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Westin to Step into San Jose in '13

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Westin, one of the upscale brands of Starwood Hotels & Resorts Worldwide Inc. is set to unveil a property in San Jose, California in July 2013. The upcoming property will be a renovated and rebranded national historic hotel called the Sainte Claire which was set up in 1926. The new hotel will feature 10,000 square feet of meeting space along with numerous other amenities.

Starwood set a new trend in hotel designs with its Westin brand and has spread its operations globally with more than 186 hotels in over 36 countries. Westin continues to be a star performer and immense opportunities for conversion are prevailing around different markets across North America.

The brand rides on a high growth trajectory and has already spread globally, with properties in North America, Europe, Latin America, India, Southeast Asia and China. Management appears optimistic on the brand as it has significant refurbishment in progress at the Westin Peachtree, Atlanta. In the first quarter of 2012, RevPAR growth at Westin was 7.2% or 7.6% in constant dollars, the third highest among all the other brands.

Westin, which falls into the Luxury category, has seen success in the international market and remains on track to open its 200th property within the next one year. In fact, since luxury resorts have a higher demand abroad, Starwood has 90% of its Luxury pipeline outside North America.

We believe San Jose is a strategic fit for new hotels, as it is an important business destination. The hotelier is all set to tap the market, as the area attracts business travelers due to the presence of high-tech companies like Apple Inc. (AAPL - Free Report) , Google Inc. and eBay Inc. (EBAY - Free Report) in adjoining areas. Further, the property is in proximity to several popular sightseeing and cultural spots. Starwood’s major competitors, Hyatt Hotel Corp. (H - Free Report) and Marriott International Inc. (MAR - Free Report) also have a considerable presence in Silicon Valley. 

Starwood currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We also reiterate our long-term Neutral recommendation on the stock.

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