thanks for that, Patrick. The reality is communication and transparency are critical. I think we are doing a much better job as it pertains to showing the puts and takes on the net rooms growth in the prepared remarks on the RevPAR side. We obviously try to provide that, and we'll continue to do so in the future. Okay. Thank you. Thank you. Your next question comes from the line of Robin Farley with UBS. Robin, your line is open. Please go ahead. Great. Thank you. Two questions. One is just going back to the commentary about the expected increase in U.S. rooms, really sounds like in Q4. Maybe I'm doing the math wrong on this, but it looks like your U.S. pipeline is down year-over-year. If the growth in U.S. rooms, is it more just this fewer exits? Is that the right way to think about it? Was there a purposeful program to get rid of certain properties that now is winding down? Just to understand the components of that U.S. growth. Thanks for the question, Robin. I'll hit it at a high level, if Scott wanted to add anything, certainly can. I think it is coming from both, right? It's coming from an increase in openings. I think in this quarter you actually did see a 27% or so increase in the openings, we're very encouraged by what we're seeing. The reality is that the vast majority, about 90% of those openings, that we expect in the full-year as well, are coming from conversions. We have that proven conversion engine. We're actually seeing a reduction in the time between a franchise agreement being signed and when a hotel opens by almost one month. Again, we're seeing speed to open increasing as well. We're very encouraged by the fact that about 75% of the conversions that we're signing this year are going to open in-year. We do expect to see a pretty significant, the increase that's in line with the guidance, at least, on the opening side. We also continue to see the trend that we're seeing on exits continuing in the back half of the year. It's going to be a both/and, as it pertains to the opening side and the exit side. New construction obviously has been light across the industry. Supply growth is less than 1%, which is one of the reasons why you're seeing the pipeline where it is. But we're not just looking at the pipeline in terms of the catalyst for future growth because of that conversion engine that we do have. Again, very much excited about where we're heading there. As Dom mentioned, it really is a conversion story today. If you look at our conversion pipeline in the U.S., it's up about 24% since last year at the same time and up about 6% sequentially since the end of March. So really reflecting the success our franchise development team has done in signing agreements. As Dom mentioned, new construction has declined year-over-year as we've seen less starts with the current economic conditions. But it's basically flat since the end of the year. So really it's both increasing conversion openings as well as a decline in our termination rate, which is expected to be down about 250 basis points year-over-year. Okay, great. Thank you. My other question was just if you could help us understand, you talked about the net capital outlay for hotel development declining pretty significantly. But also in the quarter, you talked about the increase in franchise agreement acquisition costs. Can you just help us understand what is different about those two buckets? Thanks. The net development outlays were really focused specifically on building hotels through wholly owned ownership, joint ventures as well as loans. Those were specific programs that we had done to launch our both Cambria and Everhome Suites brands. Now that we've gotten both of those to the scale that we believe is necessary for them to grow more in an asset-light nature and franchising only, we're able to pull back the spending on those programs and now move to recycle that capital. That'll be capital that comes back in. Key money is more focused on cost of acquiring a franchise agreement. As Dom mentioned here earlier, really it's around helping the owner as they transition to our brand, to upgrade the hotel, make sure the quality is in the right spot for each one of the brands to make sure we're enhancing guest experience. Those come with a very long franchise agreement, and assuming the franchisee operates within our system over the term of the agreement, the key money is forgiven over time. Really it's a cost of acquiring the contract, but very high IRRs on that as we go forward. A little bit different when we look at the overall capital intensity of the business. It's certainly declining, and we expect free cash flow conversion over the next several years to get back to more of the historical levels that we've had. Okay, great. Thank you. Thank you. Your next question comes from the line of Stephen Grambling with Morgan Stanley. Stephen, your line is open. Please go ahead. Thank you. Maybe just to follow up there, in the vein of disclosure, what percent of the key money that you expect this year is for supporting existing owners versus what's in the pipeline? Then some of your peers have also talked about supporting owners through programs to incentivize them spending on properties and aligning the brand with owners. Sounds like you're alluding to a bit of a similar dynamic with your own cost reductions, but should investors anticipate this will be funded through your P&L or the