Choice Hotels International, Inc. and its subsidiaries (Choice) operate as a hotel franchisor in the United States and internationally.
The company is primarily a hotel franchisor operating in 50 states, the District of Columbia, and 46 countries and territories. The company has hotels with rooms open and operating, and hotels with rooms under construction, awaiting conversion or approved for development, or committed to future franchise development on outstanding master development agreements...
Choice Hotels International, Inc. and its subsidiaries (Choice) operate as a hotel franchisor in the United States and internationally.
The company is primarily a hotel franchisor operating in 50 states, the District of Columbia, and 46 countries and territories. The company has hotels with rooms open and operating, and hotels with rooms under construction, awaiting conversion or approved for development, or committed to future franchise development on outstanding master development agreements (collectively, ‘pipeline’) in its global system.
The company’s brand names include Comfort Inn, Comfort Suites, Quality, Clarion, Clarion Pointe, Ascend Hotel Collection, Sleep Inn, Econo Lodge, Rodeway Inn, MainStay Suites, Suburban Studios, WoodSpring Suites, Everhome Suites, and Cambria Hotels (collectively, the ‘legacy Choice brands’). Additionally, through the Radisson Hotels Americas acquisition completed on August 11, 2022, the company’s brands expanded to include Radisson Blu, Radisson RED, Radisson, Park Plaza, Country Inn & Suites by Radisson, Radisson Inn & Suites, Park Inn by Radisson, Radisson Individuals, and Radisson Collection (collectively, the ‘legacy Radisson brands’), which are located across the United States, Canada, the Caribbean and Latin America (the ‘Americas’).
The hotel franchising business represents the company's primary operations. The company’s domestic operations are conducted through direct franchising relationships, the ownership of Cambria and legacy Radisson Hotels Americas open and operating hotels, and the management of hotels (inclusive of owned hotels), while its international franchise operations are conducted through a combination of direct franchising and master franchising relationships. Master franchising relationships are governed by master franchising agreements, which generally provide the master franchisee with the right to use the company’s brands and sub-license the use of its brands in a specific geographic region, usually for a fee. As a result of the company’s master franchise relationships and international market conditions, the company’s revenues are primarily concentrated in the United States. Therefore, the company’s description of its business is primarily focused on the domestic operations, which encompasses the United States.
The company generates revenues, income, and cash flows primarily from the company’s hotel franchising operations. Revenues are also generated from partnerships with qualified vendors and travel partners that provide value-added solutions to the company’s platforms of guests and hotels, hotel ownership, and other ancillary sources. Historically, the hotel industry has been seasonal in nature. For most hotels, demand is typically lower in November through February than during the remainder of the year. The company’s principal source of revenue is franchise fees, which is based on the gross room revenues or the number of rooms at the company’s franchised properties. The company’s franchise and managed fees, as well as its owned hotels' revenues, normally reflect the industry's seasonality and historically have been lower in the first and fourth quarters than in the second and third quarters of the year.’
The Hotel Franchising & Management reportable segment includes the company's hotel franchising operations which consists of its 22 brands and brand extensions and the hotel management operations of hotels (inclusive of owned hotels).
Choice’s Franchising Business
The company operates primarily as a hotel franchisor and deploys its family of brands and brand extensions, which represent both new construction and conversion brands.
Strategy
A key component of the company’s strategy for owned hotels is to maximize revenues. The company’s business strategy is to create franchise system growth by leveraging Choice’s large and well-known hotel brands, franchise sales capabilities, effective marketing and reservation delivery efforts, training and education programs, RevPAR enhancing services, and technologies and financial strength created by the company’s significant free cash flow.
The company’s strategy is to utilize the strengths of each brand for room growth, RevPAR gains, and royalty rate improvement, all of which will create revenue growth.
The company continually focuses on identifying methods to utilize its significant platform of hotels in the company’s system and its relationships with hospitality-related vendors and partnerships with travel-related providers in order to increase returns for the company’s franchisees. The company is focused on expanding its platform business through key partnerships, new technology, and other key franchisee resources, which is reflected in the company’s procurement services revenues. The expansion of these relationships has enabled the company to further drive its top-line revenue and deliver tangible value-added solutions to the company’s hotel owners and customers.
Industry Positioning
The company’s brands are as follows:
Cambria Hotels - Cambria Hotels is a select service hotel brand that operates in the upscale chain scale category, targeting the top primary market locations and secondary markets with a mix of business and leisure demand. Cambria offers guests a distinct experience with simple, guilt-free indulgences and little luxuries allowing them to stay at their best while on the road. The environment matches guests' casual lifestyles but tailored to the needs of the modern traveler. The properties feature a compelling design inspired by the location, spacious and comfortable rooms, spa inspired bathrooms, outdoor spaces featuring pools and rooftop bars, flexible meeting space, and a locally sourced menu and craft beer. The principal competitor brands include Courtyard by Marriott, Aloft, Hyatt Place, Hotel Indigo, AC Hotels, and Hilton Garden Inn.
