Starwood Hotels & Resorts Worldwide Inc.
) plans to expand its operations in Latin America by 50% over the
next five years. This will lead to the opening of seven hotels
per year on an average in that region.
Starwood has been focusing on this fast growing region for
quite some time. Starwood sees more construction opportunities in
Latin America with around half a billion people and an abundance
of natural resources.
The affluent middle class population in Latin America which
grew by 50% over the last decade and greater footfall in the
region caught the attention of Starwood. Apart from being a
tourist hub, the region is also emerging as a business hub.
Starwood's entry into Latin America dates back to 1963 when
Sheraton Maria Isabel debuted in Mexico City. The property also
marks the first international hotel company in Latin America.
Leveraging its first-mover advantage, Starwood has become one of
the most sought-after global brands in Latin America.
Starwood currently operates 72 hotels in 13 countries with a
total of 15,600 rooms. Since 2007, its footprint in Latin America
grew 36% making it the largest high-end hotel operator in the
region. Presently, it has a pipeline of 19 hotels and intends to
open six more under four different brands across four countries
Among all other Latin American countries, Brazil and Colombia are
expected to lead the growth trajectory. Brazil is set to witness
a surge in demand driven by the resurgence of the middle class. A
large number of hotels will be constructed in the country to cash
in on the FIFA World Cup, which is scheduled in 2014 along with
the Olympics in 2016.
Of late, Colombia has also undertaken steps to improve its
economy and hotel infrastructure and thereby become an attractive
destination for foreign investment and international hotel
On the flip side, while Brazil and Colombia promise solid growth
in the region, Argentina remains a laggard. In the first quarter
of 2013, Starwood's Latin America revenue per available room
(RevPAR) was flat. Management expects the sluggish trend to
persist in the region owing to deteriorating political situation,
rising inflation and an over-valued currency in Argentina.
However, we believe, these threats are short-lived.
Starwood currently carries a Zacks Rank #3 (Hold). Other players
in the same industry, which look attractive at current levels,
Marriott Vacations Worldwide Corp.
Las Vegas Sands Corp.
Wynn Resorts Ltd.
). While Marriott Vacations carries a Zacks Rank #1 (Strong Buy),
Las Vegas Sands and Wynn Resorts carry a Zacks Rank #2 (Buy).
STARWOOD HOTELS (HOT): Free Stock Analysis
LAS VEGAS SANDS (LVS): Free Stock Analysis
MARRIOT VAC WW (VAC): Free Stock Analysis
WYNN RESRTS LTD (WYNN): Free Stock Analysis
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