1-Star Price
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5-Star Price
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Economic Moat
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Capital Allocation
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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.
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.
