‘India poised to be our third largest market’

Despite challenging years for the hotel industry, Starwood Hotels and Resorts, which now has 38 operating hotels, says it is on track to have 100 hotels under various stages of development by 2015-end. The company has 35 hotels in the pipeline and plans to open six-eight properties this year. Vasant Prabhu, Vice-Chairman and CFO, Starwood Hotels & Resorts Worldwide, speaks to Business Line about the importance of the Indian market and growth strategies. Edited excerpts.

The last two years have been tough for the hotel industry. Have you scaled back or re-looked at your goals for India?

Indian economy has seen a rough patch. The hotel industry has slowed down. But our hotels have done better than others. We are well on our way to achieve the goal of 100 hotels by 2015. I think, during the tough times, owners want to partner with hotel brands which can deliver the goods, and we have demonstrated that to our owners. Our hotels are very profitable. Even through these tough times, we have grown quite well.

Do you see things improving in India?

I think things can only get better. We believe the second half of 2014 will be stronger for the hotel industry.

A few years ago, hotel rates were quite high. Now, they are very reasonable. I think this makes India a more attractive destination. India remains one of the most under-hotelled markets in the world. There is a huge untapped opportunity. We are committed to India for the long term and will continue to invest here. India is currently our fourth largest market and, we believe, is poised to become the third biggest in a year or two.

What strategies helped you grow in challenging times?

Our loyalty programme — Starwood Preferred Guests — is popular with it accounting for nearly 60-70 per cent occupancies on any given night at our hotels. We also have a major global sales force, which gives us access to global corporate account. This gives us an edge over domestic players.

Indian brands are slipping quite a bit because it is very hard to compete with global brands like ours.

Do you think India’s image has taken a hit among international investors in recent times?

India’s reputation has taken a really big hit. There is some work to do to repair it over time. Projects are stalled because of the economic environment. But the Indian hotel market has grown well in the last five years.

There has been a lot of supply, and demand has also been growing. Occupancies have stayed stable despite the increase in supply. From Starwood’s standpoint, I don’t think anything changes. In the long run, India is still going to be our third largest market.

What strategies will you adopt for faster pace of growth?

Conversion is the big opportunity. It involves partnering with existing hotel owners. Independent and domestic brands are beginning to see the value of a partnership with an international brand. We believe there are opportunities for conversion deals in the upscale and upper upscale segment and even in the luxury segment. We have already signed some deals under our brand, Four Points of Sheraton. It is going to be a critical strategy. We are also in talks with developers to finalise multi-hotel deals across locations.

Once you touch the 100-hotel mark, do you expect the next phase of growth to happen faster?

There comes a point in every country where once you have reached a critical mass in infrastructure, the hotel industry accelerates. We saw that in China about five years ago. We believe the same thing will happen in India.

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