NORTH BETHESDA, MD - Choice Hotels (NYSE:CHH) International, Inc. (NYSE: CHH), a prominent lodging franchisor, has formed a strategic partnership with Entegra, a leading food group purchasing organization. This collaboration, announced today, grants Choice Hotels' franchisees access to Entegra's digital platform, connecting them with a network of over 3,000 suppliers globally.
The agreement is set to provide franchise owners with enhanced purchasing options, potentially leading to cost savings and improved business performance. Entegra's platform offers a range of procurement solutions and supply-chain expertise aimed at fostering operational efficiencies for hoteliers.
Entegra Global CEO Damien Calderini expressed enthusiasm about the partnership, emphasizing the benefits of their digital tools and services in supporting Choice Hotels to deliver superior hospitality experiences. Anya Kroupnik, Choice Hotels' VP of Procurement, also highlighted the expected advantages, including better product pricing and increased support for daily operations.
Jeff Porterfield, Entegra's Senior Vice President of Client Services, elaborated on the commitment to deliver dedicated service and support to Choice franchisees. The partnership is designed to enhance competitiveness and provide access to advanced business intelligence tools.
Choice Hotels, with nearly 7,500 hotels across 45 countries, offers a diverse portfolio catering to various segments of the hospitality market. The company aims to drive value for franchise owners and shareholders while meeting the needs of travelers. Entegra, a subsidiary of Sodexo (EPA:EXHO), operates in 10 countries and is renowned for its purchasing power and personalized advisory services in the hospitality sector.
In other recent news, Choice Hotels International has seen a significant revision in its financial outlook by Truist Securities. The firm's adjusted earnings per share (EPS) forecast for 2024 has been decreased to $6.40 from $6.48, while the estimated EBITDA for 2025 has been revised downward to $605 million from $609 million. This adjustment reflects a more conservative valuation approach by Truist Securities.
Simultaneously, Choice Hotels has reported robust growth in Q1 2024, with a 17% increase in adjusted EBITDA and a 14% rise in adjusted EPS year-over-year. The company attributes this success to the integration of Radisson Americas and a strong global pipeline.
InvestingPro Insights
As Choice Hotels International, Inc. (NYSE: CHH) embarks on its new strategic partnership with Entegra, investors and franchise owners alike may be interested in the company's financial health and market performance. Choice Hotels has been demonstrating strong financial discipline, as evidenced by its impressive gross profit margin of 90.37% over the last twelve months as of Q1 2024. This level of profitability suggests that the company is adept at controlling costs and maximizing returns from its operations, which could be further enhanced by the procurement efficiencies expected from the Entegra partnership.
Moreover, the company's commitment to returning value to shareholders remains steadfast, with a track record of maintaining dividend payments for 21 consecutive years. The current dividend yield stands at 0.88%, with the next ex-date for dividend distribution set for July 1, 2024. This consistent dividend policy could appeal to income-focused investors looking for stable returns.
While the company's fundamentals appear strong, with a market capitalization of $6.28 billion and a Price/Earnings (P/E) ratio of 22.15, it's important to note that Choice Hotels is trading at a high revenue valuation multiple and near its 52-week high, with the price at 97.1% of this peak. This could indicate a premium valuation, which is a key consideration for potential investors. For those looking for more in-depth analysis, there are additional InvestingPro Tips available, which can provide further insights into the company's financials and market position.
Investors interested in Choice Hotels can leverage these insights and more by exploring InvestingPro, where they can find a total of 9 InvestingPro Tips for a comprehensive understanding of the company's prospects. To access these exclusive insights, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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