system fund, or are you finding outright reductions and the system fund should still be kind of break-even longer-term? Yeah, I'll hit the cost and the key money associated with the existing owners. The reality is when an owner is coming up on an expiration or whatnot, obviously in order to retain that owner, if we expect for them to have a capital outlay associated with improving that particular hotel, that's our opportunity to work with them on what that property improvement plan looks like. Making sure that we're ultimately tailoring in such a way that meets their needs, but more importantly, the needs of the guest in terms of those longer-term guest reviews and whatnot. You are seeing us being able to meet the owner where they are as it pertains to retaining them and as it pertains to supporting that property improvement plan. There's other creative things that we've always done in the past, candidly, that I know some of our competitors are talking about today with regards to reducing certain fees as well, based on guest review scores. We have an internal acronym for it, but it's effectively your guest review scores around hitting a certain threshold and having a reduction in a loyalty fee, hitting a certain score, and having a reduction to other business as usual fees and customer relations and whatnot. Again, there's the capital piece that ultimately flows through the P&L, and then there's the P&L piece that does not have a material impact on the effective royalty rate and the overall royalty fees as well. In terms of your question on key money, at this point in the year, we have fairly good visibility in terms of how much key money is tied up into the pipeline today. Certainly, the timing of disbursement can fluctuate over periods as your hotels, particularly as we mentioned earlier, 90% of our openings this year will be conversion open within three to six months. There can be unforeseen circumstances as people do their property improvement plans that could either accelerate it or push that into the next year. There will be still deals that we'll do for the remainder of the year that will open in the year that we have not executed yet. There's always a little bit of volatility in terms of predicting the key money in any one period. Generally, we have a very good sense of the total outlays over an 18-month period. Thank you. Thank you. Your next question comes from the line of Trey Bowers with Wells Fargo. Trey, your line is open. Please go ahead. Hey, guys. Thanks for the question. I guess in the vein of what have you done for me lately, you guys have done a great job breaking out the net capital outlays and the improvement from last year. As we look out to 2027 and think about free cash flow dynamics, should we expect that to be a net positive number next year? Less negative? Just any framework as you guys look to start to distribute some of these assets, what that could mean. Thanks. Yeah. At this point in time, Trey, we're done at the end of this year, for the most part. There may be a few dollars that trickle into 2027, but as the final projects are finished, but the capital outlays, there's no more commitments to that. At this point in time, in terms of our support of Cambria and Everhome, we will be net recyclers of that. As we wind up some of those joint ventures we have, as we sell the wholly owned assets, as we collect the outstanding loans we have, we will be in a net surplus position, which will obviously be a tailwind to our cash flow. We expect no more substantial money to go out and really over the next 12 - 24 months as we work through the market conditions and take those assets to market to be net recyclers of capital. I guess as a follow-up, as I think about the owned portfolio, is that a number that over time should go to zero? Would you like to be 100% franchised, or will there always be some small portion of the portfolio that you guys want to hold on to just to control brand standards? Finally against that, any sense of kind of magnitude if you were to execute all these sales, what that would mean? Thank you. Yeah, in terms of ownership, that's really not in our long-term plans. The hotels we own really are concentrated in three different ways, as I mentioned earlier. Building some Cambrias and early Everhomes to get the brands launched. We did acquire three assets when we acquired Radisson. At this point in time, we don't see any long-term strategic value into owning them. We are an asset-light franchising company, so we do not plan on holding any of the assets. Really right now is around making sure that we're maximizing the value on sales as well as retaining franchise agreements is really what we're focused on. In terms of magnitude, we've got about $650 million on our balance sheet related to those programs. It is mixed between owned hotels, some joint ventures we have, as well as lending. About $450 million of it is on owned hotels, that would be the more immediate area that we have the ability to go sell and monetize those prior investments. Great. Thank you. Thank you. Your next question comes from the line of Meredith Jensen with HSBC. Meredith, your line is open. Please go ahead. Good morning. Two very quick things. One, Scott, I think you mentioned some penetration in terms of loyalty. I was hoping you might discuss a little bit further what you're seeing since the refresh, what some opportunities