Choice Hotels (CHH) Expands Ascend Hotel Line-up in England

Choice Hotels International, Inc.’s CHH Ascend brand recently announced the addition of The Palmer House Resort and The Valley Inn to its line of hotels in England.

Located at 5383 Main St. in Manchester, Vermont, The Palmer House Resort comprises a 50-room hotel, a chalet and two historic homes. The 16-acre property also offers a nine-hole golf course, two tennis courts, an indoor and outdoor swimming pool, fitness center, restaurant and bar.

Meanwhile, The Valley Inn is situated in 17 Tecumseh Rd. in Waterville Valley, New Hampshire. Notably, the 44-room hotel features a lobby with fieldstone fireplace and balcony, seasonal outdoor pool, breakfast room, game room and large meeting space that allows for socially-distant gatherings. It also offers access to several restaurants and shops.

In this regard, Janis Cannon, senior vice president, upscale brands, Choice Hotels stated, "As people continue to return to traveling, we look forward to adding more unique upscale properties to the Ascend Hotel Collection in locations that allow them to satisfy their travel curiosity."

Increased Focus on Franchising Bodes Well

Choice Hotels gains from economies of scale associated with the franchise business. Accordingly, higher fees from franchisees and transference of cost burden to franchises provide the company with operational advantages. Apart from royalty fees and procurement-service revenues, Choice Hotels collects marketing and reservation system fees to provide support activities to the franchise system.

Notably, the company’s solid commitment toward franchisee profitability is driving incremental revenues. As of Jun 30, 2020, the company had 982 franchised hotels with 78,517 rooms under construction, awaiting approval for development in its domestic system as compared with 988 hotels and 78,613 rooms as of Jun 30, 2019. The number of new construction franchised hotels in the company's domestic pipeline dropped 2% to 741 on Jun 30, 2020, from 753 on Jun 30, 2019. However, the number of conversion franchised hotels in its domestic pipeline increased by six (or 3%) to 241 as on Jun 30, 2020, from 235 in the prior-year quarter. We believe that franchising will facilitate ROE expansion and earnings growth over the long term.

So far this year, shares of Choice Hotels have declined 13.5% compared with the industry’s fall of 26.7%.

Zacks Rank & Key Picks

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.

Some better-ranked stocks in the Zacks Consumer Discretionary sector include Camping World Holdings, Inc. CWH, Monarch Casino & Resort, Inc. MCRI and Acushnet Holdings Corp. GOLF, each sporting a Zacks Rank #1.

Camping World has a three-five-year earnings per share growth rate of 34.7%.

Earnings for Monarch Casino and Acushnet Holdings are expected to surge 1006.3% and 111.9%, respectively, in 2021.

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