Starwood to double presence in SE Asia

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Chuck Abbott, Regional Vice President, South East Asia, Starwood Hotels & Resorts

Starwood Hotels and Resorts, one of the world’s largest hotel companies, says it will expand in Southeast Asia in the coming years to at least double its presence in the region. The company owns, operates, franchises and manages hotels, resorts, spas, residences, and vacation ownership properties under its nine brands, which are Westin, Sheraton, Four Points by Sheraton, The Luxury Collection, W Hotels, St Regis, Le Meridien, Aloft, and Element. Inside Investor talked to Chuck Abbott, Regional Vice President, South East Asia, Starwood Hotels & Resorts, about the group’s strategy in Southeast Asia.

Q: Could you recap on the development of Starwood in Southeast Asia?

A: Starwood has grown up to 1,100 hotels globally in the last three to four years, and Asia Pacific has been the fastest growing region. The Asian economy had been very robust, especially Malaysia and Indonesia, as the region was not that affected by the economic crisis of 2008 and 2009. We continue to see opportunities for new hotels, and we are growing quite fast in Southeast Asia now.

Q: How much is the Southeast Asia region contributing to the group’s revenue?

A:  Just to put it into perspective: We now have just under 1,100 hotels globally, and we only operate 23 hotels in Southeast Asia. So it’s actually a very small number. However, the good thing about this is that in this region, the majority of our hotels are all managed by Starwood, while in other parts of the globe, especially in North America, we have  a combination of managed and franchise agreements. Overall, in terms of planned new hotel openings, China is the fastest growing region with 99 hotels in operations and 91 hotels under development, India the second fastest, and Southeast Asia is the third fastest growing region within the Asia Pacific Division.

Q: Starwood has nine brands, what are their differences in cost structure, market segmentation, and the like?

A: We do have nine brands. However, in Asia, we do not have the Element brand as of yet.  Actually, seven of our brands are in operation in Southeast Asia, and for the eight, Aloft, we do have a development for a hotel in Kuala Lumpur that will open up in March 2013. This means, by next year we will have eight brands in Southeast Asia.

Regarding the differences: The brands are lifestyle brands targeting different audiences. For example, the luxury hotels have different lifestyle components. The St Regis Hotels and Resorts are in the best address providing bespoke services and offerings, the W Hotels are very hip and full of energy, and The Luxury Collection Hotels & Resorts are more indigenous in their offerings. There is something special about each particular brand that we communicate. The Westin, the Sheraton, and Le Meridien have different basic characteristics, the same applies to the Four Points by Sheraton, the Aloft, and the Element.

With that said, our hotels are all either upper-upscale (which is four star), or luxury. We don’t have any budget or economy-type operations and we are not planning to expand into that segment. Each brand attracts different customers, but our customers also utilise all of our brands. This is a result of our loyalty programme – Starwood Preferred Guest (SPG), which is certainly our strongest marketing component and is really beneficial to all the hotels. In most of our hotels, over 50 per cent of the guests are SPG members.

The Westin Langkawi Resort & Spa

Q: As the hotel sector continues to grow in Southeast Asia, the more competitive its gets. What is your strategy in this respect?

A: The world has changed over the last few years. In the tourism sector, we now have many tools for customers to use such as our SPG customer review page, review sites and other social media. Everybody is on the information highway and the customer has greater knowledge. The way we face this is, firstly, with our SPG programme, which is voted by the consumers as the best loyalty programme in the industry. Recently the changes we’ve introduced to the programme are next to impossible for our competitors to copy. The idea is to get out of the purely “points and perks” arms race and introduce personal services that drive “loyalty beyond reason” with our best guests.

Secondly, we offer different choices in the upper-upscale and luxury segment, and all hotels represent their brands quite well. People have their expectation levels and want to find what they are looking for. Starwood is quite powerful in fulfilling that expectation.

Q: What does Starwood have in the line-up for Malaysia and the greater region?

