Choice Hotels On Expansion Spree, To Develop Mid-Scale Hotels

Choice Hotels International, Inc. (NYSE:CHH) , which banks on solid brand presence and continual expansion for growth, has signed an agreement with Equinox Hospitality to develop mid-scale hotels.

Per the terms of the agreement, three dual-brand Sleep Inn and MainStay Suites properties as well as two stand-alone Sleep Inn hotels will be developed in the Phoenix metropolitan area and California. The company is set to launch its first hotel in 2021. Markedly, Choice Hotels is quite confident about the success of these two brands. Further, the company stated that its domestic pipelines include approximately 300 hotels across the two brands.

This latest move underscores the company’s efforts to expand its footprint and strengthen the midscale category. Driven by its expansion strategy, shares of Choice Hotels have gained nearly 30% in the past two years compared with the S&P 500 increase of 17%.

Strategic Expansion to Drive Growth

Choice Hotels riveting growth potential is backed by the continual expansion of brands. Moreover, its portfolio of well-segmented brands is getting evidently stronger. With continuous enhancement of the mid-scale brand and the acquisition of the WoodSpring brand as well as transformation and advancement of the Comfort and Cambria brands, Choice Hotels is poised for growth in 2019.

In domestic and international markets, Choice Hotels relies heavily on expansion. 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 its international footprint in new countries. Key international operating markets include Spain, Colombia, Panama, the Caribbean and Canada.

The company had strengthened its mid-scale presence with the launch of Clarion Pointe. Expansion of the brand is expected to take place through 21 Clarion Pointe franchise agreements.

Choice Hotels, which shares space with Extended Stay America, Inc. (NASDAQ:STAY) , has a Zacks Rank #3 (Hold).

Key Picks

Better-ranked stocks worth considering in the same space include, Belmond Ltd. (NYSE:BEL) and Hilton Worldwide Holdings Inc. (NYSE:HLT) . Belmond and Hilton Worldwide Holdings carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Belmond reported better-than-expected earnings in the trailing two quarters.

Hilton Worldwide Holdings’ long-term earnings are likely to witness 9.1% growth.

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