Yahoo Finance Can Choice Hotels (CHH) Expansion Efforts Bring Back Lost Sheen?
Shares of Choice Hotels International, Inc. CHH have slumped 27.5% in the past six months, compared with the industry’s decline of 22.2%. However, the company’s performance is likely to improve owing to robust expansion efforts, a loyalty program and robust growth of the Cambria brand. Let’s delve deeper.
Factors Likely to Drive Growth
Choice Hotels relies heavily on expansion in both domestic and international markets. In first-quarter 2022, the company awarded 93 domestic franchise agreements, reflecting a surge of 45% year over year. CHH reported sequential increases in its business and group travel demand, courtesy of a rise in extended vacations, household relocations and temporary remote work assignments. The transition of leisure travel into mainstream business contributed to the performance. Backed by the positive trends and segment-specific tailwinds, the company stated that RevPAR and adjusted EBITDA had surpassed 2019 levels. Going forward, CHH anticipates the momentum to continue on the back of investments in infrastructure build and onshoring of the U.S. supply chain.
Coming to the extended-stay portfolio, the company witnessed rapid expansion, taking the count to 478 domestic hotels as of Mar 31, 2022. This highlighted an increase of 5.3% on a year-over-year basis. During the first quarter of 2022, the company awarded 29 extended-stay domestic franchise agreements, reflecting growth of three times and two times from 2021 and 2019 levels, respectively. As of Mar 31, the domestic extended-stay pipeline comprised 350 hotels awaiting conversion, under construction or approved for development.
The Zacks Rank #2 (Buy) company’s Cambria portfolio has been doing solid business. Cambria has significantly outperformed the upscale soft brands (as well as the segment on the whole) in terms of year-over-year RevPAR change. The brand has been well received on account of smart-conversion opportunities. During first-quarter 2022, the company broke ground for 19 Cambria projects, taking the total unit count to 58. CHH stated that it has additional 68 domestic properties in the pipeline. Backed by solid consumer confidence and the attractiveness of Choice Hotels value proposition, the company anticipates boosting the revenue intensity of its system by adding more properties. In 2022, the company anticipates opening 10 additional Cambria hotels.
Choice Hotels continues to focus on its loyalty program to drive growth. During third-quarter 2021, the company announced a collaboration with a trusted digital-asset marketplace — Bakkt. The initiative enables Choice Privileges loyalty members to unlock new redemption opportunities by converting their rewards points to cash or purchasing Bitcoin.
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Other Key Picks
Some other top-ranked stocks in the Zacks Consumer Discretionary sector are Bluegreen Vacations Holding Corporation BVH, Civeo Corporation CVEO and Boyd Gaming Corporation BYD.
Bluegreen Vacations sports a Zacks Rank #1 (Strong Buy). BVH has a trailing four-quarter earnings surprise of 85.9%, on average. The stock has increased 40.4% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BVH’s current financial year sales and earnings per share (EPS) indicates growth of 11.2% and 35.1%, respectively, from the year-ago period’s reported levels.
Civeo sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 1,565.1%, on average. Shares of the company have increased 37.5% in the past year.
The Zacks Consensus Estimate for CVEO’s 2022 sales and EPS suggests growth of 12.5% and 1,450%, respectively, from the year-ago period’s levels.
Boyd Gaming carries a Zacks Rank #2 (Buy). BYD has a trailing four-quarter earnings surprise of 24.2%, on average. Shares of the company have declined 18.7% in the past year.
The Zacks Consensus Estimate for Boyd Gaming’s current financial year sales and EPS suggests growth of 3% and 6.8%, respectively, from the year-ago period’s reported levels.
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Choice Hotels International, Inc. (CHH) : Free Stock Analysis Report
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