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August 27, 2012

Starwood Hotels & Resorts to Double Portfolio in Russia And CIS With Seven New Hotels by 2015 – Starwood Announces Deal to Open Russia’s First Aloft Hotel

(Moscow, Russia – August 27, 2012) Starwood Hotels & Resorts Worldwide announced plans to expand its portfolio throughout Russia and the Commonwealth of Independent States (CIS). Over the next three years, Starwood will more than double its portfolio in the region with seven new hotels, including the debut of the Aloft brand in Russia with the new Aloft St. Petersburg, a deal that was announced today. Emphasising the importance of the region as one of the world’s fastest-growing hotel and travel markets, CEO Frits van Paasschen and members of Starwood’s senior executive team visited Russia this week, travelling to key growth markets, including Moscow, St. Petersburg, Sochi and Rostov-on-Don.

“As one of the world’s fastest-growing outbound travel markets, Russia represents a great opportunity for us,” said Frits van Paasschen, President and CEO, Starwood Hotels & Resorts. “With a rising middle class, growing disposable income, an affinity for luxury brands and huge pent-up demand for foreign travel, Russia is emblematic of the growth we are seeing in regions around the world and key to our global growth plans.”

Last year, Starwood opened three new hotels in Russia and CIS, marking a number of key milestones, including the highly successful debut of the W brand in Russia with the opening of W St. Petersburg and the entrance of Starwood into Ukraine and Azerbaijan.

“Moscow has more billionaires than any other city in the world and yet Russia is seriously under-hoteled, with only 28 high-end hotels,” said Simon Turner, President of Global Development & Acquisition, Starwood Hotels & Resorts. “Russia and CIS offer tremendous growth opportunities, especially within markets that do not have major internationally-branded hotels. We plan to expand our brands throughout the region in the years to come with development partners who have a proven track record of success and are looking for a new and exciting growth vehicle.”

Starwood Continues Expansion
With more than 70% of the world’s economic growth coming from fast-growing markets over the next few years, Starwood is focused on expansion in developing markets such as Russia as well as key emerging markets including Ukraine and Tajikistan.

As part of this strategy, Starwood is investing in development, sales and expanding its Starwood Preferred Guest (SPG) program in Russia, and will open seven new hotels across Russia and CIS in the next three years. Key highlights include:

  • The debut of Starwood in Kiev with the opening of Sheraton Kiev Olympiysky, Ukraine in 2013. The hotel will be located in central Kiev at Troitskaya Square, just steps away from famous Khreschatik Street and other city landmarks.
  • The entry of Starwood into Tajikistan in 2013 with the opening of a new Sheraton hotel in the country’s capital city of Dushanbe.
  • Starwood’s second Sheraton hotel in Moscow with the opening of Sheraton Moscow Sheremetyevo Airport in 2013. This new 10-storey hotel will be part of the Skypoint Business Park, located 800 metres from the international terminal of Sheremetyevo Airport.
  • The debut of Starwood in three emerging Russian markets with the openings of a Four Points by Sheraton hotel in Kaluga and a Sheraton hotel in Rostov-on-Don in 2014, followed by the opening of Sheraton Perm in 2015.
  • Russia’s first Aloft hotel with the new Aloft St. Petersburg. Scheduled to open in 2015, Aloft St. Petersburg will be part of an emerging business district within close proximity to galleries, restaurants and green spaces, and will offer an entirely new approach to Russia’s mid-market category.

Sheraton First-Mover Advantage
While Starwood is committed to the growth of all of its brands throughout Russia and CIS, the company’s most iconic brand – Sheraton Hotels & Resorts – plays a critical role in its development strategy.

“With the largest footprint among Starwood’s portfolio and one of the world’s most recognised hotel brands, Sheraton is often the brand that allows Starwood to enter key markets,” said Roeland Vos, President, Starwood Hotels & Resorts, Europe, Africa and Middle East. “Nowhere is Sheraton’s ‘first-mover advantage’ more evident than in Russia and CIS where the Sheraton brand is driving our growth in key Russian and Ukrainian markets, such as Perm, Rostov-on-Don and Kiev.”

