Choice Hotels (CHH) Boosts Extended Stay Line-up With New Hotel
Choice Hotels International, Inc. CHH recently announced the opening of its Suburban Studios hotel in Bloomington, MN. This marks the company’s 100th hotel opening.
Suburban Studios caters to the needs of long-term travelers by offering spacious rooms, in-room kitchens, contemporary design, discounted rates for longer stays and flexible booking options. It also provides state-of-the-art cloud-based solutions and learning resources to maximize success from the initial stages of opening and beyond.
Ron Burgett, senior vice president of extended stay development at Choice Hotels, expressed excitement about reaching this milestone and highlighted the brand's innovative approach that combines swift conversions with a robust business strategy.
Converting preexisting properties into Suburban Studios within a rapid three- to four-month period has played a crucial role in the brand's success. This strategy is in sync with the growing need for extended-stay lodgings, an area where Choice Hotels has taken the lead, effectively leveraging opportunities for conversions.
A key factor in this success has been Choice Hotels' introduction of the "Kitchen in a Box," an adaptable kitchen design package tailored for Suburban Studios. This modular approach has attracted developers, with a majority adopting this system to enter the extended-stay market. As of Sep 30, 2023, the domestic extended-stay pipeline increased 12% year over year to more than 47,000 rooms.
Despite challenges like higher interest rates, CHH remains optimistic about its pipeline of extended-stay projects. The growth in extended-stay hotel openings and a robust domestic pipeline underline the appeal and strength of the firm’s extended-stay platform.
Price Performance
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In the past six months, shares of Choice Hotels have gained 0.7% compared with the industry’s 17% growth.
A volatile macroeconomic environment primarily caused the downside. The company believes that if inflation rates rise moderately, it will likely lead to comparable or even higher increases in hotel room rates. CHH is monitoring future inflation trends and assessing any potential impacts.
Nevertheless, the company is optimistic about synergies through the Radisson Hotels Americas integration and momentum in the pipeline of conversion projects. Also, the focus on continual expansion strategies through acquisitions and franchise agreements bodes well.
Going forward, the company will focus on expansion strategies, enhancement of the mid-scale brands and transformation and advancement of the Comfort brands to drive growth. Earnings estimates for 2024 have increased in the past 30 days, depicting analyst optimism regarding the stock’s growth potential.
Zacks Rank & Key Picks
Choice Hotels currently carries a Zacks Rank #3 (Hold).
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