Choice Hotels International, Inc. (CHH - Free Report) has partnered with Ash Properties to develop a five-story Cambria Hotel in Jacksonville, FL This 132-room upscale hotel is likely to open in 2020.
Notably, this latest move underscores the company’s efforts to expand its footprint globally and strengthen its upscale category. Driven its expansion strategy, shares of Choice Hotels have gained 45.6% in the past two years compared with the industry’s 13.4% rally.
Strategic Expansion Bodes Well
Choice Hotel's riveting growth potential is backed by continual expansion of brands. Also, its portfolio of well-segmented brands is getting stronger. Backed by continuous enhancement of the mid-scale brand and the acquisition of the WoodSpring brand as well as transformation and advancement of the Comfort and Cambria brands, Choice Hotels is poised for growth in 2018.
Choice Hotels relies heavily on expansion in both domestic as well as international markets. Apart from constant franchise expansion, the company recently added 239 new extended-stay hotels in 35 states to its portfolio through the acquisition of Woodspring Suites.
By the beginning of 2019, Choice Hotels expects to operate 250 hotels under Woodspring. In the first nine months of 2018, the company opened 11 WoodSpring hotels in top markets like Chicago, Seattle, Charlotte and Detroit. Additionally, in the fourth quarter, the company finalized an agreement with a developer to build more than 20 additional WoodSpring Suites over the next four years. Net domestic unit growth for 2018 is expected to be 7-8%.
Meanwhile, management continues to expand its international footprint in new countries alongside domestic growth. In April, Choice Hotels announced a strategic alliance with Sercotel — a leading hotel operator and franchisor based in Spain. This alliance will enable the extension of Choice Hotels’ global footprint in Spain and other markets as well as create opportunities for additional hotel development across Europe and Latin America.
Choice Hotels, which share space with Extended Stay America, Inc. (STAY - Free Report) , has a Zacks Rank #3 (Hold).
Better-ranked stocks worth considering in the same space include Belmond Ltd. (BEL - Free Report) and Hyatt Hotels Corporation (H - Free Report) . Belmond sports a Zacks Rank #1 (Strong Buy), whereas Hyatt carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Belmond has an impressive long-term earnings growth rate of 15%.
Hyatt reported better-than-expected earnings in the trailing four quarters, the average being 29.2%.
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