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Choice Hotels International Inc - Stock Quote CHH

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Morningstar's Choice Hotels International Inc Stock Analysis

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Narrow-Moat Choice Increases Its Upper-Scale Presence With Strategically Sound Radisson Acquisition

Dan Wasiolek Senior Equity Analyst

Analyst Note

| Dan Wasiolek |

We believe Choice’s acquisition of Radisson is strategically sound for a few reasons. First, we calculate that Radisson’s portfolio stands to increase Choice’s upscale presence to around 12% of total rooms up from about 8% prior, while extending its upper-midscale room count to roughly 40%, from a high 30% prior. This harmonizes with Choice’s focus on expanding its higher revenue-generating brands (such as the existing Ascend and Cambria) versus its lower economy scale and underperforming assets, which we think supports its intangible brand asset (source of its narrow moat). Second, the deal will expand Choice’s existing 53 million loyalty members by over 10 million, adding an incremental incentive for third-party hotel owners to join the operator’s platform to tap into this demand channel, which again buoys the hotelier's brand advantage. Finally, the added scale of Radisson’s 68,000 rooms on Choice’s sizable base of 575,000 should improve distribution and procurement costs, while adding incremental data to aid revenue optimization tools.

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Key Statistics - CHH

Choice Hotels International Inc's Company Profile

Business Description

As of Dec. 31, 2021, Choice Hotels operated 579,746 rooms across 13 brands addressing the economy and midscale segments. Comfort Inn and Comfort Suites are the largest brands (29% of the company's total domestic rooms), while Ascend and Cambria (7% 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 79% of total rooms.

Contact
1 Choice Hotels Circle, Suite 400
Rockville, MD, 20850
T +1 301 592-5000
Industry Lodging
Most Recent Earnings Mar 31, 2022
Fiscal Year End Dec 31, 2022
Stock Type Cyclical
Employees 1,500

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