Avis Budget Chosen As Choice Hotels' Mobility Solution Vendor

Avis Budget Group Inc. (NASDAQ:CAR) was recently selected as the Qualified Vendor for mobility solutions by hospitality holding company Choice Hotels International, Inc. (NYSE:CHH) . This is expected to drive Avis Budget’s revenues through the expansion of customer base.

The multi-year agreement will help Avis Budget promote its car rental services, namely, Avis Car Rental and Budget Car Rental, in order to offer exclusive mobility services to more than 33 million Choice Hotels customers across the globe. This will further help the company promote its products and money-saving offers by leveraging on Choice Hotels’ varied marketing channels for incremental geographical coverage.

With over 6,500 franchised hotels in more than 40 countries, Choice Hotels boasts more than 500,000 rooms worldwide. In addition, the company has over 800 hotels in its development pipeline as of Sep 30, 2017. This opens up a huge revenue-generating opportunity for Avis Budget through enhanced marketing of products and services.

Avis Budget intends to aggressively increase the number of company-operated locations in fast-growing markets. The company is particularly focused on expanding its Budget brand, taking its multi-brand strategy to the next level. However, Avis Budget’s year-to-date average decline of 2.2% has underperformed the industry’s gain of 5.7%.

Nevertheless, we envision strong U.S. demand trends for the company as travel volumes continue to rise. Anticipating strong travel by leisure and commercial travelers, Avis Budget’s acquisitions and collaborations are expected to fortify its operational foothold in global markets. Moreover, sustained productivity growth, implementation of pricing initiatives and potential revenue-generating synergies from various acquisitions bode well.

Avis Budget currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in the industry are WageWorks, Inc. (NYSE:WAGE) and SPS Commerce, Inc. (NASDAQ:SPSC) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

WageWorks has a long-term earnings growth expectation of 15%.

SPS Commerce has a long-term earnings growth expectation of 25%.

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