Choice Hotels Expands Cambria Brand In Texas, Eyes Growth

Choice Hotels International, Inc. (NYSE:CHH) continues to expand through franchise agreements. To this end, the company recently announced the opening of the Cambria Hotel Houston Downtown Convention Centre, adding to its upscale Cambria brand.

Notably, this 21-story, 226-roomed property is the company’s first hotel under the Cambria brand in Houston, TX. Moreover, the Cambria Hotel Houston Downtown Convention Centre is sister property to the Cambria Hotel Downtown Dallas.

The Cambria Hotel Houston Downtown Convention Centre draws inspiration from Houston’s unique history and culture that include stone carvings from1920s building, custom artwork highlighting the city's oil industry roots, storied cowboy culture, and NASA influence. This provides exquisite experience to its guests. Senior Vice President of Upscale Brands, Janis Cannon stated, "The grand opening of the Cambria Hotel Houston Downtown Convention Center is a proud moment for us, as it marks an exciting new chapter for the Great Southwest Building and introduces guests to little luxuries only Cambria offers to make every stay feel indulgent."

Choice Hotels is confident about the success of this new property — situated at 1314 Texas Ave — that offers easy access to the George R. Brown Convention Center and Minute Maid Park, the city's home stadium for professional baseball team. Additionally, it is in close proximity to the city’s several well-known corporations and employers like Chevron Corp. (NYSE:CVX), JPMorgan Chase & Co (NYSE:JPM). and United Airlines, as well as many entertainment, dining and performing arts offerings.

Strategic Expansion to Drive Growth

Alongside domestic growth, the company continues to expand international footprint. It operates in key international markets including Spain, Colombia, Panama, the Caribbean and Canada.

Recently, Choice Hotels plans to open two Cambria Hotels in Midwestern states. To this end, the company recently signed franchise agreements with Lloyd Hospitality and MWA LLC to open Cambria Hotels in Kansas City, MO, and Indianapolis, IN, respectively. Notably, these hotels are slated to be opened in 2021.

Moreover, Choice Hotels strengthened mid-scale presence with the launch of Clarion Pointe. Expansion of the brand is expected through 21 Clarion Pointe franchise agreements.

Last year, the company had announced an alliance with Sercotel — a leading hotel operator and franchisor based in Spain. This alliance will enable the expansion of Choice Hotels’ global footprint into Spain and other markets, as well as creation of opportunities for additional hotel development across Europe and Latin America.

Notably, the Cambria brand has been doing solid business. In second-quarter 2019, Cambria's RevPAR increased 2.2%, which outpaced its industry and the upscale chain scale by 110 and 260 basis points, respectively. Also, Cambria’s pipeline expanded to 82 hotels in the same period. The addition of these hotels will increase its upscale room count by 11,000.

Backed by solid expansion strategies and a strong brand presence, shares of Choice Hotels have gained 22.7% so far this year compared with the industry’s 14.3% rally.

On a further encouraging note, the hotel opening will drive its revenues. The company’s revenues have been improving over the last few quarters. In second-quarter 2019, total revenues came in at $317.7 million, up 8% from the year-ago period. The top line also outpaced the Zacks Consensus Estimate of $303 million by 4.8%.

Zacks Rank & Other Key Picks

Currently, Choice Hotels carries a Zacks Rank #2 (Buy). Other top-ranked stocks from the same space include Wyndham Destinations, Inc. (NYSE:WYND) , American Woodmark Corporation (NASDAQ:AMWD) and Bright Horizons Family Solutions Inc. (NYSE:BFAM) each carrying a Zacks Rank of 2. You can the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Wyndham delivered an average positive earnings surprise of 6.5% in the trailing four quarters.

Shares of American have gained 54.7% so far this year.

Bright Horizons has an impressive long-term earnings growth rate of 10.1%.

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