About Choice Hotels International, Inc.
This company offers a lot of hospitality choices. Choice Hotels is a leading hotel franchisor with more than 7,000 locations and nearly 570,000 rooms throughout the US and more than 40 other countries. Flagship brands include Comfort Inn, one of the largest limited-service brands with more than 2,000 properties (including Comfort Suites), and Quality Inn, a midscale brand with another 2,000 locations. Its Econo Lodge chain offers lodging primarily for budget-minded travelers. Among its nearly a dozen other brands include Ascend Hotel Collection (boutique), Cambria Hotel (upscale), and Rodeway Inn (economy). It also operates extended stay hotels such as MainStay Suites and WoodSpring Suites.
Choice Hotels' brands compete at various price points, including economy, mid-scale, upper mid-scale, and upscale. The company collects marketing and reservation system fees from its franchisors (more than 50% of revenue). It also earns revenue from initial, re-licensing, and continuing royalty fees from franchisors (about 40% of revenue). Re-licensing fees include fees charged to new owners of a franchised property whenever an ownership change occurs and the property remains in the franchise system.
Procurement services (about 5% of revenue) involve implementing new brand programs and conducting business with qualified vendors and strategic alliance partners. Remaining revenue sources include fees for non-compliance, contract termination, and other franchising services, as well as non-hotel franchising activities.
The firm gives hotel investors the opportunity to develop new builds as well as the opportunity to convert independent brands and non-Choice affiliated hotels. New build brands include Cambria Hotels, Comfort, Sleep Inn, and WoodSpring, while conversion brands include Quality, Ascend Hotel Collection, and Econo Lodge.
Rockville, Maryland-based Choice Hotels has offices in Dallas, Texas; Phoenix, Arizona; and Chevy Chase, Maryland. Outside the US the company has offices in Australia, Canada, Germany, Italy, France, the Netherlands, India, Mexico, and the UK.
Despite having "international" in its moniker, the firm does most of its business in the US. Choice Hotels has nearly 1,200 international properties representing about 15% of its portfolio.
Sales and Marketing
Choice Hotels advertises on national television, radio, digital, and print media; uses telemarketing and personal sales calls; and participates in promotional events with qualified vendors and corporate partners.
Its Choice Privileges loyalty program rewards travelers with points towards free hotel nights, airline miles, and gift certificates at participating retailers.
Advertising expenses totaled $141.8 million, $114.1 million, and $102.7 million in 2018, 2017, and 2016, respectively.
Choice Hotels has recorded strong, consistent growth over the last five years as it expands its hotel- and room-count.
In 2018 the company’s revenue reached $1.0 billion, up from $941 million in 2017. The acquisition of hotel franchisor WoodSpring Suites in 2018 increased domestic royalties for the year. The purchase added some 240 hotels and more than 28,000 rooms to Choice Hotels' portfolio.
Choice Hotel’s net income rose to $216.4 million in 2018, up from $122.3 million in 2017 on higher revenue. The company also benefited from a lower income tax rate. (Income tax rates were about 20% and more than 50% for 2018 and 2017, respectively.)
Cash at the end of 2018 was $26.6 million. Cash from operations was $242.9 million, while investing activities used $321.3 million. Financing activities used $129.4 million.
Choice Hotels continues to expand its hotel portfolio, growing its total number of domestic properties from 5,500 in 2017 to more than 5,800 in 2018 while adding about 30 properties to international portfolio during the same time frame. At the end of 2018 it had more than 1,000 properties approved for development.
The company also continues to upgrade its technology in order to meet increasing customer demand for personalization and convenience. As part of these efforts it launched its cloud-based global reservation system, ChoiceEDGE, in 2018. ChoiceEDGE manages all distribution for the company by optimizing rate, inventory, and booking for its website, mobile apps, and third-party distribution partners.
Mergers and Acquisitions
In 2018 Choice Hotels acquired WoodSpring Suites, a hotel franchisor serving the economy extended-stay market with 240 hotels in 35 states, for $231 million. The acquisition of WoodSpring resulted in about 75 new construction franchise agreements in 2018.
Choice Hotels started as Quality Courts United, a marketing cooperative founded by several Florida motor court owners in 1941 to combat the poor image of roadside lodgings as dens of undesirable drifters. By 1963 Quality Courts had established a strong brand and began to sell franchises. In 1990 Quality was renamed Choice Hotels International.
1 CHOICE HOTELS CIR STE 400
Rockville, MD 20850-5172
Phone: 1 (301) 592-5000
Employer Type: Publicly Owned
Stock Symbol: CHH
Stock Exchange: , NYSE
Chairman: Stewart Bainum
CFO: Dominic E. Dragisich
President and CEO: Patrick S. Pacious
Employees (This Location): 500
Employees (All Locations): 1,882
El Segundo, CA
Three Rivers, CA
Oak Grove, KY
New Orleans, LA
Ocean City, MD
Pocomoke City, MD
Morehead City, NC
Lake George, NY
Mount Pleasant, SC
Corpus Christi, TX