Narrow-Moat Choice Hotels Extends Reach With WoodSpring Acquisition; Shares Fairly Valued
Narrow-moat Choice Hotels has announced it will acquire extended-stay brand WoodSpring Suites. We are planning a mid-single-digit percentage lift to our existing $70 fair value estimate, leaving the shares fairly valued.Although WoodSpring's financials are not available, we know that the brand has 28,500 rooms (around 5.5% of Choice’s existing unit base), and our analysis leads us to conclude that its average daily rate on those rooms is around $50, or roughly 60% of Choice’s 2016 consolidated...
Choice Hotels International is a hotel franchisor. The company franchises lodging properties under the following proprietary brand names: Comfort Inn?, Comfort Suites?, Quality?, Clarion?, Clarion Pointe?, Sleep Inn?, Econo Lodge?, Rodeway Inn?, MainStay Suites?, Suburban Extended Stay Hotel?, WoodSpring Suites?, Cambria? Hotels, and Ascend Hotel Collection?. The company's primary segment is the hotel franchising business. The company's domestic franchising operations are conducted through direct franchising relationships while its international franchise operations are conducted through a combination of direct franchising and master franchising relationships.
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