A: We have signed up six new hotels in Malaysia: The Four Points by Sheraton Kota Kinabalu, the Aloft, W and St Regis in Kuala Lumpur, the Sheraton Desaru Resort and the Four Points by Sheraton Sandakan. In Indonesia, we will open three hotels in Bali this year whilst in Singapore, we will have the W Singapore, Sentosa Cove opening this year. The Westin Singapore Marina Bay is scheduled to open next year. In Jakarta, The Keraton at the Plaza, A Luxury Collection Hotel will open next year whilst the W Jakarta is due to open in 2016.

Q: What have you done as a brand to attract investors for all this projects?

A: I think there are two components: Malaysia and Indonesia today are economically and politically much more stable than they were years ago, and stability in a country plays a big role as people feel comfortable and are more inclined to invest. We also have very strong relationships with our owners. Many of our developments are done with existing owners or have been referred to us from existing owners. We are selective, we don’t sign up every deal, because we want to have a successful, long-term win-win relationship.

Q: Who are your hotel guests?

A: Well, every destination is a little bit different. We have more guests coming from North Asia like Korea, Japan and China. In the business segment, we see guests from Europe, although the demand is a little bit softer now because of the economic situation there. Australia is a big source market for places like Bali, or Langkawi, and Kuala Lumpur. We have a variety of source markets around the globe which helps us during difficult times when one market has troubles. The domestic business has also increased significantly both in Malaysia and Indonesia.

Sheraton Imperial Kuala Lumpur

Q: What does Starwood plan to achieve in the next five years in the region?

A: We would be comfortable if we could double our footprint in the region in terms of hotel numbers at least in Malaysia, Indonesia, and Singapore. Today we have 23. We have already signed up 16, and we are positive to sign up another seven along the line. We are looking at secondary markets or destinations where we don’t have a presence right now and where a five-star hotel may not be appropriate, we may look at setting up a Four Points by Sheraton or Aloft, for example.

Q: Is there any interest from outside, i.e. foreign investors to team up with you in opening new hotels in the region?

A: The more stable the region gets, the more the appetite for investments rises. In 1990, this region wasn’t the number one destination for investors, and many were scared off. This has changed now.

Q: How would you assess today’s tourism and hospitality sector in the region compared to ten years ago?

A: The globe has gotten smaller, people can travel easier to many destinations, and I think each country and each region has to be very competitive from a tourism standpoint. Malaysia and Indonesia have great leisure destinations, and more and more companies are coming in for business purposes. This is definitely the case in Jakarta. One important thing to note is that today, the competition is global while it was more regional-focused before.

Q: What differences do you see between Malaysia, Indonesia, and Singapore in terms of working with the tourism authorities?

A: In Singapore, they obviously have all cylinders running and they have everything in a very stable environment. It’s easy to do business in Singapore. Indonesia is certainly becoming very attractive and the local ownership groups are investing a lot. If this trend continues, then Indonesia will be a place where people certainly want to do business. For Malaysia, the government is active in securing support from the various hospitality sectors for new campaigns. Tourism Malaysia has embarked on many campaigns and we look forward to a continuity of that.

Q: On a personal level, what has been your experience in Asia?

A: Well, I have been here for sixteen years, and I find it enjoyable. Right now, it’s exciting to be in Asia as it is in the world’s focus. The economies here are more robust compared to some mature economies in the world, and the cultures are intriguing and very interesting. I enjoy it and I learn from it.

