In order to expand the global presence of its eco-friendly hotel
Starwood Hotels & Resorts Worldwide Inc.
) recently struck a deal with Bari Gruppe GmbH & Co. KG to
unveil a 'Element' branded hotel in Frankfurt, Germany in October,
2014. This property will mark the entry of the Element brand in
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Located near the Frankfurt Airport which is Europe's third busiest
airport, the new Element hotel offering 133 studios and one-bed
room suites along with several other amenities will enjoy a prime
Strategic positioning in Frankfurt's newly developed business
district as well as easy accessibility to the global headquarters
of companies such as Lufthansa, Condor and DB Schenker will help
this new Element property attract business travelers. Moreover, the
close proximity to several sight seeing venues will likely make the
property attractive to leisure travelers.
Starwood currently has five other brands in Germany operating 25
hotels and resorts. In Frankfurt alone, Starwood has four other
brands including Le Méridien Parkhotel Frankfurt, The Westin Grand
Frankfurt, Sheraton Frankfurt Congress Hotel and the Sheraton
Frankfurt Airport Hotel & Conference Center.
Starwood set a trend in hotel designs with its Element brand, which
is LEED (Leadership in Energy and Environmental Design) certified.
This upscale and contemporary brand was introduced in 2006 and its
first property appeared in 2008.
Starwood's management was on a lookout to spread the Element brand
in markets like Germany, where affordable and innovative hotel
brands are in demand. Management remains focused to spread the
brand across Europe.
Even though Europe remains the epicenter of the global crisis due
to the continued Euro-zone debt problem, Starwood is hopeful about
the overall European hospitability environment. Management did not
notice any acute slowdown in the latest second quarter of 2012,
with RevPAR growing 2% involving 70% of occupancy level which
remained unchanged from the year-ago period. In fact, excluding the
most troubled zone - Greece where RevPAR was down 20%, Europe
witnessed a modest 4.5% growth in second quarter 2012 RevPAR.
There are more visitors to Europe compared to the U.S. because it
is easier to get a visa for the European countries. At present, the
continent is experiencing more visitor arrivals than both the
Middle East and Asia. A stronger dollar has led to an increase in
visitors from America as well.
On a positive note, we have observed that the effect of the
sovereign debt is not uniform across the European region and among
the affected countries, Germany, where the deal is based, remains
comparatively well positioned. A year ago, Starwood also inked a
deal to acquire a 49.8% stake at Design Hotels AG in Germany.
Further, management expects to witness an easy comparison in the
fourth quarter of 2012.
Starwood, which competes with
Marriott International Inc.
), currently retains a Zacks #3 Rank that translates into a
short-term Strong-Hold rating. We also maintain our long-term
'Neutral' recommendation on the stock.