Starwood CEO and Senior Executives Visit Russia
Underscoring the importance of the region as one of Starwood’s fastest-growing hotel and travel markets, van Paasschen and seven members of Starwood’s senior executive team visited Russia this week. On the trip, Starwood executives met with hotel owners, customers and investors in Moscow, St. Petersburg, Rostov-on-Don and Sochi with the goal to further understand, appreciate and ultimately leverage different cultural perspectives and approaches to business.

Starwood currently operates five hotels in Russia and CIS, including: Hotel National, a Luxury Collection Hotel, Sheraton Palace Hotel, both in Moscow, and the recently opened W St. Petersburg in Russia, Sheraton Baku Airport in Azerbaijan and Four Points by Sheraton Zaporozhye, Ukraine.
Starwood Hotels & Resorts Continues Expansion in Russia with the Debut of Aloft Hotels in St. Petersburg – Slated to open in 2015, Aloft St. Petersburg is Set to Shake up Russia’s Mid-Market Hotel Category
Starwood Hotels & Resorts Worldwide and its destination sensation brand, Aloft Hotels, announced also the signing of Aloft St. Petersburg. Created to shake up the staid and traditional mid-market hotel sector, Aloft is redefining the category by delivering urban-influenced, modern and vibrant design and a social guest experience at an affordable price point. The opening of Aloft St. Petersburg in 2015 will mark the debut of Starwood’s Aloft Hotels brand in Russia.

Owned by Remstroyintour LLC and Ludmila Kudryavtseva, Aloft St. Petersburg will be located in an emerging business district within close proximity to galleries, restaurants and green spaces, and will offer an entirely new approach to hospitality in the city of St. Petersburg. This deal was announced earlier today at a press conference in Moscow with Starwood President & CEO Frits van Paasschen and Roeland Vos, President of the company’s Europe, Africa and Middle East (EAME) Division.

“We are delighted to partner with Remstroyintour LLC and Ludmila Kudryavtseva to open the first Aloft hotel in the country,” said Vos. “We see great opportunities to grow our Aloft portfolio in markets like Russia where there is a strong demand for affordable yet stylish, innovative hotel brands. The signing of Aloft St. Petersburg underlines Starwood’s continued commitment to expanding our portfolio of mid-market brands in Russia and throughout Europe.”

A vision of W Hotels, Aloft has been an industry game-changer since its 2008 debut. Its vibrant “style at a steal” brand proposition is geared toward the next generation of travellers, pioneering initiatives in music, design and technology, while providing modern comforts and a fun social guest experience. The Aloft brand consistently garners high guest satisfaction scores, with select hotels ranking among TripAdvisor’s 2012 “Top 25 Trendiest Hotels in the US and around the world.”

“Aloft has become a popular choice for owners and developers looking to fill the void in the mid-market hotel category,” said Bart Carnahan, Senior Vice President, Acquisitions & Development, Europe, Africa and Middle East Division, Starwood Hotels & Resorts. “We are focused on growing Aloft in secondary and tertiary markets throughout Russia and CIS, where we see the greatest demand for an alternative to the mid-market category.”

“I am pleased to partner with Starwood to bring the Aloft brand to Russia. This hotel will start a new page in the history of the Russian hotel industry,” commented owner Ludmila Kudryavtseva.

Situated in the northern part of the city overlooking the Neva River, Aloft St. Petersburg will offer atmospheric public spaces where guests can mix and mingle, read the paper, work on laptops, play a game of pool or grab a drink with friends at the re:mixSM lounge and w xyzSM bar.

