Starwood Spreads to Panama - Analyst Blog

Starwood Hotels & Resorts Worldwide Inc. (HOT) recently announced its intention to open an Aloft hotel in Panama City. This will mark the entry of the Aloft brand of Starwood in that country. The hotel will feature 312 guest rooms and a meeting space more than 4,000 square feet along with other amenities. It is slated for inauguration in December 2012.

The new hotel is being developed by Nuevos Hoteles de Panama S.A. The developing partner will also operate the hotel under a franchise agreement with Starwood. Nuevos Hoteles de Panama, S.A. also owns the Sheraton Panama Hotel & Convention Center.

Panama has become a financial center for South America. Considering its growing prominence in the world of commerce, Starwood is constantly increasing its focus on Panama. Starwood is also scheduled to open two Westin hotels in Panama.

The Westin Playa Bonita Panama will open in 2011, followed by the opening of The Westin Panama Hotel in 2012 in Panama City's Costa del Este business district. Starwood will operate the two hotels as franchised properties with Bern Hotels & Resorts Panama. Earlier, Starwood had partnered with Bern Hotels & Resorts Panama to open Le Méridien Panama in September 2009.

Starwood is poised to benefit from a surge in demand for hotels. It has over half of its hotel properties outside the U.S., an international exposure that not many of its peers can boast of. Additionally, over 80% of the company's 85,000 room pipeline is set aside for international markets.

With new openings in Panama, the Starwood brand will spread to four Latin American countries. Starwood continues to see more construction opportunities in Latin America with over half a billion people and an abundance of natural resources. The hotelier has a strong presence in the upscale and luxury segment with 63 properties in the region with several more in the pipeline.

Of late, the economic balance of power has been shifting from the developed world to rapidly growing economies and starwood has not escaped this transition has as well. The shift is more evident from the 13% REVPAR growth at the International company-operated level compared with 10% in North America. Management expects to see even more growth in this dynamic market over the next decade across all its global brands of Starwood.

Starwood currently retains a Zacks #3 Rank (short-term Hold rating). One of Starwood's close competitors Marriott International Inc. (MAR) also retains a Zacks #3 Rank.

 
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