 "Marriott plans 200 hotels by 2020: Rajeev Menon")
JW Marriott has become the undisputed king of hotels after the acquisition of Starwood. Rajeev Menon, chief operating officer, Asia-Pacific operations (excluding China) of Marriott International, tells Avishek Rakshit about the group’s plans to speed up its hotel count and focus on the mid-market and upscale brands. Edited excerpts:
What is the road map for the Marriott International group in India after the acquisition of Starwood?
The road map is very much what we have done so far, except that it will be accelerated growth. Earlier, we were targeting 100 hotels by 2020, but with the Starwood acquisition, which makes us the largest player in India, we can safely say, we’ll be close to 175-200 hotels over the next four years. We’ll have 15 brands operating in India by this year.
What structural changes took place in the organisation after the Starwood acquisition? Will there be a headcount reduction?
In the next 15-30 days, I will announce the India structure for the future. Currently, both leaders — Neeraj Govil (area vice-president — South Asia of Marriott International) and Dilip Puri (managing director, India, & regional vice-president, South Asia, of Starwood Hotels and Resorts) — are reporting to me.
We are going to maintain both our Delhi as well as Mumbai offices as we see these two cities as strategic markets catering to south Asia. India is also the hub for managing places like Bangladesh, Nepal, Bhutan and Sri Lanka. So we’ll keep both offices.
My focus would be to get the best talent from both the Starwood and Marriott teams and there will not be a headcount reduction. In some cases, where there are identical jobs being done by two people, we will try to relocate them into other opportunities.
After the merger, what will be the future of the ITC-Starwood hotel deal?
The master franchisee deal will continue under Marriott. I started my career with ITC as a trainee and there are some very dear friends there today and from our perspective nothing changes. It is just a shift from Starwood to Marriott.
Will there be a clash of positioning of hotels now that you have acquired the Starwood brand, which also has a deal with ITC?
I generally believe that there is ample opportunity for all lodging segments, given India’s long-term growth potential. It’s really about how a company positions its brands and stays true to the brand’s commitment and delivers returns.
Will you bring your entire 30 brands into India in the near future?
I don’t think so. It is easy to bring in a brand to India but the difficult part is how to grow it. There are many global luxury hotel brands that haven’t succeeded here.
Right now, many luxury brands are posting negative Ebitda (earnings before interest, tax, depreciation and amortisation). What is the case with Marriott?
There are elements like cost of land, how effectively you borrowed money from banks and at what interest rate, how quickly you build the hotel and how effectively you manage the business. In India typically, when you are getting 10-year loans at high interest rates, and its taking you 7-8 years to develop the hotel, you get only two years to pay. Hence, you hear all this negativity.
Over the past couple of years, we have seen double digit growth in our topline as well as bottomline in India.
What is your market share now?
Last year we carried a 30 per cent market share premium to our competitors on same-store sales. Any brand that can carry a 25-30 per cent market share premium is very well positioned.
What is the road map for the Marriott International group in India after the acquisition of Starwood?
The road map is very much what we have done so far, except that it will be accelerated growth. Earlier, we were targeting 100 hotels by 2020, but with the Starwood acquisition, which makes us the largest player in India, we can safely say, we’ll be close to 175-200 hotels over the next four years. We’ll have 15 brands operating in India by this year.
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In the mid-space and below, there is probably 50 per cent supply, and in the upper luxury there would another 45-50 per cent.
What structural changes took place in the organisation after the Starwood acquisition? Will there be a headcount reduction?
In the next 15-30 days, I will announce the India structure for the future. Currently, both leaders — Neeraj Govil (area vice-president — South Asia of Marriott International) and Dilip Puri (managing director, India, & regional vice-president, South Asia, of Starwood Hotels and Resorts) — are reporting to me.
We are going to maintain both our Delhi as well as Mumbai offices as we see these two cities as strategic markets catering to south Asia. India is also the hub for managing places like Bangladesh, Nepal, Bhutan and Sri Lanka. So we’ll keep both offices.
My focus would be to get the best talent from both the Starwood and Marriott teams and there will not be a headcount reduction. In some cases, where there are identical jobs being done by two people, we will try to relocate them into other opportunities.
After the merger, what will be the future of the ITC-Starwood hotel deal?
The master franchisee deal will continue under Marriott. I started my career with ITC as a trainee and there are some very dear friends there today and from our perspective nothing changes. It is just a shift from Starwood to Marriott.
Will there be a clash of positioning of hotels now that you have acquired the Starwood brand, which also has a deal with ITC?
I generally believe that there is ample opportunity for all lodging segments, given India’s long-term growth potential. It’s really about how a company positions its brands and stays true to the brand’s commitment and delivers returns.
Will you bring your entire 30 brands into India in the near future?
I don’t think so. It is easy to bring in a brand to India but the difficult part is how to grow it. There are many global luxury hotel brands that haven’t succeeded here.
Right now, many luxury brands are posting negative Ebitda (earnings before interest, tax, depreciation and amortisation). What is the case with Marriott?
There are elements like cost of land, how effectively you borrowed money from banks and at what interest rate, how quickly you build the hotel and how effectively you manage the business. In India typically, when you are getting 10-year loans at high interest rates, and its taking you 7-8 years to develop the hotel, you get only two years to pay. Hence, you hear all this negativity.
Over the past couple of years, we have seen double digit growth in our topline as well as bottomline in India.
What is your market share now?
Last year we carried a 30 per cent market share premium to our competitors on same-store sales. Any brand that can carry a 25-30 per cent market share premium is very well positioned.