We have been reporting earlier about the increased buying in the hotel sector and the trend gathering momentum after the economy taking a positive turn. As we have been saying that it is the large hotel trust funds with deep pockets who feature in most of these high value deals and transactions. Another such transaction has taken place recently in Chicago where Starwood Hotels & Resorts Worldwide Inc. (HOT), owner of the St. Regis and W brands, sold the W Chicago – City Center to Chesapeake Lodging Trust (CHSP) for $128.8 million, or $350,000 per room.
The agreement signed after the sale will see Starwood continue to operate the hotel. The hospitality company based in White Plains, New York, has entered into an agreement with the trust to manage the hotel under a 40 year contract. Starwood, who also own the Westin and Sheraton brands of luxury hotels has changed its strategy and has been open to selling its high end assets if a good deal is available. According to their president and chief executive officer, Frits van Paasschen, they would like to transform themselves into an asset light hospitality company with a focus on management.
Last year, the company sold two of its W properties in Manhattan and the luxury St. Regis hotel in Aspen, Colorado. They are always on the lookout for opportunities to sell high- quality assets like W Chicago – City Center. The Chicago hotel, located in the financial district is a premium property with room rates starting at $345 in the first week of this month. Chesapeake, the trust based in Annapolis, Maryland is happy with the deal as the recovery per room has registered a 19% increase in the first quarter as compared to the 2010 figures. It really seems to be a win-win situation for both the parties.