As part of its continued brand-revitalization,
Starwood Hotels & Resorts Worldwide Inc.
(
HOT
) has decided on an extensive makeover of its Sheraton New Orleans
Hotel for around $45 million. The venture will likely be completed
in 2013.
New Orleans is one of the prime U.S. tourist spots and a
favorite destination for business meetings. Citing the prospect,
Starwood plans to revamp all 1,100 guest rooms, meeting facilities
and other amenities at Sheraton New Orleans to garner more business
from meetings and conventions.
Hotel companies across the globe have been diligently working
over the last couple of years to augment guest satisfaction to
uplift their positions in a cutthroat environment. Brand conversion
and remodeling soon became the trend. Earlier this month, Starwood
announced its overhaul plans of more than 10 North American W
properties. Several other Starwood brands and properties have
already got their new look while some are in the queue.
Starwood is primarily considering older properties operating in
dynamic markets like New York City, Seattle, Chicago, New Orleans
and Los Angeles as ideal candidates for the upgrade. Apart from
renovation, these properties generally unveil some new bar and
restaurant concepts to attract more neighboring guests. Likewise,
Sheraton New Orleans intends to unveil its refurbished bar in
September 2012.
Since the last couple of quarters, Sheraton is spearheading
Starwood's market share growth. The brand covers around 30% of the
company's current total global pipeline. Recently, Sheraton was
through with a $6 billion brand-wide revitalization program and is
now busy with a three-year $6 billion international expansion
program.
Citing Sheraton's brand appeal, in March 2011, Starwood embarked
on a two-phase $150 million remodeling program for The Sheraton New
York, one of the largest hotels in New York City. In first-quarter
2012, Starwood revamped the Sheraton in Kauai. Yet another Sheraton
at Rio is also lined up for overhaul later this year.
Renovation work, however, hurts near-term revenue when
construction is on. Starwood's management commented that extensive
renovation at various properties lessened its owned EBITDA by
approximately $5 million in the first quarter of 2012 and expects a
similar impact in the second quarter as well. But after the
overhaul work, existing properties pay off more.
White Plains, New York-based Starwood which competes with the
likes of
Marriott International Inc.
(
MAR
) currently retains a Zacks #2 Rank that translates into a
short-term Buy rating. We also reiterate our long-term Neutral
recommendation on the stock.
STARWOOD HOTELS (HOT): Free Stock Analysis
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