Choice Hotels International (CHH) risk factors, FY2024 10-K

Business and Operational Risks

1. 01We are subject to the operating risks common in the lodging and franchising industries
2. 02We depend on the skill, ability, and decisions of third-party operators
3. 03We are subject to certain risks related to our indebtedness
4. 04We are subject to certain risks related to litigation filed by or against us
5. 05Our international operations are subject to political and monetary risks
6. 06Labor shortages could restrict our ability and the ability of franchisees to operate hotel properties or grow our business or result in increased labor costs that could adversely affect the results of operations
7. 07Climate change and sustainability related concerns could have a material adverse effect on our business and results of operations

Risks Related to Our Franchise System

1. 08We may not grow our franchise system or we may lose business by failing to compete effectively or by failing to manage the reputations of our brands
2. 09We may not achieve our objectives for growth in the number of franchised hotels
3. 10We may have disputes with the owners of our franchised hotels or their representative franchisee associations
4. 11Under certain circumstances our franchisees may terminate our franchise contracts
5. 12Deterioration in the general financial condition of our franchisees may adversely affect our results
6. 13the franchisee for non-payment of franchise fees or require the transfer of ownership of the franchise. In those instances where ownership is transferred, there can be no assurance that the new owners will choose to affiliate with our brands
7. 14We may not be able to recover advances for system services that we may at certain times provide to our franchisees
8. 15Our franchisees may fail to make the investments necessary to maintain or improve their properties, preference for our brands and our reputation could suffer and our franchise agreements with these franchisees could terminate
9. 16We and our franchisees are reliant upon information technology systems to operate our business and remain competitive, and any disruption or malfunction or failure to adapt to technological developments could adversely affect our business

Risks Related to Our Brands

1. 17We are subject to the risks relating to the acquisition of new brands or lines of business
2. 18New brands may not be accepted by franchisees and consumers
3. 19Increasing use by consumers of alternative internet reservation channels may decrease loyalty to our brands and our existing distribution channels, and may influence our distribution strategies, in ways that may adversely affect us
4. 20An increase in the use of AI enabled third-party internet services to book online hotel reservations could adversely impact our business
5. 21Development and brand support activities that involve our co-investment or financing and guaranty support for third parties or development of hotels may result in losses
6. 22Our involvement in hotel ownership and hotel development activities to stimulate the development of new brands may result in exposure to losses and be disruptive to our asset-light business model
7. 23Failure to protect our trademarks and other intellectual property could impact our business

Risks Related to Different Lines of Business

1. 24We may not be able to generate significant procurement services revenue from our platform business
2. 25In the past, we have both acquired and launched internally developed business divisions. We expect to continue to invest in alternate lines of business and may in the future invest in other new business strategies, products, services, and technologies
3. 26Investing jointly through affiliates decreases our ability to manage risk

Risks Related to Cybersecurity and Data Privacy

1. 27We are subject to the risks related to cybersecurity
2. 28Failure to maintain the integrity of internal or customer data could result in faulty business decisions, damage of reputation, and/or subject us to costs, fines or lawsuits
3. 29Privacy laws and regulations could adversely affect our ability to transfer guest data and market our products effectively and could be applied to impose costs, fines, and operational conditions on our business in the event of perceived non-compliance, and could otherwise impact our results from operations

Legal and Regulatory Risks

1. 30Government franchise and tax regulation could impact our business
2. 31We may be deemed to be a joint employer with our franchisees under certain new laws, rules, and regulations
3. 32Anti-takeover provisions may prevent a change in control
4. 33The concentration of share ownership may influence the outcome of certain matters