Choice Hotels International, Inc. is set to revamp and elevate the on-property experiences of five of its eight brands within its upscale and upper upscale portfolio. With a firm foundation of 400 upscale hotels and a growing count of new openings, including 19 properties under the Ascend Hotel Collection and nine under Cambria Hotels, CHH is positioning itself as the preferred franchisor for developers seeking distinct products. The company is also encouraged by an impressive 8% year-over-year increase in revenue per available room (RevPAR) for its Radisson brand.
In an effort to revitalize its properties, Choice Hotels is concentrating on enhancing guest experiences, demonstrating a commitment to being franchisee-friendly, and continuing to invest in strategies to drive success.
The five brands slated for redefinition are Radisson Blu, Radisson, Radisson Individuals, Cambria Hotels, and Ascend Hotel Collection, with the makeover commencing with Radisson Blu and scheduled for completion by 2024.
Revamping Radisson Blu
Rooted in three distinctive brand pillars – experience, design, and service, the foundation of Radisson Blu is undergoing a $15 million renovation. The Radisson Blu Mall of America will epitomize these pillars, with the initiative aimed at elevating it as the flagship hotel for the Radisson Blu brand.
Other Promising Initiatives
Choice Hotels’ initiatives to expand in both domestic and international markets are showing promise. The recently introduced Everhome Suites extended stay brand has garnered significant attention from developers, with 60 ongoing projects. The company is optimistic about the strong appeal of this new product in the development community and anticipates an increase in contracts heading into 2024.
Additionally, Choice Hotels benefits from economies of scale linked to the franchise business. Higher fees from franchisees and the transfer of cost burdens to franchises give the company operational advantages. Besides royalty fees and procurement services revenues, the company also collects marketing and reservation system fees for its franchise support activities, with 97% of its revenues stemming from the franchise business.
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While shares of the global hotel franchisor have gained 5% in the past three months, they have underperformed compared to the 21.6% growth of the Hotels and Motels industry as per Zacks. However, CHH’s consistent focus on executing growth initiatives across its diverse brand portfolio is expected to drive momentum in the near future.
Zacks Rank & Key Picks
Choice Hotels currently holds a Zacks Rank #3 (Hold).
Here are some better-ranked stocks from the Zacks Consumer Discretionary sector.
H World Group Limited currently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 94.5% and the Zacks Consensus Estimate for its 2024 sales and earnings per share (EPS) indicates significant improvement from the year-ago levels.
Atour Lifestyle Holdings Limited holds a Zacks Rank of 1 and has shown a trailing four-quarter earnings surprise, alongside a promising growth outlook for 2024 sales and EPS over the year-ago levels.
Similarly, Acushnet Holdings Corp. currently carries a Zacks Rank #2 (Buy), showing promising earnings surprises and sales and EPS growth projections for 2024.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
