Choice Hotels (CHH) Enters 2024 With New Growth Initiatives

Personal Finance

Choice Hotels International, Inc. CHH plans on restyling and enhancing the on-property experiences of five of the eight brands across its upscale and upper upscale portfolio.

By leveraging the solid base of 400 upscale hotels and counting, along with new hotel openings comprising 19 properties under Ascend Hotel Collection and nine under Cambria Hotels, CHH aims to become the go-to franchisor for developers looking for differentiated products. Also, an 8% year-over-year increase in revenue per available room (RevPAR) for its Radisson brand is encouraging.

The primary factors that Choice Hotels is focusing on through its refurbishing efforts comprises enhancing guest experiences, commitment of being franchisee-friendly and continue investments to drive success.

The five brands to be redefined will include Radisson Blu, Radisson, Radisson Individuals, Cambria Hotels and Ascend Hotel Collection, with the enhancements starting with Radisson Blu through 2024.

Focus on Radisson Blu

The foundation of Radisson Blu was primarily based on three distinct brand pillars including experience or exciting comforts, design or Nordic nouveau and service or curatorial warmth.

Currently undergoing a $15 million renovation, the Radisson Blu Mall of America will showcase properties highlighting these pillars. This enhancement initiative for this property is aimed to make it an anchor hotel for the Radisson Blu brand.

Other Growth Initiatives Bode Well

Choice Hotels’ initiatives to expand in domestic and international markets bode well. In 2023, the newly-introduced Everhome Suites extended stay brand experienced a promising start, generating significant interest among developers with 60 ongoing projects. Given the solid appeal of this new product in the development community, CHH is optimistic in this regard and anticipates higher contracts moving into 2024.

Furthermore, Choice Hotels gains from economies of scale associated with the franchise business. 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, the company also collects marketing and reservation system fees to provide support activities for the franchise system. CHH’s 97% of revenues are generated from the franchise business.

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Shares of this global hotel franchisor gained 5% in the past three months compared with the Zacks Hotels and Motels industry’s 21.6% growth. Although shares have underperformed its industry, CHH’s consistent focus on executing its growth initiatives across its diverse portfolio of brands is likely to spark growth momentum in the upcoming period.

Zacks Rank & Key Picks

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

Here are some better-ranked stocks from the Zacks Consumer Discretionary sector.

H World Group Limited HTHT currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

It has a trailing four-quarter earnings surprise of 94.5%, on average. The stock has fallen 34% in the past year. The Zacks Consensus Estimate for HTHT’s 2024 sales and earnings per share (EPS) indicates an improvement of 7.9% and 9.8%, respectively, from the year-ago levels.

Atour Lifestyle Holdings Limited ATAT sports a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 15.5%, on average. The stock has fallen 33.7% in the past year.

The Zacks Consensus Estimate for ATAT’s 2024 sales and EPS implies growth of 14.2% and 48.6%, respectively, from the year-ago levels.

Acushnet Holdings Corp. GOLF currently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 49.9%, on average. The stock has gained 44.5% in the past year.

The Zacks Consensus Estimate for GOLF’s 2024 sales and EPS suggests growth of 2.5% and 5%, respectively, from the year-ago levels.

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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.

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