Starwood | Sector Overview

HOTELS & LEISURE

sector Overview:

Luxury hotels are enjoying a come back. A survey of 2007 hotel prices worldwide found that five star occupancy rates were up 15.2% compared to growth of just 4.8% in the budget sector. More people are travelling and they have put away their backpacks to do it in style. This has been helped by relatively continuous economic growth and the prevalence of low cost airlines which have enabled consumers to take more trips on a regular basis. Despite a dip in consumer spending, luxury hotels will remain big business and as long as people continue to revel in the experience escape, the outlook appears positive. The shift in focus of luxury moving from ‘product’ to ‘experience’ is indicative of the evolution of customer experience and expectation and is an area where several brands are making a mark.

Luxury hotel markets have been booming for the last few years and there is huge investment interest in this segment. From Dubai to Shangai and New York to Paris, this trend is coming from consumers, investors, developers and owners alike, who see hotels as undervalued assets with good collateral in an expanding market. In the first half of 2007 in the US alone, more than $11.5bn changed hands in upscale and luxury lodging.The sector has been particularly active due to recent increase in demand, short supply, and lead times for construction. This, coupled with an anticipated continued increase in revenue per available room, has created an enticing environment for investors as evidenced by the takeover of the merged Hilton Hotels Corporation by private equity group Blackstone for $26bn during the summer of 2007.

ONES WE ARE WATCHING

Hyatt
Hyatt gained fame with the opening of the world's first atrium hotel in Atlanta 1967. Now one of the largest hotel chains around its portfolio spans a wide range from value suites through to premium properties: Alongside the new ANdaZ brand that launched with the Great Eastern Hotel in London, at the top end of the market the Park Hyatt chain is focused on personalised experience with a boutique feel. The Park Hyatt Toyko, its flagship property, was featured in Lost in Translation and the company has been extending the brand, most notably to Chicago.

Jumeirah
This Dubai owned group has been investing heavily in premium properties around the world. As it seeks to become a major player in the industry its acquisition of such prestigious hotels as the Carlton Tower in London and Essex House in New York are complementing its collection of top locations back home. As Dubai, and the UAE as a whole, promote massive growth in the number of visitors coming either for stop-overs or medical tourism, Jumeirah is showing signs of leadership in the next generation of tailored hotel experiences.

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