CHOICE HOTELS INTERNATIONAL INC /DECHH

CHOICE HOTELS INTERNATIONAL INC /DE Fair Value Disclosure

10-KFiled Feb 19, 20263 min read
Fair Value Measurements
The Company estimates the fair value of its financial instruments utilizing a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The following summarizes the three levels of inputs, as well as the assets that the Company values using those levels of inputs on a recurring basis.
Level 1 - Quoted prices in active markets for identical assets and liabilities. The Company’s Level 1 assets consist of mutual funds held in the Company's Deferred Compensation Plan.
Level 2 - Observable inputs, other than quoted prices in active markets for identical assets and liabilities, such as quoted prices for similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable. The Company’s Level 2 assets consist of money market funds held in the Company's Deferred Compensation Plan.
Level 3 - Unobservable inputs, supported by little or no market data available, where the reporting entity is required to develop its own assumptions to determine the fair value of the instrument. The Company does not currently have any assets recorded at fair value on a recurring basis whose fair value was determined using Level 3 inputs and there were no transfers of Level 3 assets during the years ended December 31, 2025 and 2024.
The Company recognized the following assets at fair value on a recurring basis in the consolidated balance sheets:
Fair Value Measurements at Reporting Date Using
(in thousands)TotalLevel 1Level 2Level 3
As of December 31, 2025
Mutual funds(1)
$47,713 $47,713 $— $— 
Money market funds(1)
4,281 — 4,281 — 
Total$51,994 $47,713 $4,281 $— 
As of December 31, 2024
Mutual funds(1)
$43,887 $43,887 $— $— 
Money market funds(1)
5,439 — 5,439 — 
Total$49,326 $43,887 $5,439 $— 
(1)The current assets at fair value noted above are presented in prepaid expenses and other current assets in the consolidated balance sheets. The long-term assets at fair value noted above are presented in investments for employee benefit plans, at fair value in the consolidated balance sheets.
Other Financial Instruments Disclosure
The Company believes that the fair values of its current assets and current liabilities approximate their reported carrying amounts due to the short-term nature of these items. In addition, the interest rate on the senior unsecured revolving credit facility adjusts frequently based on current market interest rates; therefore, the Company believes the carrying amount approximates the fair value.
The fair values of the Company's senior unsecured notes are classified as Level 2 because the significant inputs are observable in an active market. Refer to Note 9 for additional information on debt. As of December 31, 2025 and 2024, the carrying amounts and the fair values were as follows:
December 31, 2025December 31, 2024
(in thousands)Carrying AmountFair ValueCarrying AmountFair Value
2019 Senior Notes Due 2029$397,643 $389,612 $397,042 $371,600 
2020 Senior Notes Due 2031$446,910 $428,963 $446,300 $405,351 
2024 Senior Notes Due 2034$589,936 $612,612 $588,764 $601,836 
The fair value estimates are determined at a specific point in time, are subjective in nature, and involve uncertainties and matters of significant judgment. The settlement of such fair value amounts may not be possible or a prudent management decision.

Historical Timeline

Fiscal YearFiled
2025Feb 19, 2026Showing above
2024Feb 20, 2025
2023Feb 20, 2024
2022Mar 1, 2023
2021Feb 24, 2022
2020Feb 26, 2021
2019Mar 2, 2020
2018Feb 26, 2019
2017Mar 1, 2018
2016Feb 27, 2017
2015Feb 29, 2016

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

Other Available Disclosures

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