Choice Hotels International, Inc. (CHH - Free Report) recently announced the opening of Sleep Inn & Suites Yukon hotel in Okla under its midscale brand Sleep Inn. The hotel is owned and operated by Star Lodging, LLC.
This four-storied hotel with 82 guest rooms lies in close proximity to the Oklahoma City Airport and the historic Route 66. It is also close to a number of recreational destinations. The hotel is part of the company’s Designed to Dream properties, offering the lowest build costs for owners in the midscale segment.
The hotel opening underscores the company’s solid commitment toward continuous enhancement of its mid-scale brand by adding units, both domestically and globally. Presently, the Sleep Inn brand consists of about 550 properties open or under construction worldwide.
Continual Expansion Holds Key
Choice Hotels, one of the largest hotel franchisors in the world with more than 6,900 hotels across 40 countries, relies heavily on expansion in domestic as well as international markets. Apart from constant franchise expansion, the company recently added 239 new extended-stay hotels in 35 states through the acquisition of WoodSpring Suites. Choice Hotels foresees 250 WoodSpring hotels by the start of 2019.
Notably, in the first nine months of 2018, Choice Hotels 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 at 7-8%.
Thus, the company’s focus on continual expansion of brands is likely to drive revenues. In fact, in third-quarter 2018, total revenues of $291.5 million increased 8% from a year ago. Adjusted earnings of $1.24 in the quarter rose 31% from the year-ago quarter. Increased demand for lodging along with Choice Hotel’s continual expansion strategies through acquisitions and franchise agreements has led to the company’s top- and bottom-line growth on a year-over year basis.
Choice Hotels is facing intense competition from both large hotel chains like Marriott (MAR - Free Report) , Hyatt (H - Free Report) and Hilton (HLT - Free Report) as well as smaller independent local hospitality providers. Thus, we believe the latest move is Choice Hotels’ strategy to counter competition and sustain its brand presence. Meanwhile, its shares have declined 8.7% in the past year, compared with the industry’s fall of 28.7%.
Choice Hotels carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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