SHANGHAI—Starwood Hotels & Resorts Worldwide is aggressively expanding its global portfolio, and nowhere is that growth more apparent than in the Asia/Pacific region.
Ninety percent of the company’s pipeline exists outside the United States. A large chunk of that pipeline (64%) is in Asia/Pacific, where the company has 153 hotels in the pipeline, Stephen Ho, Starwood’s president of the Asia/Pacific region, said during a webcast of Starwood’s Asia Pacific Investor Day event Wednesday. He added that Asia/Pacific is the company’s fastest growing global region.
Starwood is relying heavily on its Sheraton brand to spearhead Asia/Pacific development, executives said. Of the company’s 378 operating and pipeline hotels in Asia/Pacific, 42% are under the Sheraton flag.
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| The 352-room Sheraton Huzhou Hot Spring Resort is scheduled to open later this year. |
Sheraton is an especially important brand in China, said Vasant Prabhu, the company’s vice chairman and CFO. The brand has been in the country for nearly three decades, meaning younger Chinese citizens are familiar with the brand and, as they begin to travel in earnest themselves, are choosing to stay at Sheraton properties.
“In China, Sheraton is their local brand,” Prabhu said. “It’s what they grew up with.”
In fact, the biggest Sheraton in Starwood’s system—the 3,863-room Sheraton Macau—is scheduled to open during the third quarter this year.
“Sheraton is the best Chinese brand,” Prabhu said.
It’s not just China that is seeing a growth in Sheraton development, Ho said. Excluding China, nearly one out of every four hotels in the company’s Asia/Pacific pipeline is a Sheraton, he said.
China development
Executives emphasized the importance of having a big footprint in China in general. The company earlier in the day said it had 103 operating hotels in Greater China and an additional 100 signed deals in the pipeline. Taken together, the 203 properties comprise more than 72,000 rooms.
“Every two weeks, we open a new hotel in China,” said Qian Jin, Starwood’s president of Greater China.
Several reasons were given for Starwood’s interest in China, including the huge population base, a growing middle class, and rapidly growing domestic, out
“You can see in the numbers there is great opportunity for China,” Qian said.
The company is paying close attention to secondary markets in China. More than 75% of the guests in China’s secondary and emerging markets are Chinese, Qian said.
He said Starwood’s secondary market profile in China includes:
- Hainan Island: seven operating hotels; seven pipeline hotels
- Tianjin: five operating hotels; one pipeline hotel
- Xiamen: three operating hotels; one pipeline hotel
“Our goal is to be the biggest hotel company in China,” Qian said.
Certainly, Starwood is not alone in targeting China as a growth region as other global hotel companies also announced plans to further develop their Chinese portfolios (see sidebar). But Jin said the company’s deep relationship with owners in China is an advantage as these owners recommend Starwood for development opportunities that arise.
“We’re not worried about the competitors coming in,” he said.
The company will maintain its asset light focus in China as it does in other areas of the world, Prabhu said. “Hotels are a local business,” he said. “You can’t be good at owning real estate in Mumbai and Shanghai at the same time. You just can’t.”
Outside China
Starwood’s Asia/Pacific pipeline outside China is just as robust, executives said. There are 122 operating hotels in the region, excluding China, and 53 more in the pipeline, Ho said.
“We’re seeing great travel trends” in Asia/Pacific, he said.
In India, for instance, the company is on track to have 100 operating and pipeline hotels in the country by 2015. Meantime, Indonesia is home to 12 operating hotels and seven pipeline properties for a combined 34,000 rooms, while Thailand has 19 operating hotels and five in the pipeline for a combined 6,000 rooms.
Ho said Starwood has opened 21,000 rooms in Asia/Pacific since 2010.
“There are unparalleled growth opportunities in Asia/Pacific,” he said.
Prabhu said that once a company gets development rolling in a particular region, adding hotels becomes easier.
“It’s easier to go from 100 to 150 hotels than it is to go from two to 10 because the infrastructure is in place,” he said.