Choice Hotels International, Inc. (CHH Quick QuoteCHH - Free Report) continues to boost its domestic footprint, unveiling 60 hotels under its Clarion Pointe brand. With more than 50 hotels in the pipeline, the company is focused on its further expansion.

Recent openings in various locations have further fueled interest in the Clarion Pointe brand. These include Clarion Pointe Tampa East Near Fairgrounds and Casino in Tampa, FL, Clarion Pointe Prescott Valley in Prescott Valley, Arizona, and Clarion Pointe Sevierville – Pigeon Forge in Sevierville, TN. These new additions showcase the brand's expansion and its commitment to offering guests exceptional experiences in diverse destinations.

Emphasis On Franchise Business Bodes Well

Choice Hotels gains from economies of scale associated with the franchise business. Accordingly, higher fees from franchisees and transference of cost burden to franchises provide the company with operational advantages. Apart from royalty fees and procurement-services revenues, Choice Hotels also collect marketing and reservation system fees to provide support activities to the franchise system.

The company’s solid commitment toward franchisee profitability is driving incremental revenues. During the first quarter of 2023, the company awarded seven new agreements and four new properties to its global portfolio under the Ascend Brand collection. As of Mar 31, 2023, the company reported 988 franchised hotels (with 96,111 rooms) under construction, awaiting conversion, approved for development or committed to future franchise development in its global system. This compares to 925 franchised hotels (84,210 rooms) in the prior-year period.

Approximately 94% of the pipeline is located in the United States and approximately 77% of the domestic pipeline comprises new construction. During the first quarter, new applications for domestic franchise agreements increased 13% year over year. We believe that franchising will facilitate ROE expansion and earnings growth over the long term.

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In the past year, shares of Choice Hotels have increased 7.8% against the industry’s 27% rise.

Zacks Rank & Other Key Picks

Choice Hotels currently carries a Zacks Rank #3 (Hold)

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The Zacks Consensus Estimate for BVH’s 2023 sales and EPS indicates a rise of 3.6% and 17.6%, respectively, from the year-ago period’s levels.