W Retreat & Spa Bali - Seminyak

List of new hotels in the pipeline

2012
Keraton at the Plaza, A Luxury Collection Hotel, Jakarta, Indonesia
Four Points by Sheraton Sandakan, Malaysia
W Singapore, Sentosa Cove, Singapore
Sheraton Bali Kuta Resort, Bali, Indonesia
The Westin Ubud Resort & Spa, Bali, Indonesia
Le Meridien Bali, Jimbaran, Bali, Indonesia

2013
The Westin Singapore Marina Bay, Singapore
Aloft Kuala Lumpur Sentral, Kuala Lumpur, Malaysia
The Sarasvati, A Luxury Collection Resort, Bali, Indonesia

2014
The St Regis Kuala Lumpur, Malaysia
Sheraton Desaru Resort, Johor, Malaysia

2016
W Kuala Lumpur, Malaysia
W Jakarta, Indonesia
Four Points by Sheraton Kota Kinabalu, Malaysia

Existing hotels

Malaysia
Le Meridien Kota Kinabalu
Le Meridien Kuala Lumpur
Sheraton Imperial Kuala Lumpur
The Westin Kuala Lumpur
Four Points by Sheraton Kuching
Four Points by Sheraton Langkawi
Sheraton Langkawi Beach Resort
The Andaman, A Luxury Collection Resort, Langkawi
The Westin Langkawi Resort & Spa

Indonesia
Sheraton Lampung Hotel
Sheraton Bandung Hotel & Towers
Le Meridien Jakarta
Sheraton Bandara Hotel, Jakarta
Sheraton Media Hotel & Towers, Jakarta
Sheraton Senggigi Beach Resort
The Laguna Resort & Spa , A Luxury Collection Resort, Nusa Dua, Bali
The St Regis Bali Resort
The Westin Resort Nusa Dua, Bali
W Retreat & Spa Bali – Seminyak
Sheraton Surabaya Hotel & Towers
Sheraton Mustika Yogyakarta, Resort & Spa

Singapore
Sheraton Towers Singapore
The St Regis Singapore

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Reading Time: 6 minutes

Chuck Abbott, Regional Vice President, South East Asia, Starwood Hotels & Resorts

Starwood Hotels and Resorts, one of the world’s largest hotel companies, says it will expand in Southeast Asia in the coming years to at least double its presence in the region. The company owns, operates, franchises and manages hotels, resorts, spas, residences, and vacation ownership properties under its nine brands, which are Westin, Sheraton, Four Points by Sheraton, The Luxury Collection, W Hotels, St Regis, Le Meridien, Aloft, and Element. Inside Investor talked to Chuck Abbott, Regional Vice President, South East Asia, Starwood Hotels & Resorts, about the group’s strategy in Southeast Asia.

Reading Time: 6 minutes

Chuck Abbott, Regional Vice President, South East Asia, Starwood Hotels & Resorts

Starwood Hotels and Resorts, one of the world’s largest hotel companies, says it will expand in Southeast Asia in the coming years to at least double its presence in the region. The company owns, operates, franchises and manages hotels, resorts, spas, residences, and vacation ownership properties under its nine brands, which are Westin, Sheraton, Four Points by Sheraton, The Luxury Collection, W Hotels, St Regis, Le Meridien, Aloft, and Element. Inside Investor talked to Chuck Abbott, Regional Vice President, South East Asia, Starwood Hotels & Resorts, about the group’s strategy in Southeast Asia.

Q: Could you recap on the development of Starwood in Southeast Asia?

A: Starwood has grown up to 1,100 hotels globally in the last three to four years, and Asia Pacific has been the fastest growing region. The Asian economy had been very robust, especially Malaysia and Indonesia, as the region was not that affected by the economic crisis of 2008 and 2009. We continue to see opportunities for new hotels, and we are growing quite fast in Southeast Asia now.

Q: How much is the Southeast Asia region contributing to the group’s revenue?

A:  Just to put it into perspective: We now have just under 1,100 hotels globally, and we only operate 23 hotels in Southeast Asia. So it’s actually a very small number. However, the good thing about this is that in this region, the majority of our hotels are all managed by Starwood, while in other parts of the globe, especially in North America, we have  a combination of managed and franchise agreements. Overall, in terms of planned new hotel openings, China is the fastest growing region with 99 hotels in operations and 91 hotels under development, India the second fastest, and Southeast Asia is the third fastest growing region within the Asia Pacific Division.

