Starwood Hotels and Resorts Worldwide, Inc., which operates luxury and upscale brands such as W, St Regis, Le Meridien and Westin, plans to expand its midscale and upscale property portfolio in India to boost profitability.
The company will be opening five four-star properties, including two Aloft hotels and three Four Points by Sheraton hotels, entailing an investment in excess of Rs.360 crore over the next two years, company officials said on Monday.
“Luxury properties in India, even if the numbers are less, they are profitable. For our midscale to upscale brands, which are smaller and affordable, we are focusing on more number of properties to drive profitability,” said Brian McGuinness, senior vice-president, speciality select brands.
McGuinness said the company also plans to bring in remaining midscale to upscale brand Element to India in the next three to five years.
All five upcoming properties under the Aloft and Four Points brands are greenfield properties, which the company will manage and operate.
“An Aloft property typically has 136 rooms and Four Points by Sheraton 150 rooms. Per key investment from developers for these hotels excluding land cost is around $100,000 or Rs.50 lakh,” said Dilip Puri, managing director, India, and regional vice-president, South Asia, for Starwood Hotels and Resorts.
The company, which has a portfolio of nine brands ranging from super luxury to upscale, said it will be focusing on the convergence of existing properties with its branded hotels rather than merely going in for greenfield projects.
“Building and opening a hotel in India takes about three to five years,” said McGuinness. “Going ahead, the company will look at converting existing hotel properties to our branded properties as this is significantly less expensive and takes a few months to a couple of years to open.”
“A lot of existing hotel brands and independent hotels are not doing well at present because they don’t have distribution network or loyalty programmes or technology expertise,” Puri said.
“With competition increasing in most of the markets, these hoteliers are increasingly looking to tie up with global brands,” he said. “This gives us an opportunity to grow our hotel network. There are around 300 hotels in India which can be easily converted into branded properties.”
The company had said earlier that it would have a network of 100 hotels in India by 2015.
Puri said profit margins for mid-market hotels in India are higher than in other countries as payroll costs are 50-60 per cent lower, making the segment profitable.