Expect Starwood to move faster in bringing Westin, Four Points and W Hotels to Beijing, and to set new Westin standards in China. Ian Lien, the group's VP for acquisitions and development for Asia Pacific, discusses its game plan with Raini Hamdi Hotel Asia Pacific: What sort of growth was Starwood eyeing before the Olympics win for Beijing? Has the scorecard changed? Lien: We were already expecting to bring Westin and Four Points, and potentially

Ian Lien

Hotel Asia Pacific: What's the real advantage of opening hotels in time for the Olympics, based on Starwood's experience with Sydney?

Lien: A common misperception with "event-driven" development is that many believe hotel development should be undertaken to primarily serve the Olympics period. This is perhaps slightly misguided. The Olympics last for a couple of weeks, with marginal benefit in the 12 months leading up to the Games. Hotels are long-term assets, and you can't count on a three-week sell-out period to make money in this business.

To be sure, it's great to open a hotel in an Olympic year because it's so much easier to fill the hotel in the first year with a big event like the Olympics rather than building a business customer by customer. We have had this experience in many Olympic cities, most recently in Sydney, where we opened three hotels [Westin, W and Four Points] just prior to the Olympics. All three hotels did wonderfully well and got off to a very good start.

However, I think the real benefit for the hotel business in an Olympic city is the mid- to long-term effect a global PR event like this has for the travel industry. There is usually a strong increase in interest in the destination 12 months after the Games are over. I think this is where the real benefit for the hotels in Beijing will also come in.

Hotel Asia Pacific: As Starwood's man for acquisitions and development, how are you advising the chain to proceed in China?

Lien: To seek further expansion in Beijing. We already have two hotels there - the St Regis and the Sheraton Great Wall - through which we have built a strong presence, reputation and history.

We have just opened the St Regis in Shanghai and have two more hotels under construction there that will open in 2002. One is a new Westin that will set a completely new standard for accommodation in Shanghai.

This hotel is located a stone's throw from the Bund in a class-A, mixed-use complex, and we are currently looking for a "twin sister" to this hotel in Beijing for Westin.
The other development in Shanghai is a Four Points hotel in Pudong, which will be our first mid-market hotel in China. We are also in early discussions to bring W Hotels to Shanghai.

On the whole, we are looking at growing the Four Points by Sheraton brand extensively in the PRC. We have focused on building our upscale and luxury distribution in the country before launching the mid-market brand.

Other chains have gone the other way on this, which is difficult: When you establish a mid-market reputation from initial expansion, it's difficult to act with credibility in the upscale and luxury end of the business.

Hotel Asia Pacific: What changes in acquisition/development strategies do you foresee (eg, more equity by chains)?

Lien: We are not scared of looking at investments on a global level. It is entirely possible that we will participate with our money for the right hotel.

Hotel Asia Pacific: Starwood is not a top-five operator in China. Will Four Points change this?

Lien: Again, we have focused on building an upscale and luxury presence in China, and the next phase will be broad-based growth in the mid-scale segment.

We are open to creating master-development rights for the right player in China - someone who can add 30-40 hotels quickly in the mid-market category. We don't rule out acquiring or forming a joint venture with a local group that already has domestic distribution to achieve this.

Hotel Asia Pacific: What are the real constraints in acquiring and developing in China? Do you foresee this worsening or easing with the Olympics?

Lien: For any foreign group, it is difficult to justify the non-freehold tenure of land in China. We invest globally in hotels [the company owns interests in more than 200 hotels globally] and have grown to expect to own the land and buildings without transfer rights. This is probably the pivotal issue for us.

On another level, the industry is still in its infancy in China. Many locations outside Beijing and Shanghai have very immature lodging markets with limited quality supply where it is difficult to expand the upscale/luxury side of our business - hence our focus on broad-based, mid-market development. 

Eventually, China has the potential of being the dominant country in Asia, and Starwood aims to be a leader in its hotel sector.