Ascend Hotel Collection - The Ascend Hotel Collection is an innovative global soft brand collection offering resort, boutique and historic properties that reflect, and are woven into, the fabric of their destination. Ascend enables upscale hotels to retain their individual brand equity and identity, and yet have access to Choice Hotels' global distribution, technology, performance support services, training, and loyalty benefits. The Ascend Hotel Collection offers the best of both worlds, including an independence backed by a powerful platform for customer acquisition, delivery and distribution, volume purchasing benefits, and operational efficiency. The principal competitor brands include BW Premier and Voco.
Radisson - Radisson offers an upscale travel experience. Delivering classic service with modern comforts through thoughtfully considered details, and a variety of services, these properties focus on providing excellent work/life balance for guests during their travels. To ensure a harmonious stay, the company’s hotel teams seek to build meaningful personal relationships with guests. Radisson hotels are found in urban, suburban, and airport locations. The principal competitor brands include DoubleTree by Hilton, Delta Hotels, Crowne Plaza, and Holiday Inn.
Radisson RED - An upscale, select service hotel brand, Radisson RED is characterized by a love of bold design, social connectedness, and playful twists on the conventional. These urban hotels inject new life into hospitality through informal services where anything goes. Hotel spaces kick-start the fun with vibrant designs, encourage social sharing, and easily switch from work to play and back. Connected, trend-savvy travelers will love this unique opportunity to tailor their stay to their style. The principal competitor brands include Hyatt Regency and Embassy Suites.
Radisson Blu - The Radisson Blu brand is redefining the upper upscale hotel experience by blending contemporary design with warmth in an enriching environment. Scandinavian-inspired design prioritizes comfort and distinctiveness to create iconic environments, featuring services like premium dining and on-site spas, that foster a sense of belonging and discovery. The company’s hotel teams passion and knowledge shines through in their attention to the smallest details to feed the company’s guests hunger for exploration. Radisson Blu hotels are located in major cities, key airport gateways, and resort destinations. The principal competitor brands include Canopy by Hilton, Hyatt Centric, Le Meridien, and Kimpton.
Radisson Individuals - Radisson Individuals is an upscale collection brand that offers hotels the benefits of the company’s expertise, infrastructure, and brand recognition while celebrating each property’s distinct personality. A Radisson Individuals hotel gives guests the charm of a one-of-a-kind travel experience while providing the high-quality services, amenities, and genuine hospitality we’re known for. These hotels are located in leisure markets, spanning urban, suburban, and resort locations. The principal competitor brands include Autograph Collection and Curio.
Comfort - The Comfort brand family, which includes Comfort Inn, Comfort Suites, and Comfort Inn & Suites, is an upper midscale brand that offers guests a warm and welcoming experience that is designed to help travelers feel refreshed and ready to take on the day. Comfort hotels are ready to welcome business and leisure travelers everywhere they are going. The brand continues to evolve with the opening and adoption in the company’s existing portfolio of the new design prototype – Rise & Shine. As the largest 100% smoke-free hotel brand in North America, Comfort hotels offer complimentary amenities that include a hot breakfast, Wi-Fi, business center, and a fitness center and swimming pool at most locations. Each spacious guest room offers premium bedding and bath amenities along with a refrigerator and microwave. Comfort Suites properties are tailored to meet the demands of today's traveler, with each oversized suite featuring separate areas for working and relaxing, along with a sleeper sofa. The principal competitor brands include Hampton Inn, Holiday Inn Express, and Fairfield Inn & Suites.
Country Inn & Suites by Radisson - Country Inn & Suites exemplifies ‘modern country warmth’, offering a heartfelt experience to travelers through inviting design, premium touches, and genuine service. Guests can expect a mix of spacious standard and suite accommodations along with free amenities like a hot breakfast, all-day coffee and tea, freshly baked cookies in the afternoon, Wi-Fi, printer access, a fitness facility, and cozy seating by the living room fireplace. Most hotels also feature a patio or porch with an outdoor fire pit, den, casual workspace, swimming pool, meeting space, and an ‘Inn Case Market.’ Guests feel like they matter at Country Inn & Suites. The principal competitor brands include Holiday Inn Express, Best Western Plus, and Hampton Inn.
Clarion - Clarion helps owners of existing assets with food and beverage capabilities achieve strong returns with reasonable investment. Clarion allows a more focused and efficient food and beverage operational model that works well with a variety of conversion property configurations. Clarion helps business and leisure guests ‘get together’ by providing meeting/banquet facilities, restaurants, and lounges. Amenities include free high-speed internet access, a pool or fitness center, and a business center. The principal competitor brands include the Four Points by Sheraton.