you're seeing maybe in the future given that increase of engagement. Secondly, if you might speak a little bit more about the partnership revenues in terms of the moving parts in there and sort of the sustainability of how we might model that over the longer term. Thanks a lot. Thank you. I'll start with the loyalty piece. The reality is we're encouraged by the progress that we're seeing. I think the most important kind of result that we wanted to highlight there is just the increase in loyalty contribution, which is in that 250 basis point range. At the end of the day, that's all about driving our franchisees' profitability. The more direct business that we're driving to them through the loyalty program, the better their economics are going to be. Again, the relaunch of the loyalty program in isolation was a great win for us. It's a bigger part of that commercial ecosystem that we've invested in to really close that RevPAR gap and to really drive the same-store sale number higher in the future. That's part of a loyalty tool, a guest data platform, the relaunch of our or the launch, I should say, of our EasyBid RFP response tool. It's a consolidated ecosystem, candidly, that's made up of a number of different programs that we think is going to be a net tailwind for us from a RevPAR perspective into the future. We're also seeing an increase in active members within the loyalty program itself at the highest level. The last piece is really those new loyalty program members are actually driving more RevPAR than the loyalty program members that we added during the same period last year. Again, all encouraging signs. Not going to take a victory lap just yet. It's early days, but we feel like this is going to be a big part of that commercial engine into the future. It dovetails well into the partnership question you had. As we continue to bring more guests into our ecosystem and a higher value guest, they're very valuable to the various partners that we have. Gives us the ability to cross-sell different services, whether they're travel adjacent or something else to our very most loyal members, which we then earn fees off of. The growth of the loyalty program really sets us up well to continue to monetize that guest in other ways to drive that revenue line item. The other area for the partnership services and fees that we focus on very much, it's been the theme of this call, is franchisee economics. Leveraging the size and scale of our overall franchise system to drive down the cost of operating a hotel, whether that's through various procurement of the types of items that are used in the hotel, whether that's driving down cost of converting the hotels. We've talked about the 25% reduction in prototype costs. As we do that, we're able to both lower costs for our franchisees, also then earn fees from those third-party vendors. We feel good about where we are on those programs. Our guide for this year is that mid-single digit increase. I think we have a lot of opportunity in the future to accelerate that growth. That's super helpful. Dom, did you mention the penetration, or the contribution for the loyalty, just so we can keep track on the progress? We didn't disclose that, it's different across the chain scales. In the past, we've talked about it being a little north of 40% across. Again, in the mid scale and above, you see a much higher loyalty penetration. Really, the portfolio is very different. Below the 30% in our economy brands, but when we get to the upper mid-scale and upscale hotels, more in that close to 50%-60% range where it blends to 40%. I think that's pretty common across the industry, particularly in the economy segment where it tends to be a little more cost conscious and less value guests. As you move up the chain scale, a lot more loyalty from your guests. Thanks much. Really appreciate the color. Thank you. Your last question comes from the line of Alex Brignall with Rothschild & Co. Alex, your line is open. Please go ahead. Thank you very much for taking the questions. The first one is on the churn rate. Massively appreciative of the new color that you've given for the U.S. Is there anything that you could just tell us whether it's directional in terms of the international piece or just what it would look like on a whole system basis, and whether that 250 basis point reduction in churn would apply across the whole group? If not, why there are differences? Just in terms of the reimbursable revenue and expenses, obviously as the gap has widened a little bit, can you just talk about how this will progress then out to years? Thank you. Yes. I'll hit the international and just the broader portfolio net rooms growth question specifically on the churn rate, and then Scott can hit on the reimbursable. When you take a look at just where we are from a net rooms growth perspective, we would expect to see international consistent into the future as it pertains to the churn rates. International growth this year was pretty significant. We're lapping a pretty tough comp in the back half of the year. Right now with the net rooms growth at 2%, and we're guiding to globally about 1.5%, that's because of the fact that we're lapping that pretty difficult comp. We do expect to still grow our international portfolio and call it a low to mid-single digits after 13% growth year-over-year. Those churn rates we expect to stay stable. Obviously, we're