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Choice Hotels' Cambria Continues its Expansion Spree in 2020

Zacks Equity Research

After a stupendous run in 2019, Choice Hotels International, Inc. CHH continues to expand its footprint in the United States in 2020 as well. To this end, the company has announced the opening of Cambria Hotel Bloomington Mall of America. This marks the first property opening in 2020. It also marks the third collaboration of Ceres Enterprises and the Orlean Company to jointly own and operate the hotel.

In the past year, Cambria Hotels brand opened the doors to 11 hotels in major markets —representing more than 1,700 upscale rooms. The company increased this upscale brand's system size by 25%.

Notably, this property under the Cambria Hotels brand joins Cambria Hotel Minneapolis Maple Grove and the Cambria hotel planned for Downtown Minneapolis, which is expected to open in 2021.

The hotel offers easy access to the major corporations including Best Buy, Ecolab, General Mills, Target, UnitedHealth Group and U.S. Bancorp.

Strategic Expansion Bodes Well

Choice Hotels relies heavily on expansion in domestic as well as international markets. In third-quarter 2019, the hotelier awarded 100 total franchise agreements. Alongside domestic growth, the company continues to expand footprint in new countries. Key international operating markets include Spain, Colombia, Panama, the Caribbean and Canada.

Nonetheless, the Cambria Hotels brand has been doing solid business. In the first nine months of 2019, this brand’s RevPAR inched up 0.4%. Also, Cambria's business travel revenues increased 17% year over year during the third quarter.

Janis Cannon, senior vice president, upscale brands, Choice Hotels, stated, "We look forward to building on our coast-to-coast expansion in 2020 and expect to beat our openings record for a second-consecutive year, along with beginning construction on 14 hotels, in addition to the 26 already underway. That way, we can provide time-starved, modern business travelers with even more upscale options in central locations for years to come — like in Minneapolis to start this year."

With a pipeline of more than 79 hotels in third-quarter 2019, the Cambria Hotels brand anticipates to debut new hotels in cities that includes Detroit; Fort Lauderdale, FL; Louisville, KY; and Savannah, GA. Hotels are also expected to break ground in Cincinnati; Kansas City, MO; Santa Clara, CA; Spokane, WA; and Tampa, FL.

These efforts will help it attract business travelers, improve overall guest experience and increase RevPAR for 2020 as well as for the upcoming years.

Backed by impressive expansion strategies and strong brand presence, shares of Choice Hotels have gained 25.8% in the past year compared with the industry’s 23.1% rally.



Zacks Rank & Key Picks

Choice Hotels currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Few better-ranked stocks in the Zacks Consumer Discretionary sector are GP Strategies Corporation GPX, New Oriental Education & Technology Group Inc. EDU and Acushnet Holdings Corp. GOLF, each sporting a Zacks Rank #1.

GP Strategies has three-five year expected earnings per share growth rate of 15%.

New Oriental Education has trailing four-quarter positive earnings surprise of 12.1%, on average. The company’s earnings beat estimates in two of the last four quarters.

Acushnet Holdings 2020 earnings are expected to rise 6.1%.

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