Clarion Pointe - Launched in 2019, Clarion Pointe is a select service franchise that is ideal for owners who want to strategically reposition their limited-service property into a brand with strong awareness and a concept that satisfies the expectations of emerging travelers. The hotels offer guests a convenient and affordable experience with elevated essentials in just the right places, including contemporary design touches, curated food and beverage options, and on-demand connectivity. The principal competitor brands include Best Western.
Quality Inn - Quality helps both guests and owners ‘Get Your Money's Worth’ in the midscale chain scale category. Quality hotels provide clean, comfortable, and affordable accommodations, as well as the ‘Value Qs’ of a Q Bed, Q Breakfast, Q Shower, Q Service, and the Q Essentials, including free high-speed internet access, coffee, and in-room refrigerators. The principal competitor brands include Best Western and Ramada.
Sleep Inn - A new-construction brand, every Sleep Inn hotel is built with a specific vision in mind, which is to be a sanctuary for travelers as well as a cost-efficient property to build, operate, and maintain. Every Sleep Inn hotel offers a simply stylish stay that's designed to help the company’s guests ‘Dream Better Here.’ Guests find fresh, nature-inspired design elements that are modern but timeless, that create a relaxed and serene environment, providing both business and leisure travelers with free Wi-Fi, free hot breakfast, lifestyle amenities to support a better night’s rest, and an exercise room and/or pool. The principal competitor brands include Baymont and Best Western.
Park Inn - Characterized by a positive, stress-free environment, an upper economy to midscale brand, this hotel provides a clever use of color combined with friendly service and feel-good extras like complimentary breakfast to ensure the company’s guests experience a happy stay.
Park Plaza - An upper upscale brand combines engaging service, contemporary elegance, and local flavor. At each hotel, team members warmly welcome guests and make it a point to foster genuine and meaningful interactions. Refined spaces incorporate the essence of each location and provide a vibrant social setting for guests and the local community alike. Located in capital cities and key business and leisure destinations, these charmingly distinctive hotels help travelers connect with the authentic character and culture of their location. The principal competitor brands include Staybridge Suites, DoubleTree, and Residence Inn.
MainStay Suites - MainStay Suites operates in the midscale extended stay chain scale category, offering developers flexible conversion and new construction opportunities in a variety of market types. The Mainstay Suites guest experience delivers on a ‘Live Like Home’ promise for guests traveling for business or pleasure whose stays are longer than a few nights. All guest rooms feature fully equipped kitchens, as well as separate lounges and work areas. MainStay Suites offer free high-speed internet, an exercise room, 24/7 laundry facilities, weekly housekeeping, as well as breakfast options for guests. Each hotel also has a ‘MainStay Marketplace’ where guests may purchase a variety of food and sundry items. Guests also have complimentary access to small kitchen appliances through the ‘Things I Use at Home’ program. The principal competitor brands include TownePlace Suites, Candlewood Suites, and Home2 Suites.
Everhome Suites - Everhome Suites operates in the midscale extended stay chain scale category, offering developers a value-engineered new construction prototype for entry into major markets. Everhome Suites provides a ‘Closer to Home’ experience, empowering longer staying guests to stay productive and feel connected while away from home. All suites include a fully equipped kitchen with separate spaces to work, relax and eat. Larger one-bedroom suites come equipped with in-unit washers and dryers. Guests have access to free high-speed internet, a modern fitness room, outdoor amenity space, 24/7 laundry facilities, and weekly housekeeping service. Each hotel also has a ‘Homebase Market’ with food, drink, and personal items available for purchase. Small kitchen appliances are available to check out at the front desk through the ‘Homebase Essentials’ program. The principal competitor brands include Candlewood Suites, Home2 Suites, TownePlace Suites, and Extended Stay America Premier Suites, as well as new entrants to the extended stay segment, such as StudioRes and LivSmart.
Suburban Studios - Suburban Studios operate in the economy extended stay chain scale category, offering developers access to this category through flexible conversion options. Suburban Studios’ ‘longer stays made easy’ philosophy provides value-conscious, long staying guests with clean, comfortable rooms, friendly service and the amenities they need. All guestrooms provide in-room kitchens. Guests have access to free high-speed internet, 24/7 laundry facilities, and bi-weekly housekeeping. The principal competitor brands include Extended Stay America, InTown Suites, HomeTowne Studios, and Studio 6.
WoodSpring Suites - WoodSpring Suites are all new construction, value-engineered hotels that operate in the economy extended stay chain scale category. WoodSpring developers adhere to strict prototype and design specifications and an operating model that embodies WoodSpring’s promise of ‘It’s Simple. Done Better.’ Every suite includes a well-designed kitchen, seating area, and a free premium movie channel. Guests have access to free high-speed internet, 24/7 laundry facilities, and bi-weekly housekeeping. The principal competitor brands include Extended Stay America, Extended Stay America Select Suites, MyPlace, and Studio 6.
