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Choice Hotels Inks Deal to Build 27 WoodSpring Suites Hotels

Zacks Equity Research

Choice Hotels International, Inc. CHH has signed an agreement with CHECO Purchase Company, LLC, to develop a chain of 27 WoodSpring Suites hotels. The company plans to build hotels in Michigan and North Carolina and across the metropolitan areas of Jacksonville, FL and Nashville, TN.

Notably, this latest strategic move underscores the company’s efforts to expand its footprint and strengthen its upscale category. Driven by expansion plan, shares of Choice Hotels have gained 8.4% in a month, outperforming the industry’s 5% increase.

We believe, new hotels will boost the company’s revenues as WoodSpring Suites brand has been performing exceedingly well of late. The WoodSpring Suites brand has more than 100 hotels in its pipeline. The company expects to open 35 hotels in 2019. In the United States, it was awarded 75 new WoodSpring Suites franchise agreements in 2018.

 

Strategic Expansion to Drive Growth

Choice Hotel's riveting growth potential is backed by a continual expansion of brands. Also, its portfolio of well-segmented brands is growing stronger. Choice Hotels relies heavily on expansion in both domestic and international markets.

Meanwhile, management steadily strengthens its international foothold in new countries alongside domestic growth. Last April, Choice Hotels announced a strategic alliance with Sercotel, a leading hotel operator and franchisor based in Spain. This tie-up will enable the extension of Choice Hotels’ global base in Spain and other markets as well as create opportunities for additional hotel development across Europe and Latin America.

By consistent enhancement of the mid-scale brand and the acquisition of the WoodSpring brand besides transformation and advancement of the Comfort and Cambria brands, Choice Hotels is poised for growth in 2019.

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

Key Pick

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

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