In a concerted effort to consolidate its hotel business, Loews
Hotels & Resorts, a wholly owned-subsidiary of
), will buy Madison Hotel in Washington, D.C. from Jamestown
Properties. The transaction is scheduled to close in
January next year.
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The acquisition is a part of Loews' strategic endeavors to
strengthen its portfolio of hotels and boost the count to more
than 30 from 18 in the forthcoming three to five years.
Alongside, the company aims to bring about an approximate
threefold increase in its net income by 2015.
With traffic of nearly 18 million visitors in 2012, Washington is
the foremost U.S city for international visitors and ranks among
the first 20 on a domestic basis. Possessing a property at such a
prime location is expected to assist Loews in achieving its goal.
With 356 rooms, Madison Hotel has more than 12,000 square feet of
state-of-the-art meeting and event space in 12 separate settings,
including the 3,300-square-foot ballroom. Also, it houses the
renowned Federalist restaurant.
Management earlier stated that with capital at disposal to
acquire and develop property, they will seek like opportunities
in Boston, Chicago, San Francisco, Washington, D.C., New York,
Dallas, Toronto and Seattle to add assets to its portfolio and
hence cater to an expanding customer base.
This is the second acquisition of its kind that Loews made in
order to enhance its competitive advantage. In June this year,
Loews Hotels acquired Renaissance Hotel & Spa in Hollywood,
Loews Hotels posted highest revenue growth in the third quarter,
which improved 19.5% year over year. We believe the addition of
this hotel to its portfolio will help the company to continue
delivering such robust numbers.
Loews carries a Zacks #3 Rank, translating into a short-term Hold
rating. With the optimism over its latest acquisition, we expect
analysts to raise their estimates, providing an upward
directional pressure on its Zacks Rank. We have a long-term
Neutral recommendation on the company.
The Travelers Companies, Inc.
), which competes with Loews, shares the same Zacks Rank.