Starwood Opens 4th Aloft in India

Stamford, Connecticut-based Starwood Hotels & Resorts Worldwide, Inc. ( HOT - Analyst Report ) recently announced the opening of a hotel – ‘Aloft Chandigarh Zirakpur’ – under its Aloft brand in Chandigarh, India. The company extended its partnership with Urbanedge Hotels for the opening of its fourth Aloft hotel in India.

Chandigarh, located in northern India at the foothills of the Himalayas, is emerging rapidly as a commercial hub. The city has excellent urban infrastructure and exotic beauty but a limited number of international brand hotels to serve modern travelers.

This demand-supply gap in the city has caught the attention of Starwood. The company already has a presence in Chandigarh with a hotel under the Sheraton brand – Sheraton Chandigarh Hotel – and is now intended to extend its Aloft brand in the city.

Aloft Chandigarh Zirakpur is situated on the Ambala – Chandigarh National Highway at Zirakpur. Comprising basic and modern amenities, the hotel caters to both business and leisure travelers.

The hotel is specifically designed and boasts high-class technologies to attract younger travelers. Aloft is the youth-oriented brand of Starwood, aimed to attract the tech-savvy next-generation customers. As of now, the brand owns 60 hotels in 10 countries around the world.

Apart from the new hotel, the brand already owns three 4-star deluxe hotels in Chennai, Bengaluru and Coimbatore. Since its debut in India in 2010, the brand is in expansion mode in the country. The company expects to open three more hotels in India going forward – including ‘Aloft Ahmedabad’ in Gujarat, ‘Aloft Bengaluru Cessna Business Park’ in Bengaluru and a hotel in Delhi at the Delhi International Airport Limited (DIAL).

The middle income population in India is growing rapidly, and the number of high net-worth individuals has grown over 80% in the last five years. This fraction of the population has also shown an inclination to spend on travel and leisure. Moreover, the demand for Starwood’s high-class, urban-inspired lifestyle brands is strong in both established and emerging markets across India. All these factors testify to Starwood’s target of opening around 100 hotels in India across all brands by 2015.

However, the market is not free of competition. Several major hoteliers like InterContinental Hotels Group ( IHG - Snapshot Report ) , Hyatt Hotels Corporation ( H - Snapshot Report ) and Marriott International Inc. ( MAR - Analyst Report ) are poised to beef up their portfolio in India.

The company is scheduled to release its second quarter 2012 earnings on July 26, 2012.The Zacks Consensus Estimate for the second quarter is pegged at 61 cents per share. We presently have a long-term Neutral recommendation on the stock. However, the company carries a Zacks #2 Rank, which translates into a short-term Buy rating.