Taj, ITC under pressure as Starwood, Marriott join forces

Marriott-Starwood combine will have a room strength of 18,000 rooms, compared with Taj Group's 13,443 rooms

Indian Hotels Company and ITC, which until last week controlled a quarter of the country's branded hotel room inventory, will find it difficult to retain their stranglehold as Marriott and Starwood mount pressure after their merger.

The Tata-controlled Indian Hotels Company, which has the century-old Taj brand, has been reeling from three consecutive years of losses. Increased room inventory by international chains, high debt and weak economic activity have taken a toll on the company.

The Marriott-Starwood merger announced on Monday will create an entity having 18,000 rooms. In comparison, Indian Hotels Company’s inventory in the country stands at 13,443 rooms, which will rise to 14,467 by the end of March with the addition of seven new hotels.

Indian Hotels Company leads in the number of properties with 111 hotels and resorts, whereas the Starwood-Marriott combine has 76 operational properties in India. But Marriott is adding 35 hotels in the next five years and Starwood 37.

Indian Hotels Company has committed to opening 10 new hotels in 2016-17. These are two under the Vivanta by Taj and four each under the Gateway and Ginger brands. A new Taj hotel just outside the domestic terminal in Mumbai is set to open in January.

With 30 brands Starwood-Marriott cater almost to every segment of the market, except the budget traveller. In comparison, Indian Hotels Company and the Kolkata-headquartered ITC have only four brands each. ITC has a long-standing distribution tie-up with Starwood whose fate is yet undecided.

"Starwood and Marriott have properties in cities like Delhi, Mumbai and Bengaluru. With their huge membership, these will become benchmark properties," said a Mumbai-based analyst.

Marriott and Starwood have a combined membership of 75 million, which will help the two companies market inventory aggressively.

In a recent interaction with Business Standard, Stephen Ho, president, Asia Pacific, Starwood Hotels and Resorts, said, “India has some great local brands like Taj, Leela and Oberoi, but their presence is largely in India. Outside the country their presence is not significant. Our global loyalty programmes and marketing strength will help us drive our India business.”

Taj has only 15 properties outside India and ITC is yet to open its first property overseas.