<div><strong>Frits van Paasschen</strong>, President and CEO of Starwood Hotels & Resorts Worldwide, is a man who believes in the long race. An avid marathon runner, van Paaschen is leading Starwood’s push into emerging markets. Already the chain has nearly twice as many rooms as rivals Marriott or Hilton in emerging markets. He shares Starwood’s plans for India in an exclusive conversation with BW|Businessworld's <strong>Chitra Narayanan.</strong></div> <div> </div> <div><strong>What is the current outlook for a hospitality company? Where do you see growth?</strong></div> <div>From a global perspective we believe we are at the cusp of a golden age in high-end travel. Not just in India, but around the world. A rising middle class, a growth in affluence and at the same time more global interconnectedness. We have young people with means who want to go places. But equally importantly, busineses that are based in mature, slow growth markets coming in search of growth to rapidly growing markets -– both these factors are driving demand for travel worldwide and certainly that is playing out in India as well.</div> <div> </div> <div><strong>Who’s your target? Is it the global traveller or the Indian traveller?</strong></div> <div>When it comes to global versus local brands, we find that our brands appeal to people across cultures, across backgrounds, and across age groups. In India, we see considerable growth in both global travellers as well as Indian customers. We are both a global and a multi-local company. And for us, when we look at markets around the world, almost without exception, there are more local travellers at our hotels than global. That percentage might be 60 or 70 per cent local. So, a considerable piece of our business is global as well.</div> <div> </div> <div>If we look at loyalty customers, which focuses on people who are mega travellers, people who travel 25-30 times a year. Today our occupancy around the world is driven half by loyalty customers. In other words, one in every two beds we fill every day is a Starwood Preferred Guest (SPG) loyalty programme member. And, that same percentage works in India too. We have more occupancy driven by local Indian SPG members than global SPG members. But it’s a combination of both. The other thing is that roughly 40 per cent of the spending by our Indian SPG members is outside India. </div> <div> </div> <div>That means growth opportunities for us in South East Asia, Middle East, and in Europe. All the kind of places where Indian travellers are visiting.</div><div> </div><div><strong>Read: <a href="http://www.businessworld.in/en/web/guest/magazine">The Great Hotel Swayamvara</a></strong></div> <div> </div> <div><strong>You mentioned earlier that it is golden age for luxury travel, does that mean your focus is more on high end brands?</strong></div> <div>Our skew is more towards high end. Four points by Sheraton and Aloft are Four star. We go up from there. So, we focus on the high-end market. We believe that there are big similarities among travellers from four star up to luxury. Lower than four star – you are looking at a different type of traveller.</div> <div> </div> <div>In India, we have eight of our nine brands present today. We see a balanced growth across our portfolio of brands – be it Four Points by Sheraton or across Sheraton, Westin, building on the heritage of Le Meridien. We are adding St Regis in Delhi. alongside the 10 Luxury collection we have in partnership with ITC.</div> <div> </div> <div><strong>Are you also growing through the segmented micromarkets route?</strong></div> <div>There is segmentation both by location and by brands. If you look at drive time across Mumbai, if you are business person with some work in one part of the city, you wouldn’t want to drive two hours to get there. There is no question that a city as large as Mumbai you would require many hotels across localities. Cities in India are developing by adding almost newly created cities – be it Whitefield (Bangalore) or Gurgaon or Noida (Delhi NCR). These are opportunities for us to grow. I wouldn’t even call them micromarkets but as large markets where having a presence is important.</div> <div> </div> <div>At the same time, we see segmentation by brands as well. We could have a W hotel and an Aloft side by side in the same marketplace, and they wouldn’t compete against each other as they would cater to different guests. They would both be luxury hotels but would complement rather than compete with each other. By having more than one hotel in a specific market, even a micromarket, we are better able to support and sell and promote those properties together.</div> <div> </div> <div><strong>But with 8-9 brands in your portfolio, isn’t it a challenge to create such distinct brand segmentation?</strong></div> <div>If you were to put three of our luxury hotels next to each other all in the luxury segment, one is W, whose design is funky and irreverent and if you were to contrast that with St Regis Hotel which is a modern interpretation of traditional luxury, and then compare them with a Luxury collection hotel which is focussed on the indigenous and being true to the market it stands with access to local culture, you can see how all those three brands do stand very distinct from each other. You can see how a Westin is very distinct from Le Meridien.</div> <div> </div> <div>You can have nine hotel brands in your portfolio and each of them with distinct personality. But you have to start with being focussed on delivering better global branded experiences not simply running or operating better hotels.</div> <div> </div> <div><strong>Doesn’t too much segmentation create confusion?</strong></div> <div>I do think there is a great deal of blurring on brands. From our perspective our brands do stand apart. It’s not your father’s four star property. It has the informality and ethos of a very different experience. If you look at W at Leicester square in London, which is a very saturated and brand penetrated market, that hotel has quickly risen and been noticed. I do believe there is a great deal of confusion among brands, but I do believe we stand distinct with our brands.</div> <div> </div> <div><strong>How important is India to Starwood?</strong></div> <div>The Indian market is for us our fourth largest country. We see it rapidly becoming the third largest after the US, China and overtaking Canada. We will have a hundred hotels open or in development soon in India. India is also important because it is decades away from being built out and saturation. If you look at the Emirates, where we have 21 hotels and 12 under construction, at some point by just virtue of size, it will become a very saturated market. But in the case of India, it is decades away.</div> <div> </div> <div>India is also important from an outbound market perspective. 50 million Indians will be travelling by 2020. As they use our brands in India, they use them globally. We have seen that happen for us with the Chinese market. We have seen a triple digit increase from Chinese travellers in 3-4 years.</div> <div> </div> <div><strong>Do you see a shift towards more branded hotels in India?</strong></div> <div>The Indian market has gone on a different trajectory last few year. Prior to that it was not a branded market. Everywhere else it takes time. In India it takes longer. There is more unmet demand for brands here than anywhere else. I see it as a glass half full.</div> <div> </div> <div>Chitra(dot)narayanan(at)abp(dot)in</div> <div>chitra (dot) narayanan@gmail.com</div> <div>(at)ndcnn </div>