All 200 loft-like guest rooms will feature the brand’s signature high ceilings, oversized windows and an ultra-comfortable platform bed as well as large walk-in showers with complimentary Bliss Spa products. Guests will be able to re-energise in the re:chargeSM fitness centre and grab a bite to eat at re:fuel by AloftSM, a one-stop, 24-hour grab-and-go food and beverage area, offering sweet, savoury and healthy food, snacks and drinks. For work meetings, training courses and presentations, the hotel’s two board rooms will be equipped with the latest generation of audio-visual hardware.

Starwood currently operates three hotels in Russia, including Hotel National, a Luxury Collection Hotel and the Sheraton Palace Hotel in Moscow, as well as the recently opened W Hotel in St. Petersburg. Aloft St. Petersburg will be Starwood’s second hotel in the city.
Pebblebrook Hotel Trust Acquires W Los Angeles – Westwood
Pebblebrook Hotel Trust announced that it has acquired the W Los Angeles – Westwood hotel for $125.0 million. The 258-room, all-suite, luxury, full-service hotel is located in the Westwood neighborhood of Los Angeles, California. The property will continue to be managed by Starwood Hotels and Resorts (“Starwood”).

W Los Angeles - Westwood

W Los Angeles – Westwood

“We’re thrilled with the acquisition of W Los Angeles – Westwood in the dynamic, high-barrier-to-entry West Los Angeles neighborhood of Westwood,” said Jon Bortz, Chairman, President and Chief Executive Officer of Pebblebrook Hotel Trust. “The hotel is ideally located adjacent to UCLA and Westwood Village, one of Los Angeles’ most popular shopping, dining and entertainment destinations, and is near the iconic Wilshire Corridor and Century City. Los Angeles attracts over 25 million total visitors annually and is the second-most visited city by overseas visitors. Steady demand growth along with a historically highly constrained supply environment, provide excellent operating fundamentals for the market and the hotel.”

The 258-room W Los Angeles – Westwood hotel is attractively located in the Westwood neighborhood of Los Angeles. This location offers a diversity of demand generators and convenient access to all the tourist attractions, restaurants, nightlife and entertainment industry activity in Hollywood, West Hollywood, Beverly Hills, Century City, Wilshire, Brentwood, Downtown Los Angeles and Santa Monica. Westwood Village is extremely pedestrian-friendly and is the premiere shopping and commercial center of Westwood, offering a wealth of amenities in a charming and unique setting while hosting national chain retailers, specialty stores, fine dining and casual restaurants, a full array of professional and convenience services, fitness centers, museums and vintage movie theaters that host many of Hollywood’s film premieres. Westwood is also in the heart of the Wilshire Corridor, which features ultra-luxury, high-rise condominium buildings, Class A office buildings, smaller boutique buildings, as well as the University of California, Los Angeles (“UCLA”), which is the largest university in the state of California and is home to a student population of nearly 40,000.

W Los Angeles – Westwood features 258 luxurious all-suite guest rooms with signature W Beds and state-of-the-art technology and entertainment. The hotel is known as an urban resort and features expansive, superiorly landscaped outdoor areas, as well as WET, a heated modern pool and cabana filled relaxation area, and The Backyard, a stylish, casual poolside bar and restaurant. The hotel offers 3,300 square feet of indoor meeting space and Bliss Spa, an upscale spa that offers massages, body treatments/wraps, manicures/pedicures, facials, waxing and a retail store. The property is also home to SWEAT, a fully equipped, 24-hour fitness center, as well as a 132-space parking garage with valet service and 24-hour room service. In addition to The Backyard, the hotel boasts two other food and beverage venues: NineThirty, a full-service restaurant that serves three meals daily and specializes in merging modern American cuisine with international influences and Whiskey Blue, a high design, music-oriented, art inspired bar.

