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Starwood's W Brand Grows in Asia

Zacks Equity Research

In order to further ramp up its presence in the rapidly growing emerging market of Asia, Starwood Hotels & Resorts Worldwide, Inc. (HOT) has recently declared that it is on the verge of launching 20 new hotels under its W Hotels and Retreats brand in the region over the next five years. With these openings, the W brand will be able to increase its Asian portfolio by more than twofold.

Commencing its journey in 2004, Starwood now owns 8 hotels with 1,912 guestrooms under its luxury boutique brand, W, in the Asia Pacific region. Starwood is trying to enhance its presence in Asia as the demand for hotels in the region is higher and the pace of recovery is particularly fast.

Owing to the saturation in the U.S market, many other hoteliers including Marriott International Inc. (MAR) and Wyndham Worldwide Corporation (WYN), and some other major hoteliers are also exploring growth opportunities in the Asia Pacific region.

Coming to the brand, as per the expansion plan, of W’s total development pipeline, more than 50% is based in the Asia-Pacific region across nine countries. Within Asia-Pacific, China promises immense growth potential with visits expected to increase substantially by 2014. In order to capture such growth opportunities, Starwood is intending to launch six W branded properties in several places of China including Guangzhou, Beijing, Shanghai, Changsha, Shanghai and Suzhou by 2018.

Apart from this, Starwood is also slated to open four new hotels in India and various other properties in Indonesia and Malaysia under the W brand. These hotel openings are expected to boost Starwood’s RevPAR growth, going forward.

Starwood currently carries a Zacks Rank #3 (Hold). Another hotel stock worth a look is Home Inns & Hotels Management Inc. (HMIN) , which carries a Zacks Rank #1 (Strong Buy).

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