Christie Hicks
After swinging to a profit last year, Starwood Hotels & Resorts this year expects rising rates and occupancies to further drive up revenues. At the same time, the company is completing a massive renovation of its Sheraton brand, globally expanding its W and luxury brandsand increasing the North American presence of its upper upscale Le Meridien brand. Starwood senior vice president of global sales Christie Hicks recently spoke with Management.travelsenior associate editor Michael B. Baker about the company's sales strategy in light of global growthand business travel recovery.
After the close of the first quarter, Starwood's chief executive indicated that corporate negotiations were trending toward increases in the high single-digit percentages. Is that how they panned out?
That is exactly how it panned out. Some markets actually [had increases in the] high double-digits. There are still about 15 percent of our RFPs that are not closed, which would indicate that negotiation is really hard and taking longer than either the client or we wanted it to, but we have gotten to places with most where rate increases are not such a huge surprise. What will be interesting this year is how the mix plays out. We make no bones about the fact that we want to remix for higher-rated business. The corporate transient business is really important to us and a critical piece of what we do. At our lowest point we were probably 25 to 30 percent down. We're still probably down high double-digits to best performance from an average rate perspective. By the end of this year, we will have culled that back a fair amount. In a perfect world, next year's and subsequent negotiations will put us back on that path, but the world changes in 15 minutes. Look at what happened in North Africa, and while that will have an impact on our business, it's not going to be devastating. Egypt has started to actually be sold again. In Japan, it's scary. You worry about your guests and associates, and the business piece of it becomes secondary, but there comes a point where you have to think about the business, once you realize people are OK.
Top amenities in negotiations traditionally have been Internet, breakfast and parking, but did anything else stick out this year?
They're still at the top of the list. The Internet piece will not go away until final decisions have been made across the industry, but I'm wondering if that becomes less of an ask as mobile platforms and digital platforms expand. There are a lot of people out there who don't travel with a computer anymore. That will be interesting to watch, because everybody's putting a lot of work into digital platforms. The value piece is important. Nobody talks about prices much anymore. They talk about value. The other trend that is interesting--particularly in professional services firms or high-performing companies--is that employee satisfaction and travel comfort are starting to matter again, as opposed to just cost savings. We've had several clients who have loosened the purse strings a little bit. It doesn't mean they’re careless by any stretch of the imagination, but where they may have bought down a tier or two, they're buying back up a tier or two. That's a really good opportunity for our brands and company and a trend we hope continues.
What is your sales strategy for the year?
2010 ended up being a really good year for us. We took that opportunity to push ourselves into expectations that were even a little higher than they otherwise would have been. We have our mantra for this year: path to peak. We want to get back to our peak performance levelsand make sure that, from a delivery perspective, we're hitting on all cylinders. We're continuing to pay close attention to the emerging markets on the sales side of things--the impact that they have both outbound from there and the impact they make on hotels in North America--in addition to the global nature of what they do and how it ties into what we do. We just had our global strategy team meeting in Bratislava, with all our leaders from around the world laying out our initiatives for the year, making certain checkpoints from what we said we were going to do last year were reached and laying out what we want to make sure we accomplish this year and two to three years in the future. As we've started adding people, most of our additions come from outside of North America, because that's where most of our hotels are coming. We have additions coming in China, India, Brazil, the Middle East, Russia--all the markets one would expect, because the maturity of those markets is starting to take hold. The speed at which these markets are moving and the changes taking place are unbelievable to try to keep up with. Couple that with the fact that they have a relatively fragmented way of going to market. Whereas here in the States, everything is about consolidation; it's not necessarily so over there. That has a direct impact on how we deploy, how we cover, what our strategy is, what our thought process is. When you line up here to a major corporation, you line up to their travel program and meetings program, and they're trying to get one, two or three people to make all the decisions. There's a much different approachoutside of here, and it's caused us to look at ourselves differently as well. While the goal is to be as efficient as we possibly can, this phenomenon might put in a little more duplication than we had anticipated, but it's the right thing to do because the area of crossover is the sweet spot where you can really make headway.
What are your team's top priorities?
We're doing some really great development in technology. We're building a new sales system. It can't be the cornerstone of what you are, but you have to have it in order to do everything else, and we've been a little behind on that. We're in build phase of this new system, which is similar to one of our competitor's systems, off the shelf and customized. We'll put our salespeople in a place with better intelligence, smarter decision-making and faster information so they can respond to their customers better, and then ultimately it sets us up for the customer of the future. We need to be prepared to understand that in the future, doing everything online is realistic. It's not a pipe dream. Do we have the infrastructure and tools in place that allow our corporate travel managers, meeting professionals and leisure providers to do everything online if that's how they choose, and our direct guests to do the same thing? We're working with our convention services teams on our sustainable meetings practices: What are the programs and how can we make sure they're consistent in every hotel but at the same time customized for what the clients want? And how does it look different around the world? Recycling in Africa is much more difficult than recycling here, so how do you make it make sense and make a program that is locally relevant? We're also spending time on food and beverage. Then, it's telling the growth story from a sales perspective. We have 1,000-plus hotels, and we're opening about 90 this year. Our pipeline in China is unbelievable, with 80 hotels in the pipeline. India is on the heels of it, and Brazil as well. How do you translate that into regular salespeoples' days in how they deal with the corporate travel manger from PwC or McKinsey or Bank of America and make it relevant, because their businesses are changing as well? We want to make sure people are appropriately knowledgeable, that our RFP process is better, slicker, smarter, helps inform more and makes it easier to do business while providing the right kind of value.
What response have you seen to your strategy of installing Cisco TelePresence suiteswith Tata Communications in a few of your hotels?
Slower than we thought. The sales network on the Tata side just got completed, so I think the push will come in the next several weeks to couple of months. We're in 14 locations. Usage has been sporadic. I don't know if the answer to that is a marketing answer or whether it's a concept that just needs a little more time. We believe it's something that matters and are committed to it. There may be locations--we have one in particular--where the demand for meeting space is so significant that having a room out of inventory is not good business. Can we look at the room and use it a little differently? Can it be more than just a suite and be a meeting room when the suite is not in use? The uptick from the corporate customers where telepresence is in their headquarters is certainly better than someone who is looking for an alternative way to do a meeting. If you have the suite in New York, you have to have someone on the other end to catch it. In some cases, if there isn't one readily available, frankly, it's harder to do than having a meeting.