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Baron Funds Comments on Choice Hotels International

- By Holly LaFon

Shares of Choice Hotels International, Inc. (CHH), the largest hotel franchisor in the U.S., fell in the second quarter due to slowed growth in revenue per available room (RevPAR) and unit growth that slightly missed Street estimates. While we agree RevPAR trends are a concern, Choice's revenue is fee-driven and therefore is less impacted by RevPAR than its franchisees. We believe Choice will continue to generate strong cash flow and use it to repurchase shares, issue dividends, and invest in its new higher-end Cambria brand and vacation rental business. (David Baron)

Baron Focused Growth Fund second quarter 2016 commentary.

This article first appeared on GuruFocus.