Q: Starwood has nine brands, what are their differences in cost structure, market segmentation, and the like?

A: We do have nine brands. However, in Asia, we do not have the Element brand as of yet.  Actually, seven of our brands are in operation in Southeast Asia, and for the eight, Aloft, we do have a development for a hotel in Kuala Lumpur that will open up in March 2013. This means, by next year we will have eight brands in Southeast Asia.

Regarding the differences: The brands are lifestyle brands targeting different audiences. For example, the luxury hotels have different lifestyle components. The St Regis Hotels and Resorts are in the best address providing bespoke services and offerings, the W Hotels are very hip and full of energy, and The Luxury Collection Hotels & Resorts are more indigenous in their offerings. There is something special about each particular brand that we communicate. The Westin, the Sheraton, and Le Meridien have different basic characteristics, the same applies to the Four Points by Sheraton, the Aloft, and the Element.

With that said, our hotels are all either upper-upscale (which is four star), or luxury. We don’t have any budget or economy-type operations and we are not planning to expand into that segment. Each brand attracts different customers, but our customers also utilise all of our brands. This is a result of our loyalty programme – Starwood Preferred Guest (SPG), which is certainly our strongest marketing component and is really beneficial to all the hotels. In most of our hotels, over 50 per cent of the guests are SPG members.

The Westin Langkawi Resort & Spa

Q: As the hotel sector continues to grow in Southeast Asia, the more competitive its gets. What is your strategy in this respect?

A: The world has changed over the last few years. In the tourism sector, we now have many tools for customers to use such as our SPG customer review page, review sites and other social media. Everybody is on the information highway and the customer has greater knowledge. The way we face this is, firstly, with our SPG programme, which is voted by the consumers as the best loyalty programme in the industry. Recently the changes we’ve introduced to the programme are next to impossible for our competitors to copy. The idea is to get out of the purely “points and perks” arms race and introduce personal services that drive “loyalty beyond reason” with our best guests.

Secondly, we offer different choices in the upper-upscale and luxury segment, and all hotels represent their brands quite well. People have their expectation levels and want to find what they are looking for. Starwood is quite powerful in fulfilling that expectation.

Q: What does Starwood have in the line-up for Malaysia and the greater region?

A: We have signed up six new hotels in Malaysia: The Four Points by Sheraton Kota Kinabalu, the Aloft, W and St Regis in Kuala Lumpur, the Sheraton Desaru Resort and the Four Points by Sheraton Sandakan. In Indonesia, we will open three hotels in Bali this year whilst in Singapore, we will have the W Singapore, Sentosa Cove opening this year. The Westin Singapore Marina Bay is scheduled to open next year. In Jakarta, The Keraton at the Plaza, A Luxury Collection Hotel will open next year whilst the W Jakarta is due to open in 2016.

Q: What have you done as a brand to attract investors for all this projects?

A: I think there are two components: Malaysia and Indonesia today are economically and politically much more stable than they were years ago, and stability in a country plays a big role as people feel comfortable and are more inclined to invest. We also have very strong relationships with our owners. Many of our developments are done with existing owners or have been referred to us from existing owners. We are selective, we don’t sign up every deal, because we want to have a successful, long-term win-win relationship.

Q: Who are your hotel guests?

A: Well, every destination is a little bit different. We have more guests coming from North Asia like Korea, Japan and China. In the business segment, we see guests from Europe, although the demand is a little bit softer now because of the economic situation there. Australia is a big source market for places like Bali, or Langkawi, and Kuala Lumpur. We have a variety of source markets around the globe which helps us during difficult times when one market has troubles. The domestic business has also increased significantly both in Malaysia and Indonesia.

Sheraton Imperial Kuala Lumpur

Q: What does Starwood plan to achieve in the next five years in the region?