Econo Lodge - Econo Lodge is Choice Hotel’s economy brand, which provides an ‘easy stop on the road’ for value-oriented travelers. Free high-speed internet, bedside recharge outlets, refrigerators and free morning coffee are just some of the amenities that position Econo Lodge as a great value to the guest. The principal competitor brands include SureStay by Best Western, Knights Inn, Days Inn, and Red Roof Inn.
Rodeway Inn - Rodeway Inn offers sensible lodging for travelers on a budget. With free coffee to get guests started in the morning and free high-speed internet, Rodeway is a great option for practical travelers looking for a ‘Good night. Great Savings.’ The principal competitor brands include Americas Best Value Inn and Motel 6.
The company’s brands also include the Radisson Collection and Radisson Inn & Suites, however there are no open properties under these brands as of December 31, 2023.
Domestic Franchise System
The company’s standard domestic franchise agreements grant franchisees the non-exclusive right to use certain of the company’s trademarks and to receive the benefits from the company’s franchise system in order to facilitate the operation of their franchised hotels in specified locations. The company’s domestic franchise agreements have terms ranging from 20 to 30 years, with certain rights for each of the franchisor and franchisee to terminate the agreement. The company’s franchisees operate domestically under one of 22 brands and brand extensions.
Owned and Managed Hotels
While the hotel franchising business represents the company's primary operations, the company also owns Cambria hotels and legacy Radisson Hotels Americas hotels and manages hotels (inclusive of owned hotels). The company generates revenue from the owned hotels primarily from guest stays. The company generates revenue from the managed hotels from base and incentive management fees and cost reimbursements, which is primarily for payroll costs at the managed hotels where the company is the employer.
The company intends to continue to strategically develop and manage hotels in order to increase the presence of the company’s brands in the United States, drive greater guest satisfaction and brand preference, and increase the number of franchise agreements awarded.
International Franchise Operations
The company conducts its international franchise operations through a combination of direct franchising and master franchising relationships. Master franchising relationships are governed by agreements that generally provide the master franchisee with the right to use and sub-license the use of the company’s brands in a specific geographic region.
The company’s business strategy has been to conduct direct franchising in those international markets where both franchising is an accepted business model.
The company’s international operations are primarily conducted in the following countries and territories, as organized by region:
The Asia-Pacific - Australia, China, India, Japan, New Zealand, and Thailand.
Europe & the Middle East - Austria, the Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Kingdom of Saudi Arabia, Lithuania, Norway, Portugal, Slovakia, Spain, Sweden, Turkey, and the United Kingdom.
Latin America, the Caribbean & Canada - Aruba, Bahamas, Barbados, Belize, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Dominica, Dominican Republic, Ecuador, El Salvador, Grenada, Guatemala, Honduras, Mexico, Panama, Peru, Trinidad and Tobago, and Uruguay.
Franchise Sales
Expansion of the number of hotels in the company’s franchise system is important to the company’s business model.
Service Marks and Other Intellectual Property
The service marks Ascend Hotel Collection, Cambria, Choice Hotels, Choice Privileges, Clarion, Clarion Pointe, Comfort Inn, Comfort Suites, Country Inn & Suites, Econo Lodge, Everhome Suites, MainStay Suites, Park Inn, Park Plaza, Quality, Radisson, Radisson Blu, Radisson Collection, Radisson Red, Rodeway Inn, Sleep Inn, Suburban Studios, WoodSpring Suites, and related marks and logos are material to the company’s business. The company, directly and through its franchisees, actively uses these marks. All of the material marks are registered or have registrations pending with the United States Patent and Trademark Office.
Seasonality
The company’s principal source of revenues is franchise fees, which is based on the gross room revenues of the company’s franchised properties. The company’s franchise fee revenues reflect the industry's seasonality and historically have been lower in the first and fourth quarters than in the second and third quarters (year ended December 2023).
Regulation
The company’s business is subject to various U.S. and international regulations, including the regulations of the Federal Trade Commission (‘FTC’), various states and certain other foreign jurisdictions (including Australia, France, Canada, and Mexico) that relate to the sale of franchises.
Further, the company is also subject to various U.S. federal, state and international privacy and data protections laws, including the California Consumer Protection Act, the Virginia Consumer Data Protection Act, and the European Union General Data Protection Regulation, as well as privacy laws in Connecticut, Colorado and Utah that took effect in 2023 or will take effect in 2024.
History
Choice Hotels International, Inc. was founded in 1939. The company was incorporated in 1980.
The Analyst Price Target shows the analysts’ low, high, and average target at a glance.
