CHH Comfort Program Gains Impetus

Choice Hotels International ( CHH - Snapshot Report ) recently announced that it’s Comfort ‘Redefined & Redesigned’ program has gained impetus with the opening of five new Comfort Inn brand hotels to effect a surge in guest satisfaction. The company launched the program to attain guest satisfaction by removal of underperforming hotels, opening new hotels and restoring profitable ones.

Choice Hotels opened the five new Comfort Inn hotels earlier in 2012. The hotels were opened in five geographically diverse U.S. markets - Texas, North Dakota, Montana, New Mexico and Wyoming. As per the Consumer research undertaken by the company, the guest count was seen to nearly double in response to new hotel design, with the guests even willing to pay significantly more on average per night.

Comfort Inn and Comfort Suites are the iconic brands of Choice Hotels. The brands strive for a warm atmosphere and helpful service for customers. Comfort Inn hotels are situated in around 2000 locations and Comfort Suites in 600 locations worldwide.

As a part of Comfort ‘Redefined & Redesigned’ program, Choice hotels has renewed the existing Comfort Inn and Comfort Suites hotels for upper midscale and midscale guests, based on thorough research. In 2011, the program had successfully led to increased contentment factor for Comfort Inn visitors. It involved the inclusion of the new ‘Your Morning breakfast’ program and flat panel TV in hotels. The Comfort Suites which target business travelers, have also been upgraded with the addition of new in-room multi-function charging stations in all hotels.

In 2012, Choice Hotels will put into practice the ‘Your First Impression’ program across all Comfort Inn Hotels. The program is intended to deliver steady, up-to-date guests experience, with the inclusion of a new bedding and pillow package. Choice Hotels have several other programs in its development pipeline for 2014 and 2015. Choice Hotels have plans to add the new ‘Your Suite Success Fitness Centers’ and the ‘Your Suite Success Market Place’ in Comfort Suites hotels in 2013.

With the addition of all these amenities in Comfort Inn and Comfort Suites branded hotels, around 70% of the existing Comfort system hotels will complete a Property Improvement Plan by the end of 2015. To further boost the program, Choice Hotels has already removed some hotels from its roster which did not meet the Comfort standards. The company has plans to remove around 10% of the underperforming Comfort Inn and Comfort Suites branded hotels in the coming years.

Choice hotels have been on a development spree in relation to its other brands too. The company recently announced the opening of hotels under its upscale brand - Ascend Collection – in key Canadian markets. In addition, Choice Hotels also announced that it will open Cambia suites branded hotels in New Jersey, Florida and Pennsylvania by 2013.

Founded in 1981, Choice Hotels International has franchised around 6,200 hotels, while 375 hotels remain under construction, or have been approved for development in U.S. On the other hand, some 75 hotels are under construction, or have been approved for development on the international front, as of June 30, 2012.

The company, which competes with the likes of Wyndham Worldwide Corporation ( WYN - Analyst Report ) and The Marcus Corporation ( MCS - Snapshot Report ) , is expected to release its third-quarter 2012 results on October 24, 2012. The Zacks Consensus Estimate for the third quarter is currently pegged at 62 cents per share.

We currently have a long-term Neutral recommendation on the stock. However, it carries a short-term Zacks #2 Rank (Buy).