International Franchising And Digital Platforms Will Drive Future Travel Demand

Analysts have reduced their price target for Choice Hotels International, lowering it by $3.57 per share to $129.36. Concerns about development momentum and revised company guidance weighed on expectations.

Analyst Commentary

Recent research notes provide a mixed outlook on Choice Hotels International, with analysts highlighting both positive and negative drivers for the company's valuation and growth prospects.

• Bullish analysts point out that, despite sluggish trends in revenue per available room (RevPAR), lodging companies have outperformed broad market indices in recent months.
• Premium valuations across the sector are viewed as a sign that investors are anticipating a potential reacceleration in industry growth and operational performance.
• The timeshare segment in particular has demonstrated exceptional strength, encouraging optimism for companies with exposure to this sub-sector.
• Recent upgrades in price targets reflect a belief that there is room for upside if execution improves and broader demand trends recover.

• Bearish analysts remain cautious and maintain lower ratings due to ongoing challenges in development momentum for Choice Hotels.
• Reduced company guidance has led to a recalibration of expectations for key metrics such as RevPAR and EBITDA growth.
• Mixed messages from market valuations are raising concerns that any recovery might require faster growth than is currently being delivered.
• The higher operating leverage characteristic of many real estate investment trusts (REITs) is still lagging, which further contributes to uncertainties about the pace and consistency of future growth.

What's in the News

• Choice Hotels International will nearly double its presence in France by onboarding 50 new properties. This addition brings over 4,800 rooms and expands the brand into more than 30 new cities across the country. These properties strengthen the company’s midscale and upscale offerings throughout major urban centers, suburban cities, and resort towns (Key Developments).
• The company has opened its first property in Argentina, the Radisson Blu Bariloche, marking a milestone in upper upscale expansion across the Caribbean and Latin America. The hotel offers 80 rooms and high-end amenities in a scenic Patagonian setting (Key Developments).
• Everhome Suites, Choice Hotels' midscale extended stay brand, continues to expand with seven new properties opened in the U.S., reaching a total of 17 open hotels and 45 more in the pipeline. The brand recently entered the Southern California market as well as key locations in Arizona, Montana, New Hampshire, New York, and New Jersey (Key Developments).
• Cambria Hotels, part of Choice Hotels' upscale portfolio, has expanded with four new U.S. properties in California, Florida, Massachusetts, and Oregon. The brand's growth contributes to Choice's portfolio of over 110,000 upscale rooms worldwide (Key Developments).
• Choice Hotels launched its first-ever Million Point Sweepstakes, enabling loyalty members to win travel points redeemable for hotel stays, flights, and exclusive experiences. The sweepstakes highlights recent updates and accolades for the Choice Privileges program (Key Developments).

Valuation Changes

• Consensus Analyst Price Target has decreased from $132.93 to $129.36 per share, reflecting a modest downward revision.
• Discount Rate has edged down slightly from 9.48 percent to 9.46 percent, indicating a marginally lower perceived risk.
• Revenue Growth projections remain unchanged at 30.63 percent, showing stable expectations for top-line expansion.
• Net Profit Margin estimates are essentially flat, holding at approximately 19.91 percent.
• Future P/E ratio has decreased from 21.67x to 21.08x, which indicates a slight compression in valuation multiples.