Starwood sees hotel space consolidation

Starwood Hotels & Resorts Worldwide Inc, a global hospitality player, operates over 7,500 rooms in India and has a pipeline of another 5,000. Simon Turner, president -global development, Starwood, told Ashish K Tiwari that amid the ongoing economic volatility his company’s strategy is to have a quality hotel development pipeline. Excerpts from the interview.

What’s your take on the Indian hospitality market, given that things are not really looking good for the sector?
It is interesting to look at each year and see how things have changed. We have been in India since 1973. So we have been in India for a long time and we will be in India for a long time. We will stay focused on increasing our footprint. While the world and India experience volatility, our goal is not to make outrageous growth claims. Our approach is to have a quality hotel development pipeline and not a pipe dream. There will be political and economic challenges in India, most of which will work out on its own.

Do you see consolidation in the Indian hospitality market, especially with respect to project developments?
The properties we build will be operational for the next couple of decades or more. I think that while one has to be concerned about the near-term economic volatility in the world and India, what also needs to be understood that our owners are investing in hotels for a long term.

But there is a lot of concern with the developer community. Considering Starwood has a very significant pipeline, is the stress showing on your developments, too?
Our development mantra is right properties, right places and right partners. As the market gets more and more volatile, some of the most speculative or less experienced developers / owners will reconsider their plans and there may be some consolidation. While I am confident our development partners will come through it fine, they may be also be better-positioned to take advantage of the market situation and acquire projects. We have been doing deals in India since 2005, have signed 45-50 deals and had to terminate only one agreement because it didn’t happen. In our pipeline today there are a couple of projects on hold. So out of them, may be less than five hotels are either kind of on hold or didn’t happen. It is a very low attrition rate, if you look at other companies. If you look at the quality of pipeline even today what people have signed, I think a lot of those deals don’t happen for our competitors. Whereas we’re are pretty selective and you know sometimes people think we are too selective, but I think we really focus on picking up the right partner. Hotel development is not 20-20 game but a five-day test.

So can we say your target of 100 hotels in India is on track?
Hundred is our goal in terms of opened or under-construction hotels wherein 33 are already operational and another 22 are under-construction. We will get to the India-100 aspiration and it is not a matter of if, it’s a when. We’re spreading up our organisation and investing in the Starwood infrastructure in the form of having a call centre in India that is primarily focusing only on our Indian hotels and largely on the domestic traffic. We have the largest in-country team among all the global hotel companies operating in India.

Starwood is the only hotel company that is yet to take equity positions in India…
We as an industry sometimes tend to get overexcited about making big announcements. A few years ago, there were a couple of very large announcements between global brands and local Indian investors saying we’ll do over 50 hotels and then a few years on, the fizz just sort of goes away. Running global brands, creating multilingual web pages, setting up a customer call centre, investing in infrastructure and having a loyalty programme that makes sure the Starwood Preferred Guest clientele is loyal is also an investment of a different kind.