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Choice Hotels Expands WoodSpring Brand, Eyes Top-Line Growth

Zacks Equity Research

Choice Hotels International, Inc. CHH announced the opening of WoodSpring Suites Portland North Gresham in Oregon. The 122-room hotel marks WoodSpring’s 250th property and the first hotel in Oregon.

The move underscores Choice Hotel’s heavy reliance on expansion in domestic as well as international markets. In the fourth quarter, this hotelier awarded 73 total franchise agreements, out of which 43 were domestic and 30 were international.

Alongside domestic growth, the company continues to expand the international footprint in many countries. Key international operating markets include Spain, Colombia, Panama, the Caribbean and Canada.

WoodSpring Adds Value

The recent hotel is part of Choice Hotel’s flagship brand, WoodSpring, which currently has 250 hotels. Apart from constant franchise expansions, Choice Hotels has added 239 extended-stay hotels in 35 states to the portfolio through the acquisition of Woodspring Suites in the past year.

In 2018, the company completed opening of additional 12 WoodSpring hotels in top markets like Chicago, Seattle, Charlotte and Detroit. Further, growth is likely to accelerate in 2019, with expected opening of additional 20 hotels. Choice Hotels expects to see Woodspring having 300 hotels by the end of 2020. Additionally, in January, the company finalized an agreement with a developer to build more than 27 additional WoodSpring Suites over the next four years.

The addition of Woodspring brand has been of vital importance to Choice Hotels. Since addition, WoodSpring’s revenues from website has increased 24%, call center conversion rates moved up 5.5% and corporate account business delivery increased 18%. This resulted in a 7.6% year-over-year RevPAR increase for WoodSpring.

Expansion to Facilitate Top-Line Growth & Counter Competition

We believe that by addition of hotels in the portfolio, Choice Hotels is aiming at revenue growth. In the fourth quarter of 2018, total revenues grew 10.6% from the year-ago quarter. The company expects net domestic unit growth of 2-3% in 2019.

We also believe that the continual addition of hotels will help Choice Hotels to fend off intense competition from the likes of Marriott MAR, Hilton HLT and Hyatt H.

Notably, shares of the company have gained 7% over the past six months, underperforming the industry’s rally of 13.8%.


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.

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