Starwood Expands In Middle East - Analyst Blog

Starwood Hotels & Resorts Worldwide Inc (HOT) is planning to grow its portfolio in the Middle East over the next five years through its existing 50 hotels in the region and 25 new hotels in the pipeline. In January, Starwood will also enter into deals to open 5 new hotels in the region.

The White Plains, New York-based company opened its first hotel in the Middle East in 1966. In almost 44 years, the company has expanded in ten countries in the Middle East. Starwood manages the maximum number of hotels i.e. 20 in the UAE. The company also plans to boost its portfolio in the UAE by opening 10 new hotels in the next few years.

Starwood entered the Middle East with its Sheraton brand in Kuwait and by 2015 all the nine brands of the hospitality company are expected to operate in the Middle East. Currently, only in North America does Starwood operate hotels under all its brands.

The Middle East is one of the fastest-growing markets and is developing as an important travel destination. Starwood enjoys a sector leading position in the region. Moreover, tourist visits in the region are expected to reach 136 million by 2020 from 54 million in 2008. Thus, we view its expansion in the Middle East as a great growth opportunity.

Starwood has over half of its hotel properties outside the U.S., an international exposure that not many of its peers can boast, including Hyatt Hotels Corp. (H) and Intercontinental Hotels Group plc (IHG). Additionally, over 80% of Starwood's 85,000 room pipeline will be built in international markets. The company is poised to benefit from the increase in demand for hotels in markets outside the U.S.

Other than the Middle East, the hotel company is planning to expand its presence in the Asia-Pacific markets. In Asia-Pacific, China promises immense growth potential with visits expected to double by 2014. Outside the U.S., China is already Starwood's largest country with 60 hotels representing eight of its brands. Starwood also expects to increase its portfolio by 60% in India by 2013.

 
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