Has Starwood Hotels & Resorts Worldwide, Inc (HOT) Become the Perfect Stock?

Starwood is just one player in a highly competitive industry that has been under pressure from poor economic conditions. But along with InterContinental Hotels Group PLC (NYSE:IHG), Starwood has been more exposed to weaker economic forecasts around the world, as Starwood gets nearly 40% of its revenue abroad, and Intercontinental has a roughly 50/50 split between its Americas divisions and the rest of the world. With a strong dollar and improving business conditions within the U.S., Starwood has had a competitive disadvantage to more domestically focused chains, as peers Hyatt Hotels Corporation (NYSE:H) and Wyndham Worldwide Corporation (NYSE:WYN), for which international revenue is a much lower 20% to 30%.

Moreover, Starwood has taken massive steps toward getting its debt under control. In December, it offered $350 million in 10-year notes at interest rates of just 3.125%, planning to use the proceeds to retire notes paying 7% to 8% in interest due over the next six years. By taking advantage of low rates now, Starwood will avoid any unpleasantness in having to refinance those notes as they mature.

For Starwood to improve, it needs Europe to get out of its malaise and start attracting business travelers again. That could take a while, though, but Starwood has made big strides toward getting closer to perfection and could continue to make progress in the years to come.

The article Has Starwood Hotels Become the Perfect Stock? originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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