As the president of global development, Starwood Hotels & Resorts, let’s have a deep look into how Simon Turner views the develop of the company all around the world.

　　Simon Turner is responsible for the company’s global development including hotel and resort development, property acquisitions and dispositions, franchise and management pipeline expansion and real estate investment management. Prior to joining Starwood in 2008, Turner spent more than ten years as a Principal of Hotel Capital Advisers, a hotel investment advisory and asset management firm, overseeing both hotel brand and property investments. Before joining Hotel Capital Advisers, Turner was a member of the Investment Banking Department of Salomon Brothers. Based in both New York and London, he was responsible for the structuring and execution of a broad range of hotel sector strategic and financial advisory and capital-raising assignments.

　　With some 1,200 hotels in 100 countries, do you consider your portfolio of hotels well balanced between your domestic presence in the US and the international arena?

　　I am intrigued by the way you phrase the question because culturally, as a company, Starwood Ho-tels & Resorts doesn’t view itself as an American hotel group. We view ourselves as a global hotel company, which happens to have its headquarters outside of New York City. Candidly when we look at the way we run our business we have a heavy presence already in Asia-Pacific, in the Mid-dle-East and in Europe. Over the last five years, our growth has been specifically skewed outside of the US. Last year, in Asia-Pacific and China, we experienced a huge portion of our growth, repre-senting close to 50%. We are fundamentally a global company by nature.

　　How do you justify that moves, is there more profit to make outside of mature markets?

　　When we look at our strategic growth around the world, we look at where there is demand from economic growth, including an increase in business travel to a particular destination. We look at it as a supply and demand proposition… With increasing demand for hotel rooms and obviously less supply in emerging markets, there is tremendous opportunity for growth. Our brands, driven by Sheraton, have a history of being first movers in many markets around the world.

　　As a publicly traded company, we always look to create value for our shareholders – and, of course, our hotel owners. In many respects, we view our portfolio of hotels, our growth and our pipeline the same as you or I would look at personal investments – we want a balanced approach because somehow, at any given time, there will be something happening in some part of the world that will disrupt our profitability. If you look at today, for instance, we have a lot of hotels in Thailand where business is currently under a little bit of stress. Or, in Nigeria, for example, where we’ve had a sig-nificant presence for a long time, but today see some challenges for our business in that country. We have hotels in over 100 countries and recognize there will be cyclical upswings and cyclical downturns.

　　What is your specific consideration about China?

　　Well when you look at a population of 1.2 billion people, the transformation of the Chinese econo-my, and the financial resources of a centrally controlled government, long-term economic growth is unquestionable. Will there be years of 9% GDP growth and years of 5% GDP growth? Sure, but China presents many opportunities both for hotel growth in the country and the rapidly increasing number of loyal SPG travelers who are traveling out of the country. We have a portfolio of 135 ho-tels today with many great properties in the works.

　　Do you have the same interest as other international groups for sub-Saharan Africa for your coming developments?

　　We continue to look at sub-Saharan Africa for growth opportunities. If you look around the world, it is fascinating when you consider the heritage of the Sheraton brand and Le Méridien brand. For example, the Sheraton Kuwait opened in 1968, in Beijing in 1985. Le Méridien, when it was the travel companion of Air France, went into African destinations in the 70s. Since that time, we have built a talented team with experience entering new markets where infrastructures are just emerg-ing. That legacy gives us a competitive advantage.

　　Would you not consider that “mature markets”, in North America and Europe, as being safer and more productive?

　　I am going back to my previous comment on the balanced portfolio approach and our ability to re-spond to any situation. From a brand perspective, we have our three luxury brands: The Luxury Collection, W and St-Regis, we have our first class brands, Sheraton, Le Méridien and Westin; and our mid-market brands, Aloft, Element and Four Points. We also have a range of scenarios in terms of managing or franchising properties or converting an existing property versus building from the ground up. Going back to your question, if you look at what you call the more mature markets, such as the US, for the last three or four years approximately 40% of our new signings have been conversions. We are constantly evaluating the right mix with all of these strategies depending upon market dynamics and trends.

　　Do you think that your brands are flexible enough to adapt to the various options of development that you mentioned?

　　We are a very brand centric company and our brands are at the heart of everything we do. So is our desire to work with owners to create value. We have figured out a cost efficient way for own-ers to convert an existing building smoothly into one of our brands. Here are some examples… Le Méridien in the US has had great success given its flexibility to play off the local vibe and cultural themes, and adapt interior design to that. When we launched our Aloft brand five years ago, we saw a lot of opportunities for conversions given the brand’s DNA and focus on design. The very first Aloft conversion was for a former railway terminal – an industrial building in the city of Dallas. Through that development process, we were able to demonstrate the great potential of the brand to owners.

　　This conversion model – bringing older buildings back to life through a global hotel brand -- would also work in many places in Europe like Marseille, Lyon, Lille, Stuttgart or Manchester... or cities with an industrial background. To further fine tune our conversion strategy for Aloft, we took two existing hotels, one in San Francisco airport, a former Clarion, and one in downtown Tucson, Arizo-na, and we completely stripped both buildings back to their initial structure core and then built Aloft from the core up. The Aloft in Liverpool is another example, adapting our conversion strategy to an existing building. There are so many great adaptive reuse development opportunities like that in Europe.

　　How come the development of that brand is not faster in Europe then?

　　Two points. First, Europe has had some challenging economic times and the financing markets have been difficult. Second, developers tend to like to touch and feel hotels before there are willing to step in and develop a new brand. Once they can actually experience it, it changes everything. Now that we have Aloft hotels in operation in Brussels and London, with the Liverpool project well un-derway, we expect development momentum. We just announced another exciting development project in the Historic Tobacco Dock Section of London. Growth tends to be exponential once you have established the base, which is now the case for Aloft in Europe, especially with the signs of some economic and financial recovery. New developments will accelerate with more or less 50% in conversions and 50% in new build.

　　Don’t you fear that a slower pace in that development might give way to other new brands, in-spired by Aloft, such as CitizenM, Qbic, Yotel…?

　　From our perspective imitation is the greatest form of flattery. We have the motivation and the desire to move quickly and be agile, but we always have our eyes on the right long-term develop-ments for the company and our brands. While we notice the smaller brands that pop up here and there, we are not swayed in our growth strategy or our nine distinct lifestyle brands.

　　However would you plan the launch of a new brand to serve new market segment or to extend the range of your portfolio?

　　One of the things that Starwood Hotels prides itself on, in addition to our brands, is our focus on innovation. From the launch of W, to the launch of the now widely recognized heavenly bed at Westin, we’re constantly testing new ideas on every front. In terms of a new brand, we are fo-cused on the nine brands we have and believe they give us the scope and bandwidth for continued growth throughout the world. That said, if we came across another brand that would be distinctive, compelling and sufficiently different from one of our existing brands, we would consider it as we did when we acquired Le Méridien. We will continue to be very selective and strategic – while be-ing opportunistic.

　　How do you explain the success of W among owners? Would you say there is an ego factor to own such hype properties besides the financial results?

　　W Hotel was launched 15 years ago in New York and it initially grew within North America. It has gone global in many of the world’s great markets and we are getting close to 50 W hotels, which is the dominant brand in the luxury lifestyle segment. When you look at how much capital, collective-ly, has been invested by owners in the W brand, it would be very difficult for any other brand to match our distribution and global presence. We have developed a global portfolio of Ws in keys cities around the world for guests who have become W loyalists and seek out the brand wherever they travel.

　　Could you succeed to create that same kind of community around brands such as Westin or Element, influenced by the environmental concern?

　　There is a global sense of wellness and health attached to Westin and how we bring those goals to life through programming. What we try to do with each of our brand is give them a personality and an emotional hook where people to say “I am staying at a Sheraton, or a Westin or a Le Méridien or a W because I know that they have certain characteristics that will make my hotel stay distinctive and compelling from just an every day hotel.

　　I think you can do it with Element. We launched that brand a year after Aloft, at possibly the worst time ever, in the middle of a financial global crisis. But one of the things we found is that guests’ reaction to Element has been just exceptional. The combination of design and a focus on being green – all at a more affordable cost level, has really struck a chord with guests. While the brand took off slowly, we are getting a lot of attraction and enthusiasm and will double in the next two years. And we are about to introduce the brand in Germany… once that one is in operation, I can foresee exponential growth in Europe.

　　Starwood Hotels & Resorts has been very active to develop an asset light strategy, disposing of existing assets, returning benefits to shareholders, growing as an operating company, do you see a limit to that strategy when owners are becoming demanding, when contracts could be broken, when strategic hotels lose their brand?

　　It continues to evolve. In a past life I was on the ownership side, after being on the banking side, and so I truly understand how important it is to find the alignment of interests for owners and op-erators of the brand. Our commitment to asset light development comes from the belief that own-ership in real estate is fundamentally a local business. Owners have to be familiar with the local landscape, the local financing market, the local construction market, etc. That being said, from a brand management perspective, we think that specialization leads to superior performances. Star-wood Hotels spends hundreds of millions of dollars each year on innovation and technology to be the best hotel brand and the best franchisor for the owner of the property… and that’s where our investment goes.

　　Would you consider new types of partnership with investors and owners, including key money to secure deals on the long term?

　　In certain key strategic situations, we would be open to participating in the capitalization of a hotel. To be honest, it is relatively rare that an owner seeks capital from us and part of that comes back to the strength of our brands, and our systems. If you select the right partners, they have more than sufficient capital resources to finance the real estate end of the project and they look to us to sup-port the operation and give them confidence in the performance. We may have this kind of con-versation with owners, but it doesn’t take long to explain that the fact that, when one of our brands stand at the door, there has already been an enormous amount of investment in terms of distribution, marketing, enhancement of the loyalty program, etc.

　　How do you look at the development of alternative forms of accommodation such as AirBnB and the likes? What could, should, be the response of the hotel industry?

　　For better or worse, I am old enough to remember when the concept of video conferencing came to be 20 years ago and people worried it would prevent business travel. That obviously did not happen. Then a decade ago, when the OTAs began to gain traction, there were views that this was the end of the hotel business as we know it. That did not happen neither. AirBnB is the next trend and the hotel industry should look at it carefully, but at the end of the day it will only appeal to cer-tain fragments of the traveling population. We can’t be asleep and we have to, as an industry, be on the lookout for disruptors of any sort. From a Starwood Hotels point of view, we are going to be nimble and adapt our strategies to make sure that whatever we do it is consistent with the hotel experience attached to our brands.