Starwood Hotels: Innovation through marketing

Starwood Hotels & Resorts Worldwide was one of the world’s largest hospitality ownership, management and franchise companies in 2010, with 992 properties in some 100 countries. Starwood had started out as an owner and operator of hotels in 1994. But in 2004, it had shifted its strategy to an asset-light model, whereby it reduced its ownership and focused its attention on managing and franchising hotels. As of 2009, 95% of all of Starwood’s hotel net income came from upper upscale and luxury hotels. Its 2009 revenues were $4,712.0 million, a -19.5% decline from the previous year’s results. As a successful pioneer of the world’s first portfolio of “lifestyle” hotel brands., Starwood’s brands were differentiated by emotional concept, determined by the type of experience customers sought. Its customer loyalty scheme provided opportunities to maximize customer lifetime value, by cross-selling and up-selling hotel brands over time. Additionally, Starwood’s partnership programs helped it to enhance its customer experience, while generating additional revenue from partnersIn 2007, Starwood entered into lower-end markets in North America with two new hotel brands: aloft and element. But emerging markets were viewed as the major source of Starwood’s future growth. In 2009, CEO van Paaschen announced his plan to open 70% of its new hotels outside the US, primarily in countries such as China, India and Qatar. In 2010, with 31 hotels in China (and another 34 in the pipeline), Starwood was the four- and five-star hotel leader in China. Looking to the future, industry observers wondered whether the Starwood brand portfolio was balanced. To grow, should some brands be added? If so, should the additions be acquired or developed in-house. And, were there some brands in the portfolio that were surplus to requirements?