SAN DIEGO (Reuters) - Starwood Hotels & Resorts HOT.N will open between 70 and 80 hotels this year, about even with 2010, but with more emphasis on mid-scale brands in emerging and mature markets, the hotel operator is set to announce on Monday at the Americas Lodging and Investment Summit.
Most of the new hotels will be located abroad, especially in China. But the owner of the St. Regis and Westin brands will also open more than 20 hotels in North America this year, Simon Turner, Starwood president for global development, told Reuters in an interview.
Known for stylish, upscale offerings like “W,” the spread of Starwood’s more affordable hotels like Four Points by Sheraton, Aloft and Element signals the importance of the global middle class to its business strategy.
“Not everybody is going to have the budget to stay in a St. Regis or a W or even a Sheraton or a Westin,” Turner said.
“But there is an enormous amount of growth that will be driven by a middle class and increasing affluence in Indonesia, in Brazil, in India.”
Hotel operators like Starwood and bigger rival Marriott International MAR.N tend not to own the hotels that carry their brands, preferring to generate revenue by collecting franchise and management fees.
In the United States, Starwood is the seventh-biggest hotel company, with three percent of the rooms, according to research from Goldman Sachs. But of the big U.S.-based hotel companies, Starwood has the largest international presence, with 80 percent of its pipeline outside the country.
Starwood’s Asia Pacific region will account for half of its 2011 openings, including 19 Sheratons, 10 Westins and two St. Regis hotels planned for Greater China.
In 2011, mid-scale brands like Four Points will account for about 15 percent of Starwood’s China openings, which is consistent with last year’s development, the company said.
But Starwood has its eye on the 100-plus Chinese cities that already have at least a million residents but do not enjoy the “international gateway” status of Beijing or Shanghai.
“Not all of those cities will be able to support a full-fledged Sheraton hotel in the near-term but all will be able to absolutely support a Four Points,” which is a smaller investment for Starwood’s developers and owners, Turner said.
Within five years, Aloft and Four Points will be growing faster than Sheraton in China, he said.
In India, the company will open 7 hotels, three of them Alofts and two Four Points. Two Four Points will open in both Thailand and Malaysia.
Aloft and Four Points suit the suburban office park development that is spreading around cities like Mumbai, Turner said.
Domestically, Starwood also sees its strongest domestic expansion opportunity in its “select-service” brands simply because it is relatively new to that business, Turner said.
This year, two-thirds of the 20-plus North American openings will be Four Points, Alofts or Elements, most of them Four Points. Last year, such brands accounted for 50 percent of the openings.
Reporting by Helen Chernikoff; Editing by Dhara Ranasinghe