View From The Top
Marriott wants to control India's hospitality sector with the Starwood acquisition. But, there are many stumbling blocks.
- Jul 8, 2017,
- Updated Jul 12, 2017 11:34 AM IST
The outdoor infinity pool that overlooks the Arabian Sea was the biggest attraction when the JW Marriott opened at Juhu, Mumbai, in 2004. That was Marriott's fourth property in India, and the biggest turning point for the hospitality chain, nearly five years after entering the country. Now, the Marriott alone has 36 hotels across seven brands - Courtyard, JW Marriott, Renaissance Hotels, Ritz-Carlton, Fairfield Inn & Suites, Marriott Hotels and Resorts - spread over 19 Indian cities.
With Marriott International acquiring Starwood Hotels & Resorts Worldwide in a $13-billion deal last September, Marriott has emerged as the largest hotel company globally and in India. It now has a portfolio of 1.1 million rooms across 5,700 hotels in 110 countries. In India, it has 14,700 rooms across 83 hotels, ahead of Taj Hotel Resorts & Palaces (13,600) and Carlson Rezidor (8,500). Starwood with the ITC partnership has 47 properties, including 28 franchised hotels.
A deal of the Marriott Starwood kind has no parallel. The scale involves significant complexities across several areas, but not limited to different cultures and working styles of the two organisations. The integration of two entities will be something to watch out for. Marriott is disciplined and process-oriented, while Starwood was an innovative organisation. From the historical perspective, Marriott was able to survive and thrive because it could maintain a certain traditional approach while innovating at the same time. Starwood was new on the block. The company was founded in 1980 by Barry Sternlicht. Its core strength was innovation.
Marriott's brand architecture, especially around brands such as Ritz Carlton, JW Marriott, is fairly regimented, which means that it follows a more prototypical and disciplined approach to the product. For instance, all Fairfield by Marriott properties have the same pattern of wood on the back of the reception desk. They have the same colour of upholstery on the furniture.
Starwood was far more innovative in design. Starwood's Sheraton brand typically has different characters in different cities. The Maurya Sheraton in Delhi, Sheraton in Bangalore and Sheraton in Hyderabad have high degree of individuality. Customers recognise them for their individual identities, and not necessarily for their architectural consistency.
"There are times when I want flexibility. If I have bought an existing hotel, and want to convert it, I want more flexibility. We have bought a lot of local hotels and converted them. We want to see if Marriott will preserve that innovative culture of Starwood or will that disappear and, therefore, we have one less option," says SAMHI's Jakhanwala.
"The reality is that size does matters," says Govil. Marriott seems to be betting big on size and scale to dominate the market. Consolidation is not a magic pill; and with more large-scale mergers waiting to happen, Marriott risks going back to the point from where it had started out. ~
@manukaushik
The outdoor infinity pool that overlooks the Arabian Sea was the biggest attraction when the JW Marriott opened at Juhu, Mumbai, in 2004. That was Marriott's fourth property in India, and the biggest turning point for the hospitality chain, nearly five years after entering the country. Now, the Marriott alone has 36 hotels across seven brands - Courtyard, JW Marriott, Renaissance Hotels, Ritz-Carlton, Fairfield Inn & Suites, Marriott Hotels and Resorts - spread over 19 Indian cities.
With Marriott International acquiring Starwood Hotels & Resorts Worldwide in a $13-billion deal last September, Marriott has emerged as the largest hotel company globally and in India. It now has a portfolio of 1.1 million rooms across 5,700 hotels in 110 countries. In India, it has 14,700 rooms across 83 hotels, ahead of Taj Hotel Resorts & Palaces (13,600) and Carlson Rezidor (8,500). Starwood with the ITC partnership has 47 properties, including 28 franchised hotels.
A deal of the Marriott Starwood kind has no parallel. The scale involves significant complexities across several areas, but not limited to different cultures and working styles of the two organisations. The integration of two entities will be something to watch out for. Marriott is disciplined and process-oriented, while Starwood was an innovative organisation. From the historical perspective, Marriott was able to survive and thrive because it could maintain a certain traditional approach while innovating at the same time. Starwood was new on the block. The company was founded in 1980 by Barry Sternlicht. Its core strength was innovation.
Marriott's brand architecture, especially around brands such as Ritz Carlton, JW Marriott, is fairly regimented, which means that it follows a more prototypical and disciplined approach to the product. For instance, all Fairfield by Marriott properties have the same pattern of wood on the back of the reception desk. They have the same colour of upholstery on the furniture.
Starwood was far more innovative in design. Starwood's Sheraton brand typically has different characters in different cities. The Maurya Sheraton in Delhi, Sheraton in Bangalore and Sheraton in Hyderabad have high degree of individuality. Customers recognise them for their individual identities, and not necessarily for their architectural consistency.
"There are times when I want flexibility. If I have bought an existing hotel, and want to convert it, I want more flexibility. We have bought a lot of local hotels and converted them. We want to see if Marriott will preserve that innovative culture of Starwood or will that disappear and, therefore, we have one less option," says SAMHI's Jakhanwala.
"The reality is that size does matters," says Govil. Marriott seems to be betting big on size and scale to dominate the market. Consolidation is not a magic pill; and with more large-scale mergers waiting to happen, Marriott risks going back to the point from where it had started out. ~
@manukaushik