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Lekha Gupta

Starwood's St. Regis Debuts in Africa

HOT MAR

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In a concerted endeavor to strengthen its global portfolio, Starwood Hotels & Resorts Worldwide Inc. (HOT - Analyst Report) declared the debut of St. Regis Hotels & Resorts brand in Africa with The St. Regis Mauritius Resort. The opening also marked the 30th St. Regis hotel worldwide.

St. Regis Hotels & Resorts, the classic luxurious brand from Starwood, is committed towards delivering unique experiences to travelers since it first opened in New York over a century ago. The brand has many hotel openings slated over the next few years in Changsha, Chengdu, Kuala Lumpur, Lijiang, Nanjing, New Delhi, Zhuhai, Abu Dhabi, Amman, Cairo and Dubai.

Mauritius has been one of the world’s top luxury tourist destinations backed by pleasant climate, natural and man-made attractions. The tourism industry contributes to around 11% of the GDP of the island nation. The Mauritian government expects tourist arrivals to increase 1.6% year over year to 980,000 in 2012. The Bank of Mauritius expects tourism revenues to ascend 1% to 43.2 billion Mauritian rupees in 2012. These factors justify Starwood’s decision of bringing St. Regis to the island.

Located on the southwestern tip of Mauritius, The St. Regis Mauritius Resort is in Le Morne Brabant. The resort complements the exotic beauty of the iconic Le Morne Brabant Mountain in the peninsula. Comprising 172 guestrooms and suites, it provides spectacular view of the Indian Ocean and signature brand amenities. It also boasts the rich cultural heritage of Mauritius for travelers.

The new property follows the recent St. Regis brand openings across the world in last 12 months. These include The St. Regis Sanya Yalong Bay Resort and The St. Regis Shenzhen in China; The St. Regis Bal Harbour Resort in U.S.; The St. Regis Doha and The St. Regis Saadiyat Island Resort, Abu Dhabi in the Middle East.  

Africa has been among the key markets of Starwood. The company currently has around 38 hotels in 15 African countries. In order to fortify its African presence, the company expects to increase its portfolio by 30% in the next three years. This includes a hotel under the St. Regis brand slated to open in Cairo in 2014.

Africa has an emerging tourism industry with tourism being a major revenue driver for many nations in the continent. According to United Nations World Tourism Organization (UNWTO), the tourism industry in Africa is growing at an average rate of 7.2% annually. According to UNWTO, Africa is seen to lead world tourism growth in 2012, followed by Asia-pacific, the Americas and Europe.

The demand for world class accommodation in the country caught the attention of Starwood. However, the company should be wary of its major competitor -- Marriott International, Inc. (MAR - Analyst Report) - who plans to open around 10 hotels in Africa by 2015.

We currently have a long-term Neutral recommendation on Starwood. Also, it carries a short-term Zacks #3 Rank (Hold).

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