Starwood Hotels and Resorts
Worldwide Inc. will almost double the hotels it operates in
China and India over the next four years to meet growing demand
in Asia’s biggest emerging economies.
The owner of the St. Regis and W brands, which runs 133
hotels in China, has more than 120 planned or under construction
in the world’s second-biggest economy, said Matthew Fry, senior
vice-president of acquisitions and development for Asia. In
India, where the Stamford, Connecticut-based company has opened
40 hotels since 1973, it will add more than 30, he said.
China’s rising incomes and growing middle class are
offering companies like Starwood a bigger pool of potential
customers. In India, investors are betting the biggest electoral
mandate since 1984 will help Prime Minister Narendra Modi fix
the nation’s infrastructure, which is ranked below that of
Guatemala and Namibia by the World Economic Forum.
“China is our single-biggest and fastest-growing market in
Asia,” Fry said in a telephone interview from Singapore.
“India is second, and has a ways to go to catch up in terms of
infrastructure, but it has huge amounts of potential.”
The Asia-Pacific region is seeing nearly double the hotel
rooms being added compared with those in Europe, the Middle East
and Africa, and about 30 percent more than the U.S., Fry said.
That’s because many emerging markets have few globally branded
hotels, and as these economies grow, demand for accommodation
that meets international standards is climbing, he said.
Four-star Hotels
In China, which Starwood entered in 1985, it has doubled
the number of its luxury hotels over the past three years, and
plans to increase that again by the same multiple by the end of
2015, according to the company. In newer markets, particularly
second-and third-tier cities, it will establish more four-star
hotels, Fry said.
“As we expand into secondary, tertiary markets in China,
it makes more economic sense to build more select-service
hotels,” he said.
Demand for budget hotels is growing following President Xi Jinping’s campaign to curb extravagant spending by government
officials to clean up corruption, according to analysis by
Bloomberg Industries. Profits may fall faster for five-star than
mid-tier hotels as more operators open luxury hotels, pushing
room rates down amid higher labor costs, the research shows.
Starwood also plans to add 12 new properties in Indonesia
to the 14 it already manages, Fry said. There too, the company
is seeking to expand outside of Jakarta and Bali, where growth
has traditionally come from, he said.
The company, which wants to own fewer properties, is
seeking to sell its Sheraton on the Park in Sydney, he said.
To contact the reporter on this story:
Nichola Saminather in Sydney at
nsaminather1@bloomberg.net
To contact the editors responsible for this story:
Andreea Papuc at
apapuc1@bloomberg.net
Iain McDonald
Starwood Doubles Up on China, India Hotels in Asia Demand Bet
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