In 2011, W Los Angeles – Westwood operated at 84% occupancy, with an average daily rate (“ADR”) of $258 and room revenue per available room (“RevPAR”) of $216, 16% below the property’s prior RevPAR peak in 2008. During the next 12 months, the Company currently forecasts that the hotel will generate earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $8.3 to $8.8 million and net operating income after capital reserves (“NOI”) of $7.0 to $7.5 million.

Pebblebrook Hotel Trust and Starwood are planning a multi-million dollar public space renovation that will re-concept and renovate the NineThirty restaurant, completely renovate the ground floor lobby, lobby bar and public space, and upgrade and refurbish the meeting space, pool area and The Backyard.

The hotel will continue to be managed by Starwood, pursuant to a long-term management agreement. Starwood also manages two of the Company’s other hotels: The Westin Gaslamp Quarter hotel in San Diego, California and W Boston in Boston, Massachusetts.

“We’re thrilled to again be partnering with Starwood at W Los Angeles – Westwood. We look forward to future success together as we continue to improve this high-quality hotel,” continued Mr. Bortz.

“We have a great working relationship with Pebblebrook Hotel Trust on The Westin Gaslamp Quarter, San Diego, W Boston and Sheraton Delfina Santa Monica, and are pleased to expand our partnership with this iconic property,” said Simon Turner, President of Global Development for Starwood.

The Company expects to incur approximately $0.5 million of costs related to the acquisition of the hotel that will be expensed as incurred.

The acquisition of W Los Angeles – Westwood brings the total number of properties in the Company’s portfolio to 24, comprising $1.9 billion of invested capital since the Company completed its initial public offering in December 2009. This acquisition marks the Company’s third investment in the Los Angeles market, including the 237-room Mondrian Los Angeles in West Hollywood, California and the 310-room Sheraton Delfina Santa Monica in Santa Monica, California.
Aloft Debuts in Asheville, North Carolina
Aloft Hotels, the “Style at a Steal” brand by Starwood Hotels & Resorts Worldwide announced it has opened its 60th hotel globally with the opening of Aloft Asheville Downtown in Asheville, North Carolina. Owned and operated by McKibbon Hotel Group, Inc., Aloft Asheville Downtown will offer 115 stylish guest rooms and over 1,800 square feet of unique outdoor meeting space on its Air Level pool deck and The Ledge observation deck, as well as 649 square feet of indoor meeting space in an unbeatable downtown location.

“We are delighted to debut Aloft in Asheville, a celebrated arts destination,” said Brian McGuinness, Senior Vice President of Specialty Select Brands for Starwood. “Aloft has cultivated a loyal following of Gen-Y-minded guests who appreciate the brand’s urban design aesthetic and buzzing social scene.”

Aloft Asheville Downtown is walking distance to numerous restaurants, breweries, shops and galleries. Just minutes from the Blue Ridge Parkway and Biltmore House and Gardens, the hotel is within walking distance of Pack Square Park, Diana Wortham Theatre and the renowned Orange Peel music venue. Aloft Asheville Downtown features artwork in public spaces and guest rooms that is produced entirely by local artists, and is the only hotel in downtown with convenient covered parking.

“We believe that Starwood’s Aloft brand will be a great addition to Asheville, and the location and amenities that this hotel has to offer can’t be beat,” explained John McKibbon, Chairman of McKibbon Hotel Group. “We’ve worked hard to incorporate many local details into the hotel, from the artwork to bar and menu items, and we expect the hotel to become a popular destination for both travelers and locals.”

Pioneering initiatives in pop culture, design, and technology have positioned Aloft as a must-have brand for the next generation of travelers. Aloft hotels has reported consistently high guest satisfaction scores since launch, reflecting the success of its modern, and vibrant design at an affordable price point. The Aloft social guest experience, with the buzzing re:mix™ lounge and happening w xyz™ bar, has earned select hotels within the portfolio designations on TripAdvisor’s 2011 “Top 10 Trendiest Hotels in the US” and “Top 10 Trendiest Hotels in the World” rankings lists.

 

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