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Starwood Grows Internationally

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World’s leading hospitality company, Starwood Hotels & Resorts Worldwide, Inc. remains steadfast in its goal to expand its presence in the international market. During the Asia Pacific Incentives and Meetings Expos (“AIME”), the company declared that it is set to unveil six properties in Australia and Pacific islands in 2014. Most of the company’s openings in the Pacific region will be under Sheraton — its most popular upscale brand.

Starwood had a considerable presence in the Pacific region with 14 properties, within which 9 are situated in Australia and the rest across the islands of Fiji and New Caledonia. Of the company’s new openings, two hotels — Sheraton Melbourne Hotel and Four Points by Sheraton Brisbane — will be located in the flourishing Australian market.

Moreover, Starwood will open one property each in Fiji and New Caledonia in 2014. The company has also entered into an agreement with Aggie Grey’s Hotel & Bungalows and Aggie Grey’s Lagoon, Beach Resort & Spa on the island of Upolu Samoa to develop two properties. Following these openings, the company will operate as many as 20 hotels in the Pacific region by the end of this year.

Starwood has a long-standing presence in Australia. The global hotel chain sees more development opportunities in Australia — one of the world’s wealthiest countries — with solid growth prospect. Within a limited supply environment, the country is set to witness a surge in demand for luxury accommodation driven by a considerable increase in the number of domestic as well as international travelers. In this situation, Starwood’s decision to expand in the country appears to be strategically apt.

Several Pacific islands like Fiji, Samoa and New Caledonia is also gaining popularity among travelers due to its scenic beauty.

Apart from opening new properties, Starwood is also focusing on improving its loyalty program, Starwood Preferred Guest (“SPG”) to attract more guests. In fact, to gain a competitive edge in the Pacific region, Starwood formed a global partnership with Virgin Australia — the second-largest airline of Australia — to bolster their respective loyalty programs — SPG and Velocity Frequent Flyer. This strategic alliance will allow Starwood members to redeem their points at Velocity Frequent Flyer and vice versa.

Owing to the saturation in the U.S. market, several major hoteliers such as Hyatt Hotels Corp. (H - Free Report) and Wyndham Worldwide Corp. are also exploring growth opportunities abroad.

Starwood, which currently holds a Zacks Rank #4 (Sell), recently posted mixed fourth-quarter 2013 results. Although the company’s earnings beat the Zack Consensus Estimate, its revenues missed the same due to a decrease in Vacation ownership and residential sales and services revenues. Investors may, however, consider Marriott International, Inc. (MAR - Free Report) which is a better-ranked stock in the hotel sector carrying a Zacks Rank #2 (Buy).

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