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Choice Hotels (CHH) - Trouble Ahead?

|Includes: Choice Hotels International, Inc. (CHH)

A recent analysis of the State of Texas Open Records Franchise Tax report reveals that Choice Hotels' (NYSE:CHH) Texas properties are facing extreme year over year revenue declines well above the (15%) RevPar decline the company has forecast for the upcoming quarter.  The records are available at:

http://www.window.state.tx.us/taxinfo/taxfiles.html#hotel


According to these self-reported numbers, the company's Texas Comfort Inn properties revenue declined on a year over year basis by an average of (24.3%) during the three month period ending in August, their  Quality Inns by an average of (28.8%) and their EconoLodge properties declined by an average of (18.8%). 

These numbers are well below the company’s guidance for a (15%) RevPar decline and may be indicative of a more challenging environment for their operators than the company has publicly disclosed.Further, given that Texas is historically a “stronger” geographic area than other parts of the U.S., I’d be inclined to think that other areas are facing more severe declines.  

As such, I anticipate the company's RevPar for the upcoming quarter to decline more than their guidance and they will continue to of lower RevPar expectations for the remainder of the year.   Not neccessarilly a positive development for a stock trading near it's 52-week high.