Starwood Hotels Betting on China (HOT, CD)

From an article in Forbes:

Starwood Hotels & Resorts Worldwide (ticker: HOT), owner of the Westin and other luxury hotel chains, expects business in China to boom in the next few years as the country’s economic growth spurs spending by well-heeled travelers.

The number of hotels that the company manages will grow by two-thirds, to 40, by the end of 2007, compared with 24 at the end of last year, says Robert Hogenstijn, the company’s China operations manager. And that's not the end of it. Starwood has signed contracts for another eight hotels that will open in 2008.

Only a few of Starwood's China hotels are franchised, even though "it’s a good strategy," Hogenstijn says. "Overall, there is a huge potential for franchising, and it will grow very much in China--especially if you want to grow very fast. You can take over existing properties and go that way. The brand promise that we deliver is something that is difficult to deliver, if you start to franchise it. We prefer to keep a higher level of control over our properties."

Among the U.S. hotel companies that are franchising in China is Cendant (ticker: CD), which has been making progress with its Super 8 budget entry.

Speaking in early December at the Wachovia Real Estate Securities Conference, Starwood Hotels & Resorts CFO Vasant Prabhu said:

We are expanding dramatically in China. We are always the number one five-star hotel in second-tier cities in China after having established a big presence in the major cities.

(Quotes are from the CCBN StreetEvents transcript.)

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