A: We would be comfortable if we could double our footprint in the region in terms of hotel numbers at least in Malaysia, Indonesia, and Singapore. Today we have 23. We have already signed up 16, and we are positive to sign up another seven along the line. We are looking at secondary markets or destinations where we don’t have a presence right now and where a five-star hotel may not be appropriate, we may look at setting up a Four Points by Sheraton or Aloft, for example.

Q: Is there any interest from outside, i.e. foreign investors to team up with you in opening new hotels in the region?

A: The more stable the region gets, the more the appetite for investments rises. In 1990, this region wasn’t the number one destination for investors, and many were scared off. This has changed now.

Q: How would you assess today’s tourism and hospitality sector in the region compared to ten years ago?

A: The globe has gotten smaller, people can travel easier to many destinations, and I think each country and each region has to be very competitive from a tourism standpoint. Malaysia and Indonesia have great leisure destinations, and more and more companies are coming in for business purposes. This is definitely the case in Jakarta. One important thing to note is that today, the competition is global while it was more regional-focused before.

Q: What differences do you see between Malaysia, Indonesia, and Singapore in terms of working with the tourism authorities?

A: In Singapore, they obviously have all cylinders running and they have everything in a very stable environment. It’s easy to do business in Singapore. Indonesia is certainly becoming very attractive and the local ownership groups are investing a lot. If this trend continues, then Indonesia will be a place where people certainly want to do business. For Malaysia, the government is active in securing support from the various hospitality sectors for new campaigns. Tourism Malaysia has embarked on many campaigns and we look forward to a continuity of that.

Q: On a personal level, what has been your experience in Asia?

A: Well, I have been here for sixteen years, and I find it enjoyable. Right now, it’s exciting to be in Asia as it is in the world’s focus. The economies here are more robust compared to some mature economies in the world, and the cultures are intriguing and very interesting. I enjoy it and I learn from it.

W Retreat & Spa Bali - Seminyak

List of new hotels in the pipeline

2012
Keraton at the Plaza, A Luxury Collection Hotel, Jakarta, Indonesia
Four Points by Sheraton Sandakan, Malaysia
W Singapore, Sentosa Cove, Singapore
Sheraton Bali Kuta Resort, Bali, Indonesia
The Westin Ubud Resort & Spa, Bali, Indonesia
Le Meridien Bali, Jimbaran, Bali, Indonesia

2013
The Westin Singapore Marina Bay, Singapore
Aloft Kuala Lumpur Sentral, Kuala Lumpur, Malaysia
The Sarasvati, A Luxury Collection Resort, Bali, Indonesia

2014
The St Regis Kuala Lumpur, Malaysia
Sheraton Desaru Resort, Johor, Malaysia

2016
W Kuala Lumpur, Malaysia
W Jakarta, Indonesia
Four Points by Sheraton Kota Kinabalu, Malaysia

Existing hotels

Malaysia
Le Meridien Kota Kinabalu
Le Meridien Kuala Lumpur
Sheraton Imperial Kuala Lumpur
The Westin Kuala Lumpur
Four Points by Sheraton Kuching
Four Points by Sheraton Langkawi
Sheraton Langkawi Beach Resort
The Andaman, A Luxury Collection Resort, Langkawi
The Westin Langkawi Resort & Spa

Indonesia
Sheraton Lampung Hotel
Sheraton Bandung Hotel & Towers
Le Meridien Jakarta
Sheraton Bandara Hotel, Jakarta
Sheraton Media Hotel & Towers, Jakarta
Sheraton Senggigi Beach Resort
The Laguna Resort & Spa , A Luxury Collection Resort, Nusa Dua, Bali
The St Regis Bali Resort
The Westin Resort Nusa Dua, Bali
W Retreat & Spa Bali – Seminyak
Sheraton Surabaya Hotel & Towers
Sheraton Mustika Yogyakarta, Resort & Spa

Singapore
Sheraton Towers Singapore
The St Regis Singapore

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