Starwood (HOT) Pins Hopes On Hollywood’s W Hotel To Lead The Brand’s Revival

Bloomberg reports that Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) is trying to polish its W brand, after lenders took over two properties last year.

The $350 million hotel’s future may depend on Hollywood’s revival as an entertainment hub. The W at Hollywood Boulevard, and Vine Street, which opened Jan.15, is designed to attract tourists and movie-industry customers at a time when room demand is falling, and the area is receiving fewer visitors.

“The hotel is the W’s flagship,” said Carlos Becil, North American vice president for the chain. Revenue per available room at U.S. luxury hotels fell 24% in 2009, the most of any industry segment, as travelers stopped spending. In California, the number of hotel foreclosures more than quadrupled to 62, and defaults jumped sixfold.

Starwood has been selling assets to cut long-term debt of $2.96 billion as of Dec. 31. It agreed in July to sell the W San Francisco for $90 million to Keck Seng Investments (Hong Kong) Ltd. Lenders took over the W San Diego in June after owner Sunstone Hotel Investors, Inc. was unable to modify the terms of its $65 million securitized mortgage. The W New York Union Square, bought by Dubai World in 2006, was auctioned in December to a mezzanine lender after the company missed a loan payment.

The W chain was Starwood’s best performer in Q4 as revenue per available room fell 2.3%, compared with a 7.2% decline systemwide. Starwood is targeting the brand’s expansion to more than 50 hotels by next year from 36. Earlier this month, Starwood Hotels reported adjusted profit that was double analysts’ estimates, and also, raised its revenue forecast.

The company, which has been cutting costs to deal with decreased travel spending, said demand improved in the quarter as bookings for groups, and business travelers rose. The company is banking on glamorous touches to attract visitors to the 305-room W Hollywood, where a red carpet to the front desk and a round marble staircase to the sunken lobby bring back memories of Hollywood’s “Golden Age” in the 1940s.

A third of the property’s 143 apartments have been sold, Russ Filice, sales director at Sotheby’s International Realty representing the residences at W Hollywood, said last month. Occupancy at the hotel is 50%, compared with about 62% for Starwood brands in total, in the fourth-quarter.