Starwood to Open Aloft-Element Hotels - Analyst Blog

With the demand for mass market brands increasing, Starwood Hotels & Resorts Worldwide Inc. HOT recently announced plans for a dual-branded hotel development in Boston involving its Aloft and Element brands. Both the hotels are scheduled for a 2016 opening.

The 330-room Aloft Boston Waterfront and 180-room Element Boston Waterfront will be located on D Street, directly across the Boston Convention & Exhibition Center. Asset manager, Ares Management, and commercial real estate company, CV Properties, will partner for the ownership and development of the properties.

The hotels will be located at a convenient distance from Logan International Airport and the Back Bay, the financial district. Further, both the properties will be in close proximity to leading attractions including Quincy Market and Faneuil Hall. This will be the second Aloft-Element dual hotel development in Boston, after the Aloft and Element Lexington opened in 2008.

In fact, the increasing demand for the Element brand has prompted Starwood to develop dual-branded hotels featuring these two brands in key urban locations. In 2017, Starwood will open an Aloft–Element dual branded hotel in the Tobacco Dock region of East London, marking the Element brand's debut in the U.K.

The concept of dual branded hotels has become increasingly more popular with developers and hotel companies like Hilton Worldwide Holdings Inc. HLT and Marriott International, Inc. MAR over the past two years, driven by investor and traveler demand for select-service and extended-stay segments. Additionally, the cost-savings that result from sharing construction and operational expenses acts as an added advantage.

Starwood is also looking to expand its Element brand by opening 15 more hotels by 2017-end. In addition to domestic expansion, Starwood also has plans to launch the brand in Germany and China. The company plans to double its portfolio in the upcoming 2 years and the 15th Element branded hotel is slated to open later this year.

With these contemporary brands such as Element and Aloft, Starwood is seeking to grab a major fraction of the Lifestyle sector. By 2015, the demand for mass market lifestyle brands are projected to increase buoyed by their exclusive offerings.

Starwood currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the same sector is Intercontinental Hotels Group plc IHG sporting a Zacks Rank #2 (Buy).