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Our owners are the heroes within Tribute Portfolio

Dave Marr, Global Brand Leader, Sheraton and Tribute Portfolio and Dilip Puri, Managing Director India and Regional Vice President South Asia, Starwood Hotels and Resorts, in an email interaction with Sumit Jha highlight the purpose behind creation of this new brand and its impact on the Indian market

Wednesday, May 13, 2015, 15:00 Hrs  [IST]

Q: Tribute Portfolio as a brand will work with independent upscale hotels and resorts, and continue to maintain the independent spirit of the property. Would the existing hotel/resort management be handling the operations or will it be handled by the Tribute Portfolio team of Starwood? What would be the specific role of Starwood Hotels & Resorts?
Dave Marr: In some hotels, Starwood will manage the operations of the hotel, and in other properties the owner will franchise the Tribute Portfolio brand, and have their team manage the hotel operations. That said, the purpose of having a brand that celebrates independent experience is that you really shouldn’t feel a heavy presence within the hotels with Starwood specific standards. That’s why we say our owners are the heroes within Tribute Portfolio. My team will work with the owner to bring their vision for the hotel to life and make it memorable for our guests.

What you will feel from Starwood is our standards of quality and safety, and our Starwood Preferred Guest program presence. As with Starwood’s other nine brands, guests will be able to earn and redeem SPG points at Tribute Portfolio hotels, and enjoy in-hotel tier benefits such as upgrades, welcome amenities, late check-out and more.

Q: According to reports, it has been estimated that the Tribute Portfolio hotels will touch 100 property mark over the next 5 years. Do you feel that aiming for such high growth numbers could mean a compromise on the quality aspect of the targeted upper upscale brand? How would the team responsible for takeover of hotels under the newly formed brand ensure that the brand standards are maintained?
DM: You’re correct in noting that we are aiming for 100 Tribute Portfolio properties by 2020. When it comes to those properties, we are focused on bringing guests a consistent upper upscale experience. When they stay at a Tribute Portfolio property, they can expect the hotel to live up to our Starwood standards and not blur lines across categories.

Starwood has meticulously handpicked the luxury hotels featured in The Luxury Collection for the last 20 years, and we will just as carefully select the independent upper upscale properties for Tribute Portfolio. There will be guest surveys, audits of standards and operational visits from Starwood operational teams to insure each hotel is providing the level of service expected by our SPG guests and customers.

Q: Given that now there are 10 brands in the portfolio of Starwood Hotels, do you feel that there is a chance of having an internal competition of brands? What impact would that have on the overall economics of the group?
DM: While we continue to focus and expand our nine branded offerings, we believe there is an unmet opportunity in the market to grow the Starwood footprint beyond those nine distinct brands. We recognize that there are great independent hotels out there, and Tribute Portfolio will bring the best of those hotels and the best of Starwood closer together for our guests. Our members’ ability to earn points from this outstanding group of independent hotels only helps grow engagement and business across Starwood.

Q: Since now the portfolio would include independent upscale hotels and resorts, what do you see as competition to this newly created brand?
DM: Over the past ten years, more than 30 “lifestyle” hotel brands have launched, creating a sea of sameness. As simple as it sounds, we believe that there are great independent hotels out there in great places, and we do not need to create a new brand in order for our SPG members and guests to take advantage of them. The Tribute Portfolio hotels we launched within the U.S. are a great example of this, and we’ll look to further our vision over the coming months by adding more hotels to Tribute Portfolio.

Q. Is the Tribute Portfolio going to be adding to the existing structure of brands of the Starwood Hotels & Resorts in India? When is the Indian market slated to see a Tribute Portfolio property?
Dilip Puri: Tribute Portfolio is Starwood’s 10th brand. We believe this brand has great potential to grow in key markets and exciting destinations and India provides immense opportunity for the same. Our development teams are currently in talks with hotel owners and developers all around the world including India and it would be not too long before we see the brand making a debut in India.

India today is a strategically important market for Starwood. Currently the fourth largest market, it is comfortably poised to become the third and the launch of this brand could provide a renewed impetus to our growth strategy. We have already seen great success in India with our conversion strategy. An independent brand like Tribute Portfolio could open up a new channel for us to drive our growth in the region.

Q. The current focus of the group on the Indian sub continent has been evident with the increase in the number of properties across brands. The last few years have seen several large changes in the hospitality market owing to the difficult economic environment. Can you share your perspective on the business environment for the next few years? Given the tough marketing situation, would brand conversion become a game changer for independent property owners?
This is an inflection point for India with a stable government in place and a positive market sentiment. Early indications of the kind of investments and interest we are seeing in the country from  countries from around the world and some key initiatives taken by the government has already seen some positive impact on GDP growth in the country.

With improved infrastructure and a faster pace of urbanization, we expect more demand for hotels, and we intend to be a part of the long-term growth and “good times” the Prime Minister has been talking about.

Our owners tell us that they see great value in partnering with Starwood as they get access to our affluent base of SPG members, as well as our Starwood Sales customers and distribution channels. Having worked with our other brands, they know our guests and customers love to experience high quality hotels in sought after destinations. If they can partner with Starwood and still have the flexibility to bring their vision to life for some of their unique independent assets, then that is something they have interest in pursuing. We are very optimistic and believe in the opportunities that this could bring for us to drive our growth in the region.

Q. The last couple of years have not been very easy for hotel industry in India both for operating hotels as well as projects in the pipeline. How have Starwood's portfolio of hotels performed in the tough operating climate? How did that impact your hotels’ performance in terms of occupancies, ARRs and Rev PARs?
Being an international operator has given us the edge to outperform the market even when the going is tough. The last couple of years are a testimony to this. Our openings and deal signings have been on track and our new opening hotels have ramped up faster than expected. We signed more deals than ever before in 2014 and we will open 8-10 Hotels in the next 12 months. Our Hotels are market leaders in most markets where we operate. Occupancies, ARRs and Rev Pars have been on the increase. Some markets have seen a compression due to increase in supply but our view is that the gap between demand and supply balances out over a period of time. Besides, some hotels generate their own demand. India is still a under hoteled market with the need for good quality lodging rampant across the country be it tier 1, tier 2 or tier 3 markets, micro markets within larger markets or resort destinations. We therefore remain optimistic and bullish about our growth in the region.

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