Bloomberg News

Starwood to Set Up Aloft, Expand Four Points Hotels in Australia

October 17, 2012

Starwood Hotels & Resorts Worldwide Inc. (HOT:US), the hospitality group founded by Barry Sternlicht, will introduce its four-plus-star Aloft brand (HOT:US) in Australia and expand the presence of its Four Points by Sheraton in the nation.

The Stamford, Connecticut-based company plans to open as many as 15 Aloft hotels in Australia and have a Four Points by Sheraton hotel in all eight state capitals within five years, said Andrew Taylor, Sydney-based director of acquisitions and developments for the Pacific region.

“We haven’t seen the conditions we’re seeing now for at least the past 10 years, with record occupancies in Sydney, Melbourne, Perth and Brisbane, and rates have lifted quite dramatically,” Taylor said in an interview in Sydney on Oct. 16. “We’re pursuing Aloft and Four Points deals in both new- build projects and rebranding opportunities.”

Hotels in Sydney, Melbourne and Perth recorded occupancy rates above 80 percent in the year ended June 30, driven by a lack of new construction and demand from business travelers, according to figures from Chicago-based broker Jones Lang LaSalle Inc. Occupancies will climb to 87 percent in Sydney, 86 percent in Perth and 82 percent in Melbourne by 2015, according to forecasts by Sydney-based hospitality consultancy AHS Advisory.

The average room rate will surge to about A$260 ($270) in Perth in 2015, from about A$175 in 2011, AHS expects. In Sydney, the rate will climb to about A$215 from about A$185 and in Melbourne to A$200 from about A$176, AHS figures show.

Starwood this year has sold properties globally, including the Manhattan at Times Square in New York City, the W in Los Angeles and the W Chicago-Lakeshore as it focuses on managing, rather than owning, hotels. In Australia, the five-star Sheraton on the Park hotel in Sydney, overlooking Hyde Park, is its only owned property, Taylor said.

Recent Transactions

The company, whose hotels include the Westin, W and St. Regis brands, signed an agreement to take over the management of the Citigate hotel in Perth in June, Taylor said. It has re- branded the hotel, Starwood’s first in the Western Australian capital, as a Four Points by Sheraton, he said.

Starwood will open Melbourne’s only Sheraton Hotel in March 2014 as part of a mixed-use project that includes apartments and retail properties, according to Taylor. The property is being developed by the Golden Age Development Group, a private company based in the city.

“We’re not asleep at the wheel in the luxury space,” Taylor said. “But in the past, the criticism has been that Starwood was too focused on its luxury product. And Australia is a 4.5-star market.”

Starwood is in talks to manage a hotel that’s being developed in a city on Australia’s east coast, to be one of its “mid-market” brands and set to open in 2013 or early 2014, Taylor said, declining to provide further details.

It is also planning to enter Auckland with a Sheraton hotel within the next three years, Taylor said.

To contact the reporter on this story: Nichola Saminather in Sydney at nsaminather1@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net


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Companies Mentioned

  • HOT
    (Starwood Hotels & Resorts Worldwide Inc)
    • $83.6 USD
    • -0.68
    • -0.81%
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