Starwood Hotels & Resorts Worldwide Inc. (HOT) recently announced that its largest brand Sheraton Hotels & Resorts plans to open 8 more hotels in China by year end and another 18 by 2015 citing huge, underlying growth potential in that country. Starwood inaugurated its thirtieth Sheraton hotel in Greater China this month, bringing the total number of properties in the country to 60.
 
Sheraton’s expansion plans for the rest of the year includes its debut in Guangzhou and a third hotel in Shanghai. The second Sheraton hotel in Beijing is slated for a 2011 opening.
 
Sheraton recently completed a $6 billion revitalization campaign, and is investing another $5 billion to expand its portfolio in China.
 
The demand for hotels is greater in international markets than in the U.S., especially in the Asia-Pacific region, where the pace of economic recovery is faster. Starwood can capitalize on this trend as its international exposure is wider than most of the other hoteliers. Around 60% of the company’s 85,000 room pipeline is to be built in Asian markets. Moreover, Starwood continues to see a healthy level of development activity in Asia, where 18 out of its 39 new deals have been signed so far in 2010.
 
Asia continued to see acceleration in Starwood’s RevPAR (Revenue per available Room Rate) growth, with China taking the biggest slice of the pie. RevPAR growth was 46% in China and 14% in India, Australia and the rest of Asia in the second quarter 2010.
 
Presently, China is driving the recovery in global tourism and, by 2020, it is expected to be the world’s largest tourism market. Hence, the company is targeting various Chinese cities where the company is under-penetrated. We expect Starwood to considerably benefit from this strategic expansion, going forward.
 
Other than the Chinese market, the hotelier also expects India to offer significant possibilities for growth as the country is under-hoteled relative to its future demand.
 
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