Tom Otley talks to Michael Wale, Starwood’s president for Europe, Africa & Middle East
Starwood is expanding, but not perhaps as much as some other international hotel groups. Why is that?
We have seen growth both globally and in the EMEA [Europe, Middle East and Africa] region. In Europe a lot of the growth has come from the new lifestyle brands – Aloft and Element – which are in a space that historically we haven’t been in. With 175 luxury hotels we are the largest luxury operator in the world, but the growth is in the ‘select service’ [limited service] part of the market.
In London we have both an Aloft and an Element opening in Tobacco Dock in 2016- a select service and a long-stay property – and we opened Aloft Liverpool last year.
When we started with Aloft we were very definitive about the shape of the rooms, and that turned out to be a problem for developers because if you are repurposing existing buildings it doesn’t work, so now our room sizes are consistent, but they don’t have to be square. Liverpool was a good example of that – it’s a beautiful building, the rooms have worked out very well and it’s a cost-effective build: a good showcase for the brand. We’d like to roll that out in Germany, France and other areas in the UK.
What about core brands for business travellers such as Sheraton?
There’s growth there as well. We opened 35 new Sheratons globally, including ones in Europe such as Zurich, but we are pretty well represented with those core brands in Europe, so we see Eastern Europe and Istanbul as targets [for expansion]. We just opened another Sheraton in Dubai, and there’s a big renovation programme across the portfolio going on as well. Sheraton is our first-mover brand into frontier destinations. The pros of that are you are there early and you building customer loyalty, but now we are in the process of renovating those properties.
Each brand has a different focus – with Westin it seems to be wellness
Wellness is a trend in travel, true, but it’s more than just marketing. We have had great success with the fitness gear-lending programme and group running, where we have a running concierge and guests turn up and go for a run.
But aren’t hotel gyms are empty most of the time?
No, they’re not. Maybe that was true once, but not now and the trend will continue as the baby boomers have disposable income. It’s a huge opportunity and having brands that resonate with those travellers is really important.
So how do you expand?
We’ve held to our nine distinct lifestyle brands, but as we think about the future we have to think quite carefully about expanding our brands. From my point of view they would have to be distinctively different.
What about a Chinese brand?
No, I don’t think so. We’re going to have 300 hotels in China in a few years. We are well known in the Chinese market, and when the Chinese travel abroad they want us. We might localise and adjust our brands for local markets, and be culturally sensitive, but we don’t consider a Chinese brand as our strategy. We have to fuel our growth and find a way to grow faster, but it would have to be something that positioned us in a place we are not currently in.
If a business traveller likes the brand, but you’re not present in the place he’s visiting, that’s a problem
Yes, I agree with you. Certainly we would like to be present in more destinations. We have 164 hotels in Europe, this should be 200 in five years’ time. We have 250 in Europe, Middle East and Africa, which will be 300-325 – unless we acquire something. Others have been expanding by acquiring. We haven’t, and we may well start thinking about it. We have 1,200 hotels globally, so I guess you’d classify us mid-size. Scale is something we are very focussed on globally.
We had our best signing year for incremental deals, signing 175 deals last year. So we are finding growth for our brands in a way we have never done before. But the question is whether that will give us enough growth looking forward for the next five years, so one may expect us to do something different in the next five years.
Lastly, free wifi – you now offer it to members of your SPG loyalty programme…
Yes. SPG members get Wireless free internet access free . We want to reward our most loyal guests. It’s a free basic level, enough to read emails, but you can’t stream your movies.
But you have to book direct or through Starwood channels to get it?
Yes. They are our guests and we want them to book through our channels. It’s more than just about the rate we receive; it’s about how the traveller comes to us. We want to be able to personalise their stay and deliver preferences. If they come through an OTA [online travel agency] we know less about them. OTAs are building their own loyalty programmes so it will be interesting to see how it turns out. It’s a constantly evolving place and we have delivered the mobile technology and the access points for travellers in a very impressive way in the last few years.
We work with the OTAs. We don’t see them as bad people. They are a source of business in certain markets and at certain times, but you have to be selective about how you work with them. If a business traveller is going through an OTA then they understand they are going for a low price point. Why would anyone be surprised that if they went through a low-cost booking channel they don’t get the same level of recognition? They won’t get points either. But if you have an existing arrangement with us and you’re coming to us through a recognised channel then you get the benefits. The corporate traveller is one of our most important travel segments and we want to look after them.