Now that there is a new government in place, is Starwood going to fast-track development in India? And, after a relative lull, are we going to look at more frequent launches?
I think that’s right, however, what I would suggest is that we were never not bullish on India. Regardless of the government, we always knew that this was a primary market for us and we needed to be here. But as we look now to the future, we have more opportunities to have conversions with owners and developers and we are excited about that. That being said we have similar conversions and developments going on across the world.
But things have been relatively quiet for the last couple of years… Four years ago, things were quiet in the Americas, too, and the capital markets froze. So, it happens everywhere. There are cycles throughout our industry and yet, we have never taken our eye off the ball.
Whatis the market segment Starwood is placing its bet on, in India?
Starwood is eyeing India as a key growth market for its upscale brands. We believe there is great opportunity in the mid-market segment in the country. Starwood understands this end of the market and has a great product in the Aloft and Four Points by Sheraton hotels.
We were never not bullish on India. Regardless of the government, we always knew that this was a primary market for us and we needed to be here. But as we look now to the future, we have more opportunities to have conversions with owners and developers and we are excited about that.”
But the mid-market segment is overcrowded and several domestic brands are also playing the field here. How do you plan to make a dent?
While India boasts of great domestic brands in the luxury and the budget hotel segment, there exists a gap between luxury and quality budget hotels in the country and the upscale segment fills that gap perfectly with brands like Aloft and Four Points by Sheraton strongly positioned in this space. The upscale segment has all the trappings of a luxury hotel but at an affordable price. They are an alternative to luxury hotels but not a replacement. A large proportion of corporate travellers in India are mid-level executives and a bulk of leisure travellers are from the middle class. As the propensity to travel increases, the demand for upscale brands will grow.
So, will the focus clearly be on the upscale segment?
The upscale segment in India is at a nascent stage now but Starwood believes it will see increasing demand in the years to come. With corporates becoming cost conscious and leisure travellers always looking at value-for-money options, it is emerging as the preferred choice. A growing middle class has created demand for affordable avenues for the domestic traveller. The need for affordable quality lodging is fuelling the growth of hotels in this segment.
As the urban Indian landscape evolves and cities expand and grow, Starwood’s upscale brands with their differentiated lifestyle positioning are perfectly positioned to operate in tier II and III markets as well as in micro markets within larger markets, like Whitefield in Bengaluru. With economical pricing and reduced cost of construction, this segment of hotels is a win-win prospect for owners, operators and guests. We are principally an upscale, upper upscale and luxury operator and see a lot of our growth coming from the upscale segment. Our brands lend themselves to grow in all kinds of markets, city or resort, heritage or religious destinations, stand-alone or mixed-use formats. That’s the beauty of India. Lots of opportunities leading to lots of growth. And with the changing urban Indian landscape and emerging micro markets, we believe in the opportunities that lie with our upscale brands.
How does Starwood position and differentiate its upscale brands from competition?
Starwood positions and differentiates its brands from a lifestyle and not from a price point perspective. With the tech-savvy Gen Y turning into more frequent travellers, Starwood’s young, design- led brands such as Aloft and W are resonating well with the Indian traveller. Pioneering initiatives in music, design and technology have positioned Aloft as the must-have brand for the next generation of travellers, and we’re quickly gaining traction in the Indian market among the country’s young and tech-driven society. We are also seeing the Four Points by Sheraton brand emerge as a developer’s darling with a robust pipeline of 10 hotels under development in India in addition to the already existing footprint of seven hotels.
How would you rate local hotel brands operating in this space?
Local hotel brands in India, unlike many international markets, are very good, especially at the high end. However, while they are trying to enter the mid-market, it’s not their strength. Indians want the predictability and quality of international hotels that they don’t typically get today, especially outside of the major markets.
What are Four Points by Sheraton and Aloft’s USPs?
