Sheraton Debuts in Madrid

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White Plains, New York-based Starwood Hotels & Resorts Worldwide Inc. (HOT) recently opened Sheraton Madrid Mirasierra Hotel & Spa in Madrid, Spain, in partnership with Comercial Mirasierra Group. This marks the debut of Starwood’s largest and most global brand Sheraton in Madrid. Starwood plans to open more than 60 Sheraton hotels around the world over the next three years and the new opening in Madrid is in line with this strategy.

The hotel is located in the capital and largest city of Spain and features 180 guest rooms along with numerous other amenities. The hotelier already has a strong presence in Spain with 17 hotels under seven of its brands. The new hotel further adds to the portfolio and strengthens Starwood’s position in Spain. 

Starwood is also investing in the renovation of its hotels to attract guests. Despite the prevailing uncertainty in Europe, we believe Spain is a strategic fit as it is an important tourist destination and is the twelfth largest economy in the world. Starwood’s major competitors, Hyatt Hotel Corp. (H) and Marriott International Inc. (MAR) also have a considerable presence in Spain. 

 

Since the last couple of quarters, Sheraton is spearheading Starwood’s market share growth. The brand covers almost 36% allotment of the company’s current total global pipeline. Recently, Sheraton completed a $6 billion brand-wide revitalization program, including $400 million in signature brand initiatives. Sheraton is now investing another $6 billion to add more new hotels by year-end 2013.

 

Owing to the saturation in the U.S market, major hoteliers are exploring growth opportunities abroad. Starwood can capitalize on this trend as its international exposure is wider than most of the other hoteliers. Moreover, Europe, which has been reeling under pressure for quite sometime, remains stable with the second half of 2012 estimated to be better than the first half. In the first quarter of 2012, the company also witnessed a RevPAR growth of 1.8% in Europe.

 

Starwood is a leading worldwide hospitality company with primary focus on property ownership, management and franchising. Starwood derives the majority of its revenue from its full-service, luxury/upscale brands such as Sheraton, Westin, St. Regis, The Luxury Collection, W, Four Points by Sheraton, Le Meridien, AloftSM and ElementSM.

 

Starwood currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We also reiterate our long-term Neutral recommendation on the stock.

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