Starwood Expanding In Secondary Cities
<B> Starwood Expanding In Secondary Cities</B>
By Judy Jacobs
Starwood Hotels & Resorts has aggressive plans for the Asia/Pacific region, plans that will further entrench and strengthen the company's Sheraton, Westin and St. Regis Luxury Collection brands, which already exist there, and introduce Four Points and W Hotels to selected Asia/Pacific cities.
Starwood, which currently operates 65 hotels in the region, is "the largest international upscale and luxury hotel operator in Asia/Pacific, and also the largest in some countries such as China, Australia, New Zealand and Fiji," said Ted Teng, president of Asia/Pacific division, Starwood Hotels & Resorts Worldwide Inc. "With our expansion path we will continue our domination of the hotel industry," he added.
Starwood's size is an asset, according to Teng. "Being big is a benefit to Starwood. We want to use this competitive advantage to create benefits for our guests, associates and owners. For our guests, being big is a benefit to them, because we are where they want to go, we have the product that they want to buy, and we are a solution to their needs (business or vacation). For our associates, being big provides more opportunities and training for them. For our owners, being big creates synergy in marketing effectiveness and cost efficiency and therefore a better return on investment," he said.
Although well represented in the region, Starwood intends to expand not only its number of hotels but also its brands. "At the moment, we have the Sheraton, Westin and St. Regis Luxury Collection brands represented in Asia/Pacific," Teng continued. "I see in the near future that we will be represented in the Asia/Pacific by all of Starwood's hotel brands, including Four Points Hotels and W Hotels. Each brand will occupy its own level and will be the market leader in its category. Each brand will have its own distinct image and its own customers loyal to the brand."
In a brand-by-brand analysis, Teng outlined what's ahead for each of the company's hotel groups. Sheraton currently has 44 hotels in 13 Asia/Pacific countries. "We see potential for another 10 hotels by the year 2001 in regional cities and resort destinations in Japan, Australia, China and the Philippines. Japan and Australia have large domestic markets that are well developed to provide the feeder markets for business and leisure travel within the country. China continues its steady economic growth, which will lead to more development of its regional cities. The Philippines has been rather steady through the Asian economic crisis and has held on to a steady growth course. Our number one growth priority of the Sheraton brand, however, is in the central business district of Tokyo," he said. Westin is another existing Asia/Pacific Starwood brand for which Teng sees steady expansion. "There are presently 15 Westin hotels, and we see an additional 10 hotels in countries such as Australia, Japan, China and Hong Kong (Special Administrative Region). We are very interested in having a presence in Hong Kong, which is a key business center," he added.
Although the company's most upscale brand, St. Regis Luxury Collection, only is represented by a handful of hotels in the region, Teng expects it to grow steadily. "This luxury brand will have expansion potential in the capital cities of China, Hong Kong, Japan and Australia. These are the key cities to attract the high-end business/leisure market," he said.
Four Points is a brand that Starwood is currently in the process of introducing to Asia. "We expect to have 10 hotels over the next two years. The first phase of growth will be in China, Japan and Australia. There is a large band of travelers in these markets looking for hotels that are midprice, yet have the full services that they need, and we have that with the Four Points brand," Teng said. The company's plans to take its new W Hotel brand, which currently exists only in the U.S., international extends to Asia.
"We expect to have about two or three over the next few years. This brand is at the leading edge of design, and markets with the environment that can support such unique designs include Australia and Hong Kong," Teng said.
China is a major area of expansion for Starwood, which recently signed a Strategic Alliance Agreement for China with the Calif.-based Discovery Hotel Group to develop Four Points Hotels in various yet-to-be-announced Chinese cities. "Four Points Hotels will have the greatest growth potential in China," said Teng. Overall, the company plans to have hotels in China for business and leisure.
"That will involve gateway cities, where we already have a strong presence, and regional hub cities, which are seeing an increasing number of travelers visiting for business and leisure. I do not consider these to be secondary cities just because they are not necessarily the capital cities. Places like Kunming (where Westin opened its second Chinese hotel in April), Shenyang and Chengdu (where Sheraton will open hotels in mid-2000) have populations of more than 1 million, and in many cases over 3 million (more than the country of Singapore itself). These cities play an important role, not a secondary role," he said.
Starwood's development of hotels throughout the region will be in response to travel trends that the company sees evolving. According to Teng, these include more regional and domestic travel, more younger and midlevel managerial staff going on business trips and a greater need for technology, with guests who understand it and need to use it when they travel. As a result, Starwood is developing more hotels in business cities.
"Hotel development follows the lead of the economy and the business travelers. So our new hotels in Wuxi, Nanjing, Shenyang and Chengdu cater to more and more people traveling to these regional cities," Teng said. These new hotels, however, are not just for those traveling on business but for participants in meetings, conventions and incentives.
"In countries such as China, the domestic meetings, conventions, incentive business is growing and growing fast. It is vital that we are well represented in all the main and regional cities and resort destinations. This business will also demand better technology in the meeting rooms. We have to ensure that new hotels under development and existing hotels undergoing renovation are well equipped with the latest meeting and banquet technology," he added.