India is a tech-driven, young society and so much of India’s business is focused on technology, that Aloft, Starwood’s most tech-forward brand, which is very much directed to Generation Y, in India resonates well. This is the reason why India was one of Starwood’s first international markets for Aloft. Outside the United States, there is no market where Starwood is as aggressively developing Aloft as much as here. So India is strategically important for Aloft. Four Points by Sheraton is a developers darling in India, much like China, because of the Sheraton halo. There are so many markets in India that need hotels but can’t support a Sheraton, and Four Points by Sheraton works perfectly in these markets. Today, we see micro cities emerging within larger cities and tier II markets growing rapidly. Here lies the opportunity with Aloft and Four Points by Sheraton.
Starwood is known for innovation. Any innovations for the Indian market in particular?
Nothing specific to India. The ability to stream from your smart device or your tablet onto your television, things along the line of Apple TV or the next curved TV by Samsung, SPG smart check-in using our keyless entry are innovations that you can see across the world. We are the first company to introduce smart check-in using keyless entry. We started this programme four years ago with RFID technology and then it allowed you to use your SPG card to enter the room, the next generation of that is now allowing your smartphone to be your room key. This is operational in two hotels today, Aloft in New York and in the Aloft in Silicon Valley California and it is working flawlessly.
When can we expect keyless entry using smartphones to be introduced in India?
Since the technology is being worked out, we are now studying what regulations and requirements not only by the overarching Indian government but by locations as well. For instance, in which of each of the locations there are requirements for passport control, credit card orientation, etc. In short, we are looking at what is required to introduce it in India.
Aloft, Starwood’s most tech-forward brand, is very much directed to Generation Y and in India it resonates well. This is the reason why India was one of Starwood’s first international markets for Aloft. Outside the United States, there is no market where Starwood is as aggressively developing Aloft as much as here.”
Four Points by Sheraton is a developers darling in India, much like China, because of the Sheraton halo. There are so many markets in India that need hotels but can’t support a Sheraton, and Four Points by Sheraton works perfectly in these markets.”
If you do introduce it, Bengaluru would be a good starting point…
I think it would be. Yeah, we like areas where there’s technology. Starwood increasingly looking at conversions… Yes, conversion highlights another exciting new growth channel for Starwood in India, especially in the upscale segment. Many welllocated but under-branded hotels represent enormous untapped repositioning potential. Starwood has developed a conversionfriendly strategy for existing hotels to meet owner and guest demand, and help partners reposition existing assets in a cost-effective manner with the backing of Starwood’s powerful platforms. Starwood is seeing good results from this strategy. In the last year, following the conversion of Four Points by Sheraton Ahemdabad, Starwood has successfully converted Four Points by Sheraton New Delhi Airport Highway, Four Points by Sheraton Dehradun and Four Points by Sheraton Bengaluru Whitefield, which will open this month.
To keep up with growing global demand, Aloft is also embracing existing hotel conversions and adaptive reuse projects as a strong part of its global growth. Existing office buildings with high ceilings provide an opportunity to do this. Conversions will help Starwood meet demand from partners and developers to bring more properties online. Adaptive reuse projects aren’t just an expedient way to bring more properties online quickly, they’re also a way to expand sustainably, and merge Aloft’s urban aesthetic with historic structures in a way that appeals to guests, partners, and developers.
Any particular challenges you are facing as Starwood expands its portfolio in the country?
I think there are specific challenges everywhere around the world, so whether it is regulatory issues or getting concrete or cement brought in, there isn’t anywhere where it’s terribly easy to build nowadays. That being said we continue to look for solutions to overcome challenges and we don’t foresee them as a barrier of entry. We are certainly continuing our focus to expand our portfolio here and I’m confident we will continue to do so.
Any solutions you have come up with to help fast-track development in India?
What we have done particularly for Aloft is that we have a prototype set. So, we have a set of planned documents that essentially consist of a fully designed building and that might help the regulatory issues a little bit because we can actually give a plan set in advance literally the day the project is signed. Now that may need to be modified over time as we do spatial planning and site planning but it does give the municipality and the local government a better sense of what’s coming and helps speed things up.
What is the expansion plan for Aloft and Four Points by Sheraton in India?
Today, we operate six Aloft hotels and have two Aloft hotels under development. With Four Points by Sheraton, we currently operate seven hotels and have 10 under development. The strong footprint and robust pipeline of these brands indicates how fast and effectively our guests are connecting with these brands.
