Starwood Rebrands Assets to Aloft

Following the brand conversion of existing hotels, Starwood Hotels & Resorts Worldwide Inc. (HOT - Analyst Report) will now end September 2012 with two new Aloft properties. The properties are Aloft San Francisco Airport hotel and Aloft Nashville Music Row. Meanwhile, there are several other properties lined up to be converted into the Aloft brand in Tucson, Calgary and Atlanta.

While the makeover of an existing Clarion property to a 253-room Aloft San Francisco hotel took 14 months to complete, the conversion of the Hotel Indigo Nashville Music Row to the 139-room Aloft Nashville hotel needed just a month.

The San Francisco Airport property enjoys a prime location, adjacent to mass-transit options into San Francisco as well as one of the world’s major air-travel hubs. Apart from this, the hotel is easily accessible from various corporate hubs, making it strategically fit for repositioning.

The Aloft Nashville Music Row, which is the first non-Starwood-owned Aloft conversion hotel also marks the brand’s entry to Nashville market which will likely create a strong guest base.

Starwood set a trend in hotel designs with Aloft, which spread its operations globally with more than 60 hotels opened since its launch in June 2008. In its four years of journey, Aloft has been on an uphill ride in terms of guest satisfaction scores, reflecting the brand’s strength and growing popularity.

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. Aloft as a brand name has also earned recognition as it offers an urban concept for modern travelers seeking a unique experience. Its affordable price point in the mid-market hotel category is another reason for the burgeoning popularity.

Starwood is ideally targeting two types of prospects for the Aloft conversion. First are the well positioned, older hotels set up in the ‘70s or ‘80s, and second are the well-to-do independent hotels in need for a stronger brand.

Starwood which competes with the likes of Marriott International Inc. (MAR - Analyst Report), currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. We are also maintaining our long-term Neutral recommendation on the stock.