As part of its continued brand revitalization strategy, Starwood Hotels & Resorts Worldwide Inc. (HOT) plans to revamp its New York city portfolio in association with its owner and developer partners. Each of Starwood’s global brands has a presence in New York City. The company’s portfolio in the city comprises 21 hotels. The refurbishment will cost approximately $400 million.
The properties to be renovated include the Sheraton brand’s flagship hotel – Sheraton New York Times Square Hotel, W New York – Times Square, W New York - Union Square, W New York, The Westin New York at Times Square and The Westin New York Grand Central.
New York City is one of the most sought-after locations and hosts more than 50 million tourists each year. Since the city is one of the prime destinations for leisure travelers and business meetings, we believe the overhaul of these properties is a strategic decision.
Starwood is comprehensively working on its assets to offer an enhanced travel experience to its guests. It is primarily considering renovation of older properties in dynamic markets like New York City, Seattle, Chicago, New Orleans and Los Angeles in order to maintain consistency with the newer ones.
In Mar 2013, Starwood announced a refurbishment project worth approximately $200 million at its 13 Le Meridien hotels in the Middle East and Africa (MEA) regions. In Jun 2012, Starwood announced that more than 10 North American properties of one of its high-end brands, W, will undergo extensive makeover worth more than $100 million in the coming 18 months.
In Nov 2012, Starwood completed an extensive makeover of four Hawaiian properties under its largest brand, Sheraton Hotels & Resorts for $230 million. Apart from these, there many other assets that the hotelier has revamped in the recent past.
In a competitive environment, most hotel companies across the globe have been making diligent efforts over the last couple of years to augment guest satisfaction and gain a better foothold in the industry. Hence, brand conversion and remodeling are the order of the day.
Many of Starwood’s peers like Marriott International Inc. (MAR) and InterContinental Hotels Group (IHG) are also resorting to renovation. Though renovation work affects near-term revenues, it boosts returns once completed.
Starwood currently carries a Zacks Rank #3 (Hold). Another hotelier Wyndham Worldwide Corporation (WYN) looks attractive at current levels with a Zacks Rank #2 (Buy).
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