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Interview @ Vasant M. Prabhu, Vice-Chairman and Chief Financial Officer for Starwood Hotels & Resorts - The Hindu

With brands such as Sheraton, Aloft and Westin, the hotel chain plans to have at least 100 of its properties up and running in India in the next five years..

Vasant M. Prabhu, Vice-Chairman and Chief Financial Officer for Starwood Hotels & Resorts Worldwide, Inc is on a whirlwind trip of the country. In Chennai to look at some of its upcoming properties such as a spanking new Aloft hotel coming up on Chennai's IT highway, Prabhu says Starwood has big plans for India which include opening 18 more hotels in the next few years.
Starwood Hotels manages a 1,000 properties in nearly 100 countries and territories with nine distinctive brands, namely, St. Regis, The Luxury Collection, W Hotels, Westin, Sheraton, Four Points by Sheraton, Le Méridien, Aloft and Element, and Starwood Vacation Ownership, an operator of high-end vacation interval ownership resorts. In India Starwood is present with four of its brands, Sheraton, Le Meridien, Luxury Collection and Westin, and has recently opened doors for its fifth brand, Aloft, in Chennai.

Prabhu, an IIT Bombay graduate who went on to do his MBA in marketing and finance from the University of Chicago, joined Starwood in December 2003 as Chief Financial Officer responsible for the accounting, tax, treasury, strategic planning, corporate development and risk management functions of the corporation. Recently, in recognition of his contributions to the company during the toughest year the hotel industry has endured since the Great Depression, Starwood named Prabhu Vice-Chairman.

Prior to joining Starwood, he served as Executive Vice-President & CFO for Safeway Inc, one of North America's largest food retailers. Earlier, he was Senior Vice-President of Finance and CFO for Pepsi Cola International, where he was responsible for the company's franchise and owned operations in more than 100 countries.

Excerpts from an over hour-long interview:
How big is Starwood in India now and how many more hotels do you intend to add to your portfolio?
In India we have 26 hotels. With another 18 hotels coming up across the country, we will have 44 hotels (over 10,000 rooms) in the next two to three years. And, we expect to have at least 100 hotels in the next five years. This, of course, depends on how things develop here. As of now, with over 6,500 rooms, we are the largest international hotel company in India today in the high-end, in the four- and five-star categories.

Of Starwood's portfolio of numerous brands, how many of them are in India currently and what are the new brands you intend to introduce?
Starwood has a bouquet of nine brands. In India, we have four. As you all know, we are in partnership with the ITC group through one of our brands, Sheraton. ITC also has a few hotels that come under our ‘Luxury Collections' brand – Maurya in Delhi and Grand Central in Mumbai. The group's upcoming hotel in Chennai, Grand Dakshin, may also come under the Luxury Collections brand, hopefully. Apart from this, we have Le Meridien (a luxury and upscale full-service hotel brand, which is present in India) and Westin (another upscale luxury brand). We are also in talks with various developers to bring in our five-star luxury brands, St. Regis and W, four-star brand Four Points, and the mid-market economy brand, Aloft.


Vasant Prabhu Vice-Chairman & CFO, Starwood Hotels & Resorts. 
 
For your hotels in India, do you depend on inbound traffic from abroad or domestic travellers?
Both domestic and inbound foreign traffic! In China, our first hotel, Great Wall Sheraton, opened in 1989. In the first year, 98 per cent of those who stayed in the hotel were non-Chinese. Today, if you take any night in any of our hotels there, 70–80 per cent of our guests have Chinese passports. It changes. So in Asia, 10 years ago maybe 70 per cent of the business came from outside Asia, particularly the US and Europe. Today, we have over 150 hotels in Asia right now. On any given night, 70 per cent of the business comes from within Asia – maybe domestic or regional.
What's the break-up among your brands for the proposed 18 projects you have planned in India?
It's predominantly Sheratons. We will have seven Sheratons, three Westins, two Le Meridiens, three each of Aloft and Four Points.

How are you going to position and differentiate your various brands? Say, a Westin, against a Sheraton? Or, an Aloft?
We like to call it (Westin) modern luxury. It's not the traditional luxury one would see. The design will be contemporary. The brand will give its customers, mostly business travellers, a place where they can feel more relaxed. Well, Aloft … we are very excited about the brand. Chennai will be the first city to have an Aloft; it's opening in a few weeks, and the second one will come up in Bangalore in August. It will be a unique product … will be trendy and an exciting kind of design. The lobby will be a lively place where you can play video games; there will be a ticker with stock prices, and billiards tables and so on. And the tariff will be slightly higher than Taj's Gateway hotels.

Will the design of any particular hotel brand take into account the local topography and culture?
No. Our hotels of a particular brand anywhere in the world will be almost identical. See … leisure travellers and business travellers are quite different. We mostly cater to business travellers. Business travellers in general are looking for familiarity. When they come for a day or two, they don't want surprises.
Leisure travellers look for an experience, but business travellers travel for business reasons. They want a good airport they can land in, they want get out of it fast, they want an air-conditioned car that they can get into that takes them to the hotel, the hotel should look like they are familiar with anywhere in the world. You don't want hassles. You want predictability. You want broadband access. You want a television with normal channels that you want to catch up on. You want a bed that's familiar to you.
Even in the leisure travel business, Americans, for example, want extraordinary predictability. They want to go see the sights, and want every other thing to be familiar.

Does Starwood invest itself in India? As we understand that most of your properties are managed ones where a local partner invests in the physical properties and you manage the brand?
Yes. We do invest, but not in a big way. Fox example, we are working with many experienced developers. There we don't really need to invest. We can work with people who like to invest in hotels and want an international brand. So what happens in this industry is a lot of people are interested in developing hotel projects. But for want of expertise to run a hotel they tie up with hotel companies like us, as the hotel business is global. We have a sales forces that exists in all geographies of the world and calls on all global companies. For example, we go to IBM, and IBM wants to buy room-nights around the world, and we do that. Be it IBM, Accenture, you name it, we are dealing with every one of them. In addition to that, we have a global reservation system. A reservation system is a very complex piece of technology, very expensive, and we are one of the few companies that operate on a global reservation systems.


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