Westin Hotels Bought By Phoenix Firm -- Ownership Changes Three Times In Six Years

Westin Hotels & Resorts will be sold to a Phoenix-based hotel company for $1.57 billion, the third change in ownership for the Seattle-based upscale hotel chain in six years.

Starwood Lodging, a real-estate investment trust that manages a number of hotels under different names, said it will buy Westin's stake in 90 hotels in 23 countries, including the United States, Europe, Mexico and Asia.

The deal creates a company that will operate 219 hotels in 38 states and 23 countries and have more than $4 billion in annual sales. It will operate under the name Westin Hotels & Resorts Worldwide, with current Starwood head Barry Sternlicht as chairman. Juergen Bartels, Westin's chairman and chief executive, will be chief executive officer.

The agreement calls for payment of $178 million in cash and the issuance of Starwood Lodging stock to the buyers.

About 200 people are employed at the Westin headquarters in downtown Seattle. A Westin spokesman said "it is anticipated that Westin will remain in Seattle," but added that the decision has not been finalized.

Westin had revenues of $2.6 billion in 1996. It is privately held, so no profit details are available.

Westin's collection of luxury hotels includes the St. Francis in San Francisco and the Arizona Biltmore in Phoenix, as well as the twin-towered Westin here. It also has resorts along the Mexican coastline, and recently acquired a group of boutique hotels in Europe.

Starwood gains a well-known, upscale hotel name to afix to its string of more than 100 hotels, now bearing the Sheraton, Omni and Hilton flags, among others. Starwood wants its own chain, to avoid costly franchise fees.

It has been on a buying spree recently. In early August, Starwood bought three Westin-managed hotels and resorts in Mexico from a Mexican group that developed the properties in the early 1990s. It recently bought a string of 14 hotels, mostly in New England, from a privately held group for $440 million.

Starwood also is beginning to build its own hotels, including one in downtown Seattle, where construction recently began. It owns and recently remodeled the Edmond Meany Hotel in the University District.

Westin was owned by a partnership led by Goldman Sachs and real-estate investment fund Starwood Capital. Starwood Lodging Chairman and CEO Barry Sternlicht also heads Starwood Capital, based in Greenwich, Conn.

Goldman Sachs and Starwood Capital bought the Westin in 1995 from Japan's Aoki Corp. for about $537 million. Nomura Asset Capital helped to finance that acquisition and owns a minority interest in the hotel chain.

A number of other chains apparently looked at the Westin for possible purchase. The luxury-hotel business has been in high demand recently. After years of losses in the 1980s, the hotels are profitable once again, with demand for such luxury rooms exceeding supply.

Stephen Dunphy's phone message number is 206-464-2365. His e-mail address is: sdun-new@seatimes.com

This report contains information from Bloomberg Business News.