Q&A: Simon Cooper, President & MD, Asia Pacific, Marriott Int'l

'Our pipeline in India is about thrice our existing portfolio'

Global hospitality major Marriott is betting big on India and Asia for its growth at a time when most of the western economies are going through a slowdown. Raghavendra Kamath talks to Simon Cooper, president and managing director, Asia Pacific, Marriott International about the company’s plans and the hospitality sector.
 
What bearing does the current global economic and political scenario have on your business in Asia in general and India in particular?
We continue to see strong growth in India and across Asia. We have just announced our 100th hotel in China and have a development pipeline in India that, coupled with our existing properties, easily exceeds 50 hotels. We are bullish about continued growth in the region and especially growth in Asia-for-Asia business, ie intra-regional business. Of course, there are great concerns in the main economies of Europe and the US which we monitor very closely, but we do remain upbeat about our business, growth and profitability in Asia.

What are your expansion plans in India for the next three years? How do they fit in your overall plans for Asia?
We currently have 15 open hotels in India and, as I mentioned, a confirmed pipeline of approximately 40 additional hotels to open in the next few years. We expect to open eight hotels in India next year and more than double that figure for Asia in general. India is a critically important market for us and we are looking for opportunities to grow in India, to develop our brands here and indeed to introduce new brands to the country, including our Fairfield by Marriott brand which we are convinced will be a great success in the country. We will also open our first Ritz-Carlton hotel in India next year in Bangalore which, again, we feel will find great support among domestic and international luxury travelers in the country. Our pipeline in India is approximately three times our existing portfolio which shows great growth. We are committed to India and our expansion plans and success of our existing hotels is testament to that commitment. This growth and development also, of course, creates huge employment opportunities, and we are delighted to be able to give our associates in India great careers with our hotels and brands and opening doors to a world of opportunity for them.

It is widely believed that expansion and investment in growing markets such as India are a hedge for global corporations when their home markets are slowing. What is your view on this?
I would not frame it like that. Marriott International is a global company and while we have the vast majority of our 3,700 hotels in the US, our growth is strongly focused in Asia. We do not see this as a hedge, but more as a way of becoming a truly global player. There is huge opportunity for growth in India and across Asia and to be a global company you need to have very strong presence in this region. We firmly believe in the continued growth in Asia and want to be one of the leading hospitality providers in the region. Marriott International operates some 20 brands globally but only six in Asia at present, so you get a sense of how much more room there is for us to grow. We see Asia very much as an opportunity in its own right, not a hedge.

What are you doing to maintain momentum in room occupancy in India? How do you plan to boost sales?
We continue to develop new hotels, and as mentioned, bring new brands into the country which means we will continue to grow our footprint in India. We have very strong sales and marketing teams in the region and in India and we also operate one of the world’s largest loyalty programs, i.e. Marriott Rewards. These channels along with the power of the Marriott brands, and of course Marriott.com and our size and scale gives us a huge competitive advantage in India, as it does in all markets we serve.

You have a ambitious target of having 100 hotels in India by 2015. What has the progress on this been?
We set ourselves an ambitious target for India to have 100 hotels and so far we are on track with this. We have some 40 hotels signed today across the country and with the continued work of our Development team and some opportunities we are looking at with developers in India we remain committed to reaching this goal.

You have entered into a JV with other partners to invest in hotel properties in India and set up hotels under Marriott's Fairfield brand. What is the progress on that?
This is actually critical to us reaching our stated goal of 100 hotels in the country, and the introduction of Fairfield is a key part of our strategy for this. We are confident that we can develop Fairfield in cities right across the country in the next few years with SAMHI who are our JV partner.

A lot of property developers have put their hotel plans on the backburner due to the slowdown in property market. Have your plans been impacted in any way?
Our business model is one that relies on partnerships with property developers, we rarely invest in real estate, but rather partner with the best local developers where we operate our brands and hotels. We have not seen any slow down in our singing pace or indeed in interest in developers wishing to work with us to develop hotels across our brand portfolio in India.

Do you see this (developers putting off hotel plans) an opportunity? Will it be easier for your JV company in India to buy such properties?
Well, as I said, we don’t really see developers putting off plans to build hotels with us. However, there is of course opportunities for joint ventures if the right developer and the right deal arises, but this is typically not our business model.

What is your outlook for the hospitality sector in the short term and medium term. Do you expect any sharp fall in room occupancies and room rates?
There may be a short term over supply situation in certain micro markets in India however we remain bullish overall. There will of course be continued pressure in the US and in the Euro zone