Starwood Hotels & Resorts Worldwide is expanding its presence in India. The $16-billion hotel chain has nine brands and 1,000 properties in almost 100 countries. Starwood Hotels and Resorts Worldwide executive vice-president & chief brand officer Phil McAveety tells FE’s Vishakha Talreja about the group’s expansion plans. Excerpts:
What are your expansion plans in India?
At present, we have 29 properties operational and around 16 properties are under various stages of development. By 2012, we will have 45 properties operational. Of the 16 properties that are in the pipeline, 11 are management contracts and the remaining are franchisees—four Aloft, 2 Four Points, three Westin, two Le Meridien and five Sheraton hotels. We are bullish on mid-market brands- Aloft and Four Points which we are expanding in non-metros such as Jaipur, Chandigarh, Pune and Vizag. We are constantly in talks with developers to sign new contracts.
Are there any plans to being your luxury brands—W and St Regis—in India?
We are keen on opening W Hotels and St Regis in India and are scouting for partners. Since premium brands require huge investments, it is taking long.
You have had a long standing partnership with ITC. Are you looking for partnership with any other homegrown hospitality major?
We have eight The Luxury Collection and four Sheratons with them. Earlier we had an exclusive tie-up with them for Sheratons, but not any more. None of the upcoming Sheratons are with ITC. We are not scouting for partnership with any other hotelier in the country. We are only in talks with developers to expand our footprint in India.
Where does India stand in your global growth strategy?
India is a key market for us. Within Asia Pacific, India is second, just behind China. We have 62 properties in China and 83 are in the pipeline. We are bullish on Latin America and Brazil too. Besides tapping India’s inbound tourism market, we are also looking at the outbound growth. In fact, domestic tourism in India too has seen significant growth. Around 50% of our guests are now from the domestic market as compared to 40% earlier.
With foreign and domestic players expanding in India, is there fear of oversupply?
Though many players are expanding rapidly, there is still under supply of rooms in India. Indian companies have less of pure management contracts and more of owned properties. But as the Indian players are expanding we are increasingly competing for same contracts. We don’t own properties. Our model is asset-light not ownership driven. We own less than 5% of our properties worldwide. Those are also essentially heritage properties.
Are input costs putting pressure on margins?
Having a hotel in India is a profitable proposition even though room rates have taken a hit owing to the slowdown. In India, food and beverage is a revenue spinner and labour costs are low. But there are challenges like developing a hotel takes three to four years, though things are looking up and moving in the positive direction.
