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Choice Hotels (CHH) Sets Foot in Omaha, Expands Cambria Brand

Zacks Equity Research

Choice Hotels International, Inc. CHH, which banks on strong brand presence and continual expansion for growth, has announced the opening of a Cambria Hotel in Omaha, NE. This 128-room upscale hotel is a first in the state of Nebraska. The company’s Cambria brand is present in Chicago, Indianapolis, Columbus, Ohio, and Madison. The company is also likely to open hotels in Cincinnati, Milwaukee, and Minneapolis.

The company is confident about the success of its hotel in Omaha due to growing visitors in the city. The company said that more than 12 million people annually visit Omaha.

Notably, the latest move underscores the company’s efforts to expand its footprint globally and strengthen the upscale category. Driven by its expansion strategy, shares of Choice Hotels have gained 39.8% in the past two years compared with the industry’s 11.5% rally.

Expansion to Drive Growth

Choice Hotel's riveting growth potential is backed by continual expansion of brands. Also, its portfolio of well-segmented brands is getting stronger. Choice Hotels relies heavily on expansion in both domestic as well as international markets. Apart from constant franchise expansion, the company recently added 239 new extended-stay hotels across 35 states to its portfolio through the acquisition of Woodspring Suites.

In the first nine months of 2018, the company opened 11 WoodSpring hotels in top markets like Chicago, Seattle, Charlotte and Detroit. Additionally, in the fourth quarter, the company finalized an agreement with a developer to build more than 20 additional WoodSpring Suites over the next four years. Net domestic unit growth for 2018 is expected to be 7-8%.

Meanwhile, management continues to expand its international footprint in new countries, alongside domestic growth. In April, Choice Hotels announced a strategic alliance with Sercotel — a leading hotel operator and franchisor based in Spain. This alliance will enable the extension of Choice Hotels’ global footprint in Spain and other markets, as well as create opportunities for additional hotel development across Europe and Latin America.

Choice Hotels, which shares space with Extended Stay America, Inc. STAY and Marriott Vacations Worldwide Corporation VAC, has a Zacks Rank #3 (Hold).

Key Picks

A better-ranked stock in the same space includes Belmond Ltd. BEL, sporting a Zacks Rank #1 (Strong Buy). The company delivered better-than-expected earnings in the trailing two quarters. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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