Starwood


Sheraton, Westin, Four Points, the St Regis, W Hotels, Le Méridien, The Luxury Collection and, more recently, Aloft and Element are all brands that you may have come across or even experienced. Each is focused on different markets and consumer segments and is highly efficient in how it operates. They are all part of Starwood Hotels, a US-based company worth over $10 billion.

A relatively new player in the hospitality sector, Starwood Hotels was founded in 1999 by Barry Sternlicht, a youthful Harvard MBA and real estate entrepreneur running a Connecticut-based firm called Starwood Capital. In 18 months between 1995 and 1997 he went on ‘a shopping spree’ purchasing two of America’s largest and most well-known hotel groups, Westin Hotels and ITT Sheraton. Starwood Hotels was created as a standalone hotel-operating company in 1999. Now with properties in nearly 100 countries, Starwood Hotels can justifiably claim to be the most ‘global hotel company,’ citing the unstoppable flows of globalization, capital flow, and wealth creation as cornerstones of its future growth strategy.

More than 80% of Starwood Hotels’ 85,000-room pipeline will be built in international markets, with Asia Pacific representing its largest source of future growth with 50,000 new rooms coming on stream. Starwood Hotels is now the world’s second-largest hotel group by market capitalization and the eighth largest by guestrooms with approximately 300,000 rooms in 1000 hotels around the world. In the face of strong long-standing businesses like Hilton, Hyatt and Marriott and exciting new local or regional brands such as The Standard, the Mondrian and Amanpuri, Starwood Hotels is making an impact.

Hotels are measured by their ‘revenue per available room’ – room revenue divided by the number of nights available. Competition is intense particularly in the high volume arena where global brands such as Hilton, Marriot and Crowne Plaza compete with more regional operators like Shangri-La and Jumeirah. In a crowded market where everyone is fundamentally playing the same game, Starwood Hotels has been able to match, if not better, the experience provided by the newcomers at a global scale and do this while being more efficient than the incumbents.

Through a combination of high-impact innovation to attract customers and financial efficiency in running the business, over the past five or so years, Starwood Hotels has been able to both double the number of hotels and maintain comparable average room revenues. While this does not stand out as momentous growth when compared to that achieved by some of the other Growth Champions, it is significant in relation to the hotel sector where many competitors have seen net decreases in average room revenues over the same period.

In an industry where many struggle to deliver truly differentiated offerings, the Starwood success story has been built upon delivering consistent and memorable guest experiences which in turn delivers high levels of customer loyalty. Like other Growth Champions the success of Starwood has enabled it to build a platform for continued growth based on its great brands, global scale and financial flexibility.

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