Starwood Hotels and Resorts Worldwide Inc. (HOT) with its luxury boutique hotel brand W Hotels Worldwide is all set to expand its footprint in Russia, which is considered as one of the fastest growing markets. The company has recently partnered with Real Estate Development Ltd to open its first W Hotel in Russia.
The hotel is located in St. Petersburg, which is also known as the “Venice of the North” and is most visited by tourists and citizens during the White Night Festival. Thus, we believe the hotel will enjoy one of the most strategic locations and drive traffic from all over the world.
W St. Petersburg features 137 guest rooms, 10 suites and one traditional Presidential Suite. The hotel also possesses a signature restaurant mix, a signature spa, a bar and rooftop lounge.
Starwood set a new trend in the hotel industry with its W Hotels brand and has spread its operations globally. The company has opened more than 41 W hotels worldwide since its inception in 1998. W Hotels brand is viewed as a trend setter and generally caters to the young. Starwood opened 3 W hotels this year in UK, China and Indonesia and the recent opening of a hotel in Russia will ensure further expansion of the brand.
With the opening of a new hotel in Russia, W Hotels currently operates four hotels in Europe. The other three hotels are in Istanbul, Barcelona and London. The brand currently has three hotels in the pipeline for Europe, of which two will open in 2012 and one in 2013. Moreover, the W Hotels plans to increase its portfolio to more than 50 by 2012-end.
The company is poised to benefit from the increase in demand for hotels. Over half of its hotel properties are outside the U.S., an international exposure that not many of its peers such as Wyndham Worldwide Corporation (WYN) and Hyatt Hotels Corporation (H) can boast of.
Additionally, over 80% of the company’s 85,000 room pipeline will be built in international markets. The demand for hotels in the international market is strong, as the pace of economic recovery is particularly fast outside the U.S.
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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