Choice Hotels International, Inc. ( CHH Quick Quote CHH - Free Report) recently announced a strategic agreement with Penn National Gaming, Inc. ( PENN Quick Quote PENN - Free Report) to offer reciprocal earning and redemption benefits to members of Choice Privileges and Penn's mychoice loyalty program. Slated for a phased roll-out in 2021, the alliance will facilitate customers to earn and redeem Choice Privileges points and mychoice tier points at 22 Penn locations and more than 7,100 Choice-branded hotels. Moreover, members can gain access to gaming brands, such as Hollywood, Ameristar, and L'Auberge that include approximately 50,000 gaming machines, 1,300 table games as well as live racing and sports betting. Notably, the agreement signals an expansion in benefits for loyalty members of both companies. In this regard, Jamie Russo, vice president, loyalty programs and customer engagement, Choice Hotels, stated, “"We're constantly exploring new ways to provide our loyal guests with more options for their next adventure on the road while also being able to earn and redeem points. Our new collaboration offers a great opportunity for Choice Privileges members to enjoy thrilling experiences at Penn's properties around the country." Increased Focus on Loyalty Program Bode Well
Choice hotels loyalty program has been a key business driver amid the pandemic. Notably, the company is benefitting from its Choice Privileges Diamond Elite members, which contributed a higher percentage to overall revenues during third-quarter 2020 (on a year-over-year basis). Also, facilities such as revised guest cancellation policy and deferred expiration of loyalty points added to the positives. During the third quarter, the company’s loyalty contribution increased 120 basis points quarter over quarter.
Nonetheless, with the economies opening up and demand for travel rising, we believe that loyalty program enhancements will boost the ability to drive the franchisees’ top line. Price Performance
Coming to price performance, shares of Choice Hotels have gained 22.7% in the past six-months compared with the
industry’s 33.1% growth. Notably, the company is adhering to temporary closures, "shelter in place" orders, travel restrictions, cancellation of events, conferences and meetings, social-distancing measures as well as other governmental regulations to mitigate the spread of the coronavirus. We believe that the pandemic is likely to continue and have an adverse material impact on the company as well as the hospitality industry. However, continual expansion strategies as well as enhancement of the mid-scale brand along with the transformation and advancement of the Comfort brands are likely to help the company going forward. Also, Choice Hotels’ Ascend portfolio is doing solid business. Earnings estimates for 2021 have moved up in the past 60 days, depicting optimism regarding the stock’s growth potential. Zacks Rank & Key Picks
Choice Hotels currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are Mattel, Inc. ( MAT Quick Quote MAT - Free Report) and Vista Outdoor Inc. ( VSTO Quick Quote VSTO - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
2021 earnings for Mattel and Vista Outdoor are expected to surge 33.7% and 1,029.2%, respectively.
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration. Download Marijuana Moneymakers FREE >>