In a bid to expand the Ascend brand, Choice Hotels International, Inc. CHH added a new dolphin and marine-themed hotel — Winter the Dolphin’s Beach Club in Florida — to its portfolio. Based on the “Dolphin Tale” movies, the hotel offers amenities that are designed to deliver an unforgettable marine experience.

Located at 655 S. Gulfview Blvd., the five-story, 91-room hotel provides guests access to amenities such as live video stream of dolphins, an outdoor heated pool with sundeck, and food and beverage options at the Cabanas Beachside Bar and Grill. Keeping in mind the best interests of marine mammals, the hotel has also initiated sea turtle-safe lighting, no use of plastics and special window treatments to reduce the harmful effects of sun glare.

Mark Shalala, senior vice president of development, upscale brands, Choice Hotels stated, “The addition of this eco-friendly hotel to Choice’s portfolio reaffirms our commitment to expanding the Ascend Hotel Collection — the largest soft-brand collection in the industry — one unique property at a time.”

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-services 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. The company’s newly-executed domestic franchise agreements were 58 in the first quarter. As of Mar 31, 2020, the number of domestic hotels and rooms rose 1.2% and 2.7% year over year, respectively. 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 20.6% compared with the industry’s fall of 32.9%.

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 TEGNA Inc. TGNA, Pool Corporation POOL and Brunswick Corporation BC, each sporting a Zacks Rank #1.

TEGNA has a three-five year earnings per share growth rate of 10%.

Pool Corporation has a trailing four-quarter positive earnings surprise of 9.8%, on average. The company’s earnings beat the Zacks Consensus Estimate in the last four quarters.

Earnings in 2021 for Brunswick are expected to surge 42.2%.

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