Morningstar Rating

Stock Research and Analysis

by Chad Mollman

Bulls Say

The supply of hotels in the United States is expected to increase by 1% annually in 2014 and 2015 because of tight credit conditions for property developers, creating a favorable environment for increased room rates.
Choice has a narrow economic moat derived from switching costs and a network effect. This economic moat, combined with the low capital intensity of its franchising model, has enabled the company to generate ROICs in excess of 50%.
Choice, as a pure franchisor of hotels with relatively low fixed costs, historically has performed better during recessions than competitors. Read more 

Bears Say

Choice has a weak pipeline of new properties, and weak international growth prospects.
Choice is focused on the midscale and economy segments of the lodging industry, which are growing slower than the overall industry.
The market is overly optimistic regarding the strength of the recovery in the midscale and economy segments of the lodging industry, and Choice is unlikely to generate RevPAR growth and EBITDA margins comparable with what it achieved in the last hotel industry recovery. Read more 

Management

Stewart Bainum has been Choice's chairman of the board since its inception and was involved with the company in its earliest days as part of Manor Care. Steve Joyce became CEO in 2008 after 25 years of experience at Marriott, bringing with him significant   Read more 

Profile

Choice Hotels is one of the largest hotel companies in the United States, with approximately 8% of hotel rooms in the U.S. affiliated with Choice brands. The company is   Read more 

First Name
Last Name
Email Address
Zip Code
Create Password
Verify Password
(6-15 characters; case sensitive)

The Friday Five 
Watch more 

Premium Membership

View all of our analyst reports with a free trial to Morningstar.com Premium.