continuing to see the openings as well throughout that portfolio. We are seeing significant momentum in Canada following the transition to direct franchising, or I should at least say momentum, where we're driving mid-single digit net rooms growth, low to mid-single digit RevPAR growth. We also do see an opportunity in CALA following the Radisson acquisition. Asia- Pac remains a little bit of a distribution market for us outside of Australia. Again, encouraged by the continued progress there. I wouldn't sit here and say you should expect to see 13% rooms growth internationally over the course of the next 6 - 12 months. I think you're going to see more of a moderation, which means as U.S. growth picks up, we feel confident in that 1.5% guide. Alex, in terms of your question about the marketing reservation reimbursables. Yes, we have had a temporary acceleration of the investments really around our franchisee and guest value proposition. We've been investing in capabilities that improve distribution, strengthen our reservation delivery, modernize our loyalty technology, and improve our rate setting abilities, which ultimately will help franchisees acquire customers and operate their hotels more efficiently. The current level of spending is not intended to represent a permanent run rate. We did have some accumulated surpluses from prior years, where we're able to fund this defined period of elevated investment. As we wind those up, I would expect this to be the high water mark in terms of the amount of spending into this year. We'll see that start to come down as these investments are completed this year and going into the following years. Those reimbursable expenses as measured against revenues will be more aligned. Could you quantify the surplus that you had there, please? Thank you. Yeah. Coming into the year, we had a little over, I think it was about $25 million in surpluses. We are going into more of a deficit with the spending levels this year. The way our contracts work is we will then recover that over the next several years back to breakeven. Okay. Thank you so much. Thank you. A final question coming from Brandt Montour with Barclays. Brandt, your line is open. Please go ahead. Hi. I apologize if I missed this. I wanted to ask about the pipeline, the domestic pipeline specifically, and the fact that it's down quarter-over-quarter, down year-over-year. I know franchise agreements and signings are up, and they're sort of moving in a better direction, opposite direction. I know the pipeline is not really representative of the science because you're conversion heavy, but you kind of always have been conversion heavy. I guess the question is, why are those numbers moving in the opposite direction? If there is a significant change of mix toward closer in conversions, why not sort of just put them in the pipeline? Yeah. There's a couple stories within the story there, Brandt. I think when you take a look at the pipeline year-over-year, there was a pretty significant set of hotels that were in the pipeline globally, so at our international division, which led to the 13% growth. Those effectively were open hotels that brought the pipeline down. When you take a look at the domestic pipeline year-over-year, it's effectively flat. I think it's down 40 basis points, so 0.4%. A lot of that has to do with the fact that, again, new construction has been pretty muted. I think we are encouraged by new construction that we're seeing on Extended Stay, which now represents about 40% of the pipeline, 13% unit growth. We continue to see that momentum on the Extended Stay portfolio. Broadly speaking, you are seeing just a higher velocity within those conversion development agreements, where we actually reduced time to open by, I think it was between 10% and 15%. Again, the more development agreements that are being signed, the more you're basically seeing open in-year, or in some cases, even within the quarter. That those aren't even showing up in the pipeline. Again, we're still pretty darn confident about where we're heading from a net rooms growth perspective, which is why we guided even with the pipeline effectively staying flat year-over-year domestically. Yeah, Brandt, I think to the point we made earlier, we really are more in a heavier conversion, especially in the U.S. environment. That'll be about 90% of our U.S. openings this year. Historically, it's been more in the mid-60%, just with the lack of supply growth across the entire U.S. industry. Really, where we've been focused on is our U.S. conversion pipeline is up 24% year-over-year and 6% sequentially since March 31st of this year. We are seeing, to your point earlier about the increase in franchise agreements, we are seeing that more on the conversion side, and they're moving through the pipeline really quickly. The pipeline is not always representative at any point in time of the velocity and the unit growth potential. Great. Thanks for all the color, guys. Thank you. There are no further questions at this time. I will now turn the call back to Dom Dragisich for closing remarks. Thank you, operator. Thanks everyone for joining us this morning. We're looking forward to meeting with you again in November when we report our third quarter results. In the meantime, we both hope you have a great rest of your summer. This concludes today's call. 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