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Here's Why Investors Should Hold on to Choice Hotels (CHH)
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Choice Hotels International, Inc. (CHH - Free Report) is benefiting from expansion efforts, acquisition, loyalty program and solid growth of its Cambria Brand. Improving RevPAR is also aiding the company’s growth.
This Zacks Rank #3 (Hold) company has an impressive long-term earnings growth rate of 11.6%. The company’s sales and earnings in 2023 are expected to witness growth of 8.9% and 13.3%, respectively.
Let’s delve deeper.
Growth Drivers
Choice Hotels relies heavily on expansion in domestic and international markets. In third-quarter 2022, the company awarded 123 domestic franchise agreements (representing 10,551 rooms) compared with 89 franchise agreements reported in the prior-year quarter. CHH reported sequential increases in its business and group travel demand, driven by a rise in extended vacations, household relocations and temporary remote work assignments.
Coming to the extended-stay portfolio, the company witnessed rapid expansion, reaching 468 domestic hotels as of Sep 30, 2022. This marked an increase of 45% on a year-over-year basis. During the third quarter of 2022, the company unveiled its first extended-stay hotel in Corona, CA.
Along with domestic growth, the company continues to expand its international footprint in new countries. Key international operating markets include Spain, Colombia, the Caribbean and Canada.
Relatively new to the midscale portfolio, Clarion Pointe — part of the popular Clarion brand, is experiencing great success. Clarion Point brand resonates well with guests. The brand has 50 hotels open in the United States and 10 additional hotels awaiting conversion this year.
Image Source: Zacks Investment Research
The company is also focusing on its loyalty program to drive growth. During third-quarter 2021, the company announced a collaboration with a trusted digital-asset marketplace – Bakkt. The initiative enables Choice Privileges loyalty members to unlock new redemption opportunities by converting their rewards points to cash and for purchasing Bitcoin.
Also, it allows guests to transfer their points to a friend or even redeem them online or in-store through Apple Pay and Google Pay. Backed by solid revenue contributions along with new customer additions, the company remains optimistic for growth in the upcoming periods.
CHH is gaining from acquisition of Radisson Hospitality. During third-quarter 2022, the addition of the Radisson upscale brands increased Choice's global footprint in the upscale segment to over 74,000 rooms. The Radisson Americas portfolio contributed $40.2 million to total revenues and $6.8 million in adjusted EBITDA.
Given growth prospects with respect to penetration in the upscale market and value creation efforts, the company is optimistic in this regard. The acquisition-backed enhancements with respect to the company’s long-term asset-light strategy (of growing its business in higher revenue travel segments and locations) and strengthening of Cambria’s growth prospects are likely to add to the positives.
As of Sep 30, 2022, the Radisson Hotels Americas brands had 69 franchised hotels with 8,756 rooms under construction, awaiting conversion or approval for development in its global system.
Shares of the company have increased 7.4% in the past six months compared with the industry’s increase of 15.5%.
Key Picks
Some better-ranked stocks in the Zacks Consumer Discretionary sector are World Wrestling Entertainment, Inc. , Royal Caribbean Cruises Ltd. (RCL - Free Report) and Manchester United plc (MANU - Free Report) .
World Wrestling Entertainment currently sports a Zacks Rank #1 (Strong Buy). WWE has a trailing four-quarter earnings surprise of 25.2%, on average. The stock has increased 70.4% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for WWE’s 2023 sales and earnings per share (EPS) indicates a rise of 4.9% and 10.7%, respectively, from the year-ago period’s estimated levels.
Royal Caribbean Cruises sports a Zacks Rank #1, at present. Shares of RCL have surged 84.7% in the past six months.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates a rise of 43.6% and 138.3%, respectively, from the year-ago period’s estimated levels..
Manchester United currently sports a Zacks Rank #1. MANU has a trailing four-quarter earnings surprise of 34.4%, on average. Shares of MANU have gained 63.4% in the past year.
The Zacks Consensus Estimate for MANU’s fiscal 2024 sales and EPS indicates a rise of 11.4% and 27.8%, respectively, from the year-ago period’s estimated levels.
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Here's Why Investors Should Hold on to Choice Hotels (CHH)
Choice Hotels International, Inc. (CHH - Free Report) is benefiting from expansion efforts, acquisition, loyalty program and solid growth of its Cambria Brand. Improving RevPAR is also aiding the company’s growth.
This Zacks Rank #3 (Hold) company has an impressive long-term earnings growth rate of 11.6%. The company’s sales and earnings in 2023 are expected to witness growth of 8.9% and 13.3%, respectively.
Let’s delve deeper.
Growth Drivers
Choice Hotels relies heavily on expansion in domestic and international markets. In third-quarter 2022, the company awarded 123 domestic franchise agreements (representing 10,551 rooms) compared with 89 franchise agreements reported in the prior-year quarter. CHH reported sequential increases in its business and group travel demand, driven by a rise in extended vacations, household relocations and temporary remote work assignments.
Coming to the extended-stay portfolio, the company witnessed rapid expansion, reaching 468 domestic hotels as of Sep 30, 2022. This marked an increase of 45% on a year-over-year basis. During the third quarter of 2022, the company unveiled its first extended-stay hotel in Corona, CA.
Along with domestic growth, the company continues to expand its international footprint in new countries. Key international operating markets include Spain, Colombia, the Caribbean and Canada.
Relatively new to the midscale portfolio, Clarion Pointe — part of the popular Clarion brand, is experiencing great success. Clarion Point brand resonates well with guests. The brand has 50 hotels open in the United States and 10 additional hotels awaiting conversion this year.
Image Source: Zacks Investment Research
The company is also focusing on its loyalty program to drive growth. During third-quarter 2021, the company announced a collaboration with a trusted digital-asset marketplace – Bakkt. The initiative enables Choice Privileges loyalty members to unlock new redemption opportunities by converting their rewards points to cash and for purchasing Bitcoin.
Also, it allows guests to transfer their points to a friend or even redeem them online or in-store through Apple Pay and Google Pay. Backed by solid revenue contributions along with new customer additions, the company remains optimistic for growth in the upcoming periods.
CHH is gaining from acquisition of Radisson Hospitality. During third-quarter 2022, the addition of the Radisson upscale brands increased Choice's global footprint in the upscale segment to over 74,000 rooms. The Radisson Americas portfolio contributed $40.2 million to total revenues and $6.8 million in adjusted EBITDA.
Given growth prospects with respect to penetration in the upscale market and value creation efforts, the company is optimistic in this regard. The acquisition-backed enhancements with respect to the company’s long-term asset-light strategy (of growing its business in higher revenue travel segments and locations) and strengthening of Cambria’s growth prospects are likely to add to the positives.
As of Sep 30, 2022, the Radisson Hotels Americas brands had 69 franchised hotels with 8,756 rooms under construction, awaiting conversion or approval for development in its global system.
Shares of the company have increased 7.4% in the past six months compared with the industry’s increase of 15.5%.
Key Picks
Some better-ranked stocks in the Zacks Consumer Discretionary sector are World Wrestling Entertainment, Inc. , Royal Caribbean Cruises Ltd. (RCL - Free Report) and Manchester United plc (MANU - Free Report) .
World Wrestling Entertainment currently sports a Zacks Rank #1 (Strong Buy). WWE has a trailing four-quarter earnings surprise of 25.2%, on average. The stock has increased 70.4% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for WWE’s 2023 sales and earnings per share (EPS) indicates a rise of 4.9% and 10.7%, respectively, from the year-ago period’s estimated levels.
Royal Caribbean Cruises sports a Zacks Rank #1, at present. Shares of RCL have surged 84.7% in the past six months.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates a rise of 43.6% and 138.3%, respectively, from the year-ago period’s estimated levels..
Manchester United currently sports a Zacks Rank #1. MANU has a trailing four-quarter earnings surprise of 34.4%, on average. Shares of MANU have gained 63.4% in the past year.
The Zacks Consensus Estimate for MANU’s fiscal 2024 sales and EPS indicates a rise of 11.4% and 27.8%, respectively, from the year-ago period’s estimated levels.