Starwood eyes expansion in India

Treating India as the most important market after China in Asia Pacific, Starwood Hotels & Resorts is targeting at doubling its property from the current 19 over the next five years. Starwood is known for its globally popular brands such as Sheraton, Le Meridien and Westin, all of which have presence in India.

Explaining the company's emphasis on India, Miguel Ko, president, Starwood Hotels & Resorts-Asia Pacific, said, "India is the fastest growing Asia Pacific market for international visitor spending. With domestic travel rapidly growing, it is now easier to work with the Indian government and the business environment in general has shown significant improvement in the last few years. Our importance to the Indian market might even overtake China in a few years."

ITC Hotels, which has used the Sheraton brand for 10 of its properties since 1979, renewed its 3-decade old contract with Starwood on Thursday to use its most premium brand, Luxury Collection, at seven hotels. Luxury Collection will be making its entry into India with an exclusive arrangement with ITC.

The seven ITC Sheraton property that will be re-branded to Luxury Collection are ITC Maurya in Delhi, ITC Maratha and ITC Grand Central in Mumbai, ITC Sonar in Kolkata, ITC Windsor in Bangalore, ITC Kakatiya in Hyderabad and ITC Mughal in Agra.

Though Starwood's contracts with ITC Hotels and others such as Vatika for Westin are franchise-based, it is looking at "putting equity on the ground". "That is how serious we are," Ko said.

Meanwhile, the ITC management has not ruled out the possibility of setting up new Luxury Collection hotels. "ITC Hotels has been granted Rs 5,000 crore for new projects. If an opportunity comes up for starting a Luxury Collection from the start, I am sure both Starwood and ITC will look at it keenly," said YC Deveshwar, chairman, ITC.

While the co-branding franchise arrangement still needs to be vetted by the Foreign Investors Promotion Board, ITC said it would continue to own and manage all the seven hotel properties. Starwood would be responsible for marketing and distributing the Luxury Collection hotels overseas. Both companies are optimistic that re-branding would occur by the beginning of next month.

Nakul Anand, chief executive officer, ITC Hotels said that the impact of the re-branding on the hotels' average room rates has to be still worked out. "Today, the rates are determined by market forces and the fact that demand is far greater than supply. We are still working on the economics of the upgrade," he said.

The new contract also includes the re-branding of WelcomHotel New Delhi as a Sheraton, while the Chola and the Park in Chennai and the Rajputana in Jaipur will continue to retain their Sheraton connections.