Starwood Hotels & Resorts Worldwide Inc.
) recently revealed that it remains on track to unveil 10 new
Luxury Collection Hotels & Resorts globally in the near term.
The company has properties coming up in countries like China,
India, Indonesia and Thailand.
We view the White Plains, New York-based company's focus on
enhancing luxury as quite strategic. Of its total pipeline of
95,000 rooms, 80% occupies the upper upscale and luxury segments.
According to management, the extremely high net worth individuals
were less affected by the global recession and increased by almost
30% since 2006. Hence, management plans to attract those
Moreover, increased room rates lead to higher fees and
eventually to a monetarily enriched portfolio. Management stated
that, at the current level, its luxury brands comprise 10% of its
total rooms and contribute 20% to its fees.
Luxury Collection Hotels & Resorts fall in the eponymous
category. Management commented that luxury resorts generally have a
higher demand abroad and hence Starwood has 90% of its Luxury
pipeline outside North America.
Launched in 1906, the brand rides on a high growth trajectory
and has already spread globally with 80 hotels in more than 30
countries. Well known for its upper-upscale hospitality and
individuality, management sees the brand as a lucrative addition to
its luxury hotels and invests $100 million in it. According to
management, in the last five years, the brand's reach has widened
by 40% and achieved 270 points in RevPAR index.
Owing to saturation in the U.S. market, major hoteliers are
exploring growth opportunities abroad. Starwood can capitalize on
this trend as it has a broader international exposure than most
other hoteliers such as
Wyndham Worldwide Corporation
Hyatt Hotels Corporation
). Almost 60% of Starwood's total pipeline is focused on the
Asia-Pacific markets. In Asia, the company plans to finish the year
with around 240 hotels.
Starwood currently retains a Zacks #2 Rank, which translates
into a short-term Buy rating. We are also maintaining our long-term
Neutral recommendation on the stock.
HYATT HOTELS CP (H): Free Stock Analysis Report
STARWOOD HOTELS (HOT): Free Stock Analysis
WYNDHAM WORLDWD (WYN): Free Stock Analysis
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