Another Aloft Goes Up in California

Aloft, one of the new lifestyle brands of Starwood Hotels & Resorts Worldwide Inc. (HOT - Analyst Report) is set to unveil a property in Cupertino, California in early 2013. The upcoming property will mark the third Aloft opening in California and the second in Silicon Valley. The hotel will feature 123 guest rooms along with numerous tech-savvy amenities.

Starwood set a new trend in hotel designs with its Aloft and has spread its operations globally with more than 55 hotels it has opened since its launch in June 2008. The urban concept of Aloft is for modern travelers seeking a unique experience.

The brand rides on a high growth trajectory and has already stepped into every region including North America, Europe, the Middle East, Latin America, India, Southeast Asia and China. In the fourth quarter of 2011, RevPAR growth at Aloft was 12.5% or 12.8% in constant dollars, the highest among all the other brands.

We believe Cupertino is a strategic fit for new hotels, as it is an important business destination. The hotelier is all set to tap the market, as the area attracts many business travelers due to the adjoining presence of high-tech companies like Apple Inc. (AAPL - Analyst Report), Hewlett Packard Co. (HPQ - Analyst Report) and International Business Machines (IBM - Analyst Report). Starwood’s major competitors, Hyatt Hotel Corp. (H - Snapshot Report) and Marriott International Inc. (MAR - Analyst Report) also have considerable presence in Silicon Valley.

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.