Starwood Hotels & Resorts Worldwide Inc. (HOT) plans to open two new hotels in China under its Luxury Collection brand. The expansion is part of the company’s strategy to enhance its international business and take advantage of the Chinese economy, which has significant growth potential over the next few years.
Starwood plans to reopen The Astor Hotel in Tianjin in May 2010 after renovating the hotel spending $22 million. The hotel features 152 luxury guest rooms and suites.
Starwood also intends to open The Malus Sanya, a new-build resort in Sanya in late 2012. The Malus Sanya is part of the integrated Haitang Bay Beach Resort district spreading over a site area of 150 square kilometers, with 40 kilometers of beachfront and 160 luxury guest rooms and villas.
Recently, Starwood announced its plan to increase over 12,000 jobs in 2010. Approximately half of these new jobs will be in the U.S. markets, ranging from New York to California. The augmentation of its global workforce will come from the 80−100 new hotels that Starwood and its development partners have scheduled to open this year. The hotels will include Starwood’s 9 brands and will be located in both urban markets such as New York City and Los Angeles and in smaller markets such as Biloxi, Mississippi and Kalamazoo, Michigan.
Starwood is scheduled to release its fourth quarter financial results prior to the market opening on Feb. 4, 2010, followed by a conference call at 10:30 am EST. According to the Zacks Consensus Estimate, Starwood will report earnings of 21 cents per share for the fourth quarter and 69 cents per share for the full fiscal 2009.
The operating environment in the lodging sector has continued to deteriorate in the past few quarters, and we expect revenue per available room (RevPAR) to keep falling in the near term, though the rate of decline has moderated of late. However, we believe Starwood’s strong development pipeline will provide some relief and offset the declines.
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