Earlier this month, Starwood Hotels & Resorts said it would open 50 new hotels in Europe in the next five years, increasing its European hotel portfolio by 30 percent.
We spoke with Frits van Paasschen, president and CEO of Starwood Hotels & Resorts (pictured here with Paul James) while at the International Hotel Investment conference (IHIF) in Berlin, for his perspective on why the company is focusing on Europe now. Part of it, he says, has to do with the growing wealthy class around the world.
“Despite the economic challenges that we read about with Europe and the challenges of the Euro specifically, the fact is, our business in Europe is continuing to hold up pretty well,” van Paasschen told us. “The destinations in Europe remain aspirational for people around the world; if you’ve never traveled outside of your home country and now you have the means to do that and you are the first in your family, some of the places you’ll think about going are Paris, London and Rome, and so there is demand from growing wealth around the world, there are some very strong global companies based in Europe. It overall remains a very strong market and candidly there hasn’t been a lot of supply in Europe for some time now.”
Morever, he added, performance of Starwood’s properties in Europe has been good, if not very good and occupancies are at peak levels.
“It’s the only market in the world that has an existing higher-end hotel base which grew up at a time before brands existed; that means the penetration of global brands in European market is lower than it is anywhere else,” said van Paasschen.
Opportunities for conversions abound in many markets, he noted, adding that there is ample room in other markets for newbuilds.
“As you look at the eastern periphery of Europe, as you look into Russia and into Turkey, there is great organic growth in large populations. The combination of those things leads us to think that we can open another 50 hotels in the next five years. In fact, we have just over 30 deals confirmed now and we’ll certainly get to the other 20 before the five years are over.”
Bottom line? “So, in spite of Europe having the troubles that it is, it’s still an important and growing market for us,” said van Paasschen.
The additions will be across all of Starwood’s brands, including Element, which is currently the only brand that is not currently in Europe. However, there is a confirmed Element project for Frankfurt, Germany. The environmentally friendly brand is an offshoot of Westin, which focuses on the extended-stay market.
“I think once we bring that brand to Europe it will be recognized for what it is and in my view that’s a brand that’s still ahead of its time,” said van Paasschen.
Here are some key factors to Starwood’s expansion into Europe:
This year, the company will open three hotels in Turkey, including the launch of the Sheraton brand in Adana, as well as the entry of the Sheraton and Aloft brands in Bursa, acclaimed as Turkey’s fastest growing city.
Starwood’s third hotel in Moscow will be the Sheraton Moscow Sheremetyevo Airport Hotel. In the next four years, Starwood will nearly quadruple its portfolio in Russia and the CIS with 11 new hotels in Moscow, St. Petersburg, Rostov-on-Don, Perm, Kaluga, and Krasnodar in Russia, as well as in Kiev, Ukraine and Ismayilli, Azerbaijan.
A new Sheraton hotel will open in Dushanbe, Tajikistan followed by the launch of a Sheraton hotel in the emerging city of Aktobe in Kazakhstan, and the first internationally branded hotel in Kecskemet, Hungary with the opening of the Four Points by Sheraton Kecskemet Hotel & Conference Center.
The King George hotel in Athens has joined Starwood’s Luxury Collection, marking the brand’s eighth hotel in Greece.
W Hotels opens its first ski resort with the W Verbier and The Residences at W Verbier in Switzerland in December. Starwood has opened five W hotels in Europe since 2008, including London, Barcelona, St. Petersburg, Istanbul and Paris. Next year, W Hotels will debut in Milan.
Starwood is also enhancing its European luxury hotels by investing in them along with their owners. Last year, Starwood re-opened two hotels in Spain following multi-million dollar restorations: Hotel Alfonso XIII in Seville and Hotel Maria Cristina in San Sebastian. The Gritti Palace in Venice has also been restored, and the Hotel Prince de Galles in Paris will re-open this May.
Starwood continues to grow its Luxury Collection portfolio through flagship conversions in major European capitals, including the recent conversions of Metropol Palace in Belgrade (Serbia), Hotel Bristol in Warsaw (Poland) and Hotel King George in Athens (Greece).