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Expansion Policy
What is your policy to strengthen your company worldwide?
One of the major opportunities for us is that, as global chains, which grew larger by buying up other chains, we do recognise shortfalls in providing clear and distinct brands. Plus, any attempt to differentiate via product branding, such as Westin’s Heavenly Bed, is quickly copied and becomes a qualifier, not differentiator. What happens is we have a lot of upscale brands that look alike physically. How do we make the brands distinctive to the consumers and drive loyalty from them? Starwood wants to take the leadership role in making that brand distinction. We believe it is time the hotel industry gets out of the hardware business and describes its hotels by the next shower or the next bed.
This is a defining time for Starwood. We are not just in the business of selling beds or guestrooms, but rather experiences and memories. We are migrating from being a real estate company that owns hotel brands to a branded lifestyle hotel company that owns some real estate, with world class brands that emotionally connect with our guests. There is essentially in shift in focus here now.
Huge inbound tourism into India and China as we all know, but the speed at which supply is increasing to meet the demand is still not up to speed to vie for the market share in these regions. We have recently just set up a regional office in India, to understand the market better and to aggressive grow our presence there since China and India are markets of the future.
What are the main obstacles – benefits in expanding your brand?
Three major uncertainties remain for 2006. First, it is likely that terrorism will continue to be present. However, experience shows that its impact lately has been rather limited and short-lived. Travellers overall have been more resilient, and have assumed the risk and been undeterred by external threats.
Secondly, rising energy prices, inflation and interest rates might finally change the economic scenario. This has not been much of a problem until now, as the price hike has mostly been an expression of the strong economic growth and the corresponding demand for energy. Should this situation continue and affect economic growth in Asia, the industry could start feeling the impact.
Finally, the further spread of avian flu could be a serious threat for the tourism sector. Avian flu has been present in the world for several years now and it is currently limited to birds and isolated cases of people living in very close contact with infected animals. As yet no transmission of the virus between humans has been detected and it is hard to say whether, when and where such a mutation will occur.
What we can do is to monitor the situation closely and prepare for it, should it happen. In spite of the current uncertainties I am confident that tourism and all its stakeholders including global chains like Starwood will weather the storm if it does come in the best way possible.
Which destinations have more dynamic potentials?
2006 will be the highest growth ever for Starwood Asia Pacific (last year was the record, with 120 hotels in Asia-Pacific including Le Meridien, and 28 under construction). We hope to double that this year.
Asia-Pacific is clearly a growth region, led by China, then India. Beyond that, there are many other buoyant markets like Thailand and Vietnam.
Our midscale brands will grow faster than upscale ones. The market favors the midscale growth because the GDP in Asia is still low compared with markets in the US and Europe. The market is much bigger for Aloft and Four Points and we see great opportunities in that segment.
In Asia Pacific, we will also be looking at the right environment with right partners to expand our footprints not just by the traditional (management contract) means, but by franchising.
Starwood Strategy
Business Segment
New Hotels
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
