Starwood's love affair with the Gulf

With well over a thousand properties dotted around the world, Starwood Hotels CEO Frits van Paasschen has his finger on the pulse of the global economy. He tells Arabian Business why the headlines don’t tell the whole truth

The first impression one gets after meeting Frits van Paasschen is that this is a man who doesn’t like to stand still — which is lucky for someone whose job is so closely tied to the travel industry. Not content with shifting the entire Starwood Hotels and Resorts Worldwide operation over to Dubai for a month, the wiry American is busy spending what little spare time he has over the weekends doing triathlons and cycling in the desert.

Starwood Hotels and Resorts Worldwide, the US-based company he has led for nearly six years, oversees 1,140 properties in over a hundred countries around the world. So it seems a bit strange that Dubai — not London, Paris or Hong Kong — has been chosen. Not at all, says van Paasschen, pointing out that the emirate actually hosts the second-largest number of Starwood hotels on the planet (fourteen, with another six confirmed in the pipeline), after New York.

“Why Dubai? Simply put, because of the extraordinary growth that’s happening here, and I think this region exemplifies something we’ve been calling the golden age of high-end travel. What better place to watch that unfold than a crossroads like the GCC, and particularly Dubai?”

It seems that Starwood’s love affair with the Gulf still has some way to go. It’s planning to have 30 hotels in the UAE in the next five years, alongside fifteen in Saudi Arabia. Altogether, the firm will launch 50 new hotels in the Middle East and Africa during the same period. When questioned whether the kind of capacity growth he is planning for cities like Dubai and Abu Dhabi is overkill in what are already highly competitive markets, van Paasschen shakes his head.

“Our business is about being a pioneer, being a first mover in the markets — so I would rather be early than late,” he says. “Even in the dark days of 2009, our occupancy across Dubai was 82 percent, and we haven’t dropped below that. In fact, today, the market is somewhere in the high 80s and we continue to be above that.”

“And even as I look at Abu Dhabi, there may be more supply today, but as you look at overall growth in the UAE, and you look at the investment creating Abu Dhabi as its own destination, I believe, from our own standpoint at least, our supply creates its own demand.”

While Van Paasschen has access to the kind of data that most economists can only dream of, he tends to think long term. While you may not have heard of Starwood, the chances are that you will have woken up in one of its hotels. Its family of nine brands includes Westin, Sheraton, Le Meridien and St Regis. So whether it’s emerging markets or first-world economies, van Paasschen has a pretty up-to-date grasp on where confidence is high and where the planet’s business is being done.

So what’s he got to say? Well, by and large, the news appears to be far better than the headlines - which tend to focus on a stuttering Europe, an America that is hampered by political wrangling, a hard landing in China and slowing growth in India - would have us believe. Emerging markets are of especial interest to Starwood, which has 80 percent of its pipeline of new hotels based in fast-expanding countries. In China, especially, van Paasschen reports that Starwood’s January figures indicate a bounceback in the world’s second-largest economy after the country’s leadership transition took place late last year.

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