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Choice Hotels International Inc CHH

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Choice Hotels' Brands Continue to Lead U.S. Recovery With Share Gains and Stout Profit

Dan Wasiolek Senior Equity Analyst

Analyst Note

| Dan Wasiolek |

Choice Hotels' brands continue to lead the U.S. industry’s demand recovery and maintain healthy share gains with solid profitability. We plan to lift our $94 fair value estimate by a mid-single-digit percentage (despite incorporating a 5-point increase in the U.S. corporate tax rate starting in 2022) to account for a stronger demand recovery at higher profit levels. Still, we see the shares as already more than pricing in Choice's favorable trends.

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Company Profile

Business Description

As of June 30, 2021, Choice Hotels operated 601,245 rooms across 13 brands addressing the economy and midscale segments. Comfort Inn and Comfort Suites are the largest brands (28% of the company's total domestic rooms), while Ascend and Cambria (8% of total domestic rooms) are newer lifestyle and select-service brands experiencing strong demand prior to COVID-19. Choice added its 13th brand with the launch of extended-stay brand Everhome in January 2020. Franchises are 99% of total revenue, and the United States represents 78% of total rooms.

1 Choice Hotels Circle, Suite 400
Rockville, MD, 20850
T +1 301 592-5000
Sector Consumer Cyclical
Industry Lodging
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 1,498