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Starwood to Unveil Aloft in South Korea

HOT MAR H

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Starwood Hotels & Resorts Worldwide Inc. (HOT - Analyst Report) recently struck a deal with Youngshin HRD. Co., Ltd., a wholly owned subsidiary of OKHOW Co., Ltd. to unveil an Aloft property in Suwon, South Korea in October 2014.

Located in Yeongtong-dong, the new hotel will feature 120 guestrooms, including 114 standard rooms and six suites, 404 square meter of meeting space along with numerous other facilities.

Starwood has set a new trend in hotel designs with one of its lifestyle brands Aloft. Aloft has spread its operations globally with 60 hotel openings since its launch in June 2008. The brand rides on a high growth trajectory and has already left its mark in every region including North America, Europe, the Middle East, Latin America, India, Southeast Asia and China.

In the second quarter of 2012, RevPAR growth in Aloft was 8.7% or 9.7% in constant dollars, the highest among all the other brands. The urban concept of Aloft mainly caters to the modern travelers seeking a unique experience. Its affordable price point in the mid-market hotel category is another reason for the growing popularity.  

We believe that Suwon, the provincial capital of Gyeonggi-do, South Korea, is a strategic fit for new hotels, as it is an important tourist and industrial destination featuring Samsung Electronics’ digital city and a huge factory complex. Located in a prime location, the Suwon-based Aloft property will have access to the business district, and local government offices as well as several modes of transportation that will in turn attract business travelers.

Further, the hotel will be in close proximity to several tourist spots as well as Heritage sites that could aid the growth of leisure travel. The hotel will be a part of a multi-use property housing several corporate offices, premium retail spaces and many other high-end amenities.  

Starwood, which competes with the likes of Hyatt Hotel Corp. (H - Snapshot Report) and Marriott International Inc. (MAR - Analyst Report), currently carries a Zacks #3 Rank that translates into a short-term Hold rating. We also reiterate our long-term Neutral recommendation on the stock.

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