Starwood Hotels & Resorts Worldwide, Inc, outlines the company’s regional expansion strategy and the role he plays in guiding its execution
What does your role as entail?
I am responsible setting our strategic growth objectives for the region and achieving them by leading the team that plans and executes the growth of all nine of Starwood’s brands across the Middle East and Africa. I am also responsible for overseeing the timely negotiation and renewal of management contracts across the almost 100 hotels in Starwood’s MEA portfolio.
As more brands enter the Middle East market, what’s your strategy for diversification?
Starwood currently operates 50 hotels in the Middle East across eight of its nine brands. We have a strong development pipeline for the region, with 37 hotels scheduled to open over the next three to five years. The Middle East will soon be home to all nine of Starwood’s brands, which illustrates our commitment to and success in this region.
When we first entered the Middle East in 1966, Sheraton led our development in the region. Today our upper-upscale brands, which also include Le Meridien and Westin, represent half of Starwood’s portfolio in the region and 35% of our development pipeline. In fact Sheraton is often the first international hotel brand to enter new markets and this paves the way for our other brands too.
We have seen a real shift in our portfolio from primarily upper-upscale hotels to a more balanced mix with the continued growth of our luxury and mid-market brands. Over the last five years, our luxury footprint in the region has increased from two properties to seven operational hotels, with nine more in the pipeline. Our luxury brands – St. Regis, The Luxury Collection and W – currently represent 27% of our pipeline.
W leads our luxury pipeline with five hotels scheduled to open in Dubai (two), Abu Dhabi, Amman and Muscat. These, together with upcoming St. Regis and Luxury Collection hotels, will double our luxury footprint in the Middle East.
However, we have identified a gap in the mid-market segment and filling this with our mid-market brands is a focus. Our Aloft, Four Points by Sheraton and Element brands represent 38% of our development pipeline in the Middle East. We will more than double our mid-market portfolio in the region by 2017 as we see great opportunities to offer reliable and affordable hospitality.
Which mid-market brand presents the most growth opportunities?
Aloft is spearheading the growth of our mid-market brands. Since its launch in 2008, the brand has brought a vibrant and energetic take to the mid-market segment with its urban-inspired design and innovative technologies. Developers love this brand because it is economical to build but at the same time, provides a differentiated, fresh product. We will open eight new Aloft properties in the next few years in key cities such as Dubai, Sharjah, Riyadh and Erbil and are working on many more. Expect to see an Aloft near you soon.
What is your general pipeline focus for the Middle East?
The region is important to Starwood’s overall global strategy. We will continue to look for opportunities to expand our portfolio of brands in the Middle East by working with the right partners in the right places on the right properties. The UAE and Saudi Arabia remain our largest growth markets with 20 hotels in our pipeline. We are also expanding into emerging markets and opened our first hotel in Tajikistan in December – Sheraton Dushanbe. Later this year, we will open Sheraton Dohuk – marking our return to Iraq after 20 years. We will also open three hotels in Erbil under the Sheraton, Aloft and Four Points by Sheraton brands by 2017.
Starwood will also be adding three hotels in Muscat, a fast growing leisure destination for the region and two luxury hotels (W and St Regis) in Amman.
While new builds continue to lead our growth in the Middle East, we are also seeing an increasing number of conversion opportunities. In the past three years we have signed five conversion deals across five brands, which is testament to the power of the Starwood brand.
With so many major chains rapidly expanding their portfolios in this region, how does Starwood stand out from the crowd?
Starwood’s approach to branding with its psychographic, rather than demographic or price-pointy segmentation, appeals to the growing brand-centric, lifestyle-oriented consumer. Our advantage is that we have dependable, clear, and well-segmented brands that consistently deliver compelling customer experiences. Our brands have been deliberately developed and positioned to reflect the various lifestyle aspirations of our guests, instead of focusing on traditional hotel segmentation. Hotel brands need to have a personality to cater to different types of travellers and we do that very well through our nine brands.
What’s your plan for Africa?
Starwood is one of the largest global hotel companies operating in Africa where it has had a presence for 45 years. Today we operate 35 properties (10,000 rooms) primarily across its Le Méridien and Sheraton brands, in 16 countries. We see great opportunities to strengthen our position in Africa through new build, franchised properties and conversions. We will increase our African portfolio by almost 50%, expecting to open up to 20 new hotels over the next five years, adding more than 5,000 guest rooms to the continent and creating thousands of local employment opportunities. Within the next few years, we expect to have all nine Starwood brands represented in Africa.
What brands will these hotels operate under?
Continuing the pioneering tradition of Sheraton to often be the first international standard hotel in many emerging markets, we will open Sheraton hotels in the near future in Conakry, Juba, Kigali and Nouakchott, with more markets to come. Last year, we opened our first St Regis in Mauritius and we have another under construction in Cairo. With 56 countries in Africa and Starwood present in just 16, we see great opportunity for us to grow the presence of all our brands across both existing and new markets. In order to achieve our pipeline targets we have doubled the size of our dedicated Africa development team with executives based in South Africa, Dubai and Brussels. These changes have already made a significant difference.