In a bid to ramp up its presence in Russia and the
Commonwealth of Independent States (CIS),
Starwood Hotels and Resorts Worldwide Inc.
) will introduce one of its contemporary hotel brands, Aloft in
Kiev, Ukraine in 2015.
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Starwood currently operates just one hotel in Ukraine under the
Four Points by Sheraton brand in Zaporozhye. Taking into account
Aloft Kiev, Starwood has three hotels in the pipeline in the
region including a Luxury Collection hotel in Odessa, slated to
open in 2014, and a Sheraton hotel in Kiev, due for a 2016
opening. The latest Aloft Kiev hotel will feature 310 guestrooms,
along with several other amenities.
There is ample scope for expansion as Starwood operates less than
10 hotels in Russia and CIS. Management now plans to broaden its
portfolio in that region by 2017 with 11 new hotels in Moscow,
St. Petersburg, Rostov-on-Don, Perm, Kaluga, and Krasnodar in
Russia, as well as in Kiev, Ukraine and Ismayilli, Azerbaijan. In
fact, the year 2015 will also witness the entry of the Aloft
brand in Russia. So far, Starwood brands such as Luxury
Collection, Sheraton, W and Four Points by Sheraton have managed
to enter the region.
Starwood has set a new trend in hotel designs with one of its
lifestyle brands, Aloft. Aloft has spread its operations globally
with more than 75 hotel openings since its launch in Jun 2008.
The brand rides on a high growth trajectory and has already left
its mark in every region including North America, Europe, the
Middle East, Latin America, India, Southeast Asia and China.
In its five years of journey, Aloft has performed satisfactorily
in terms of guest satisfaction, which reflects the brand's
strength and growing popularity. The urban concept of Aloft
mainly caters to modern travelers seeking a unique
experience. Its affordable price point in the mid-market
hotel category is another reason for its increasing popularity.
In the second quarter of 2013, revenue per available room
(RevPAR) growth at Aloft was 8.2% in constant dollars, the third
among all the other brands.
Why Russia & CIS?
Since the U.S. market is somewhat saturated, hoteliers are
tapping international opportunities, especially in the faster
growing emerging markets. Starwood sees a huge untapped potential
in the secondary and tertiary markets across Russia and CIS,
where the mid-market category is under-served. On the other hand,
Starwood is gaining increasing momentum off this category as
evident by the fact that its mid-market portfolio has grown over
60% since 2009. Hence, the hotelier seeks to capitalize its
potential in full.
The middle income population in the region is also growing. This
section of the population has an inclination to spend on leisure
activities. Additionally, Russia and CIS are gaining popularity
in the global travel market. Consequently, the existing hotels
are struggling to keep pace with the increasing number of
visitors to the region Ukraine alone plays host to more
than 20 million foreign citizens every year, primarily from
Eastern Europe. A large section also comes from Western Europe,
the U.S. and Canada.
Kiev, the capital and largest city of Ukraine, is a sought-after
industrial, educational and cultural center of Eastern Europe and
has been visited by foreign tourists over the years. The latest
Aloft property will be strategically positioned in the Central
Business District of the city and in close proximity to public,
retail, sports, culture and historical sites, thus making it
ideal for both business and leisure travelers.
Other Stocks to Consider
Starwood currently retains a Zacks Rank #3 (Hold). Some players
in the hotel industry, which look attractive at current levels
Hyatt Hotels Corp
China Lodging Group, Limited
Marriott Vacations Worldwide Corp.
), all carrying a Zacks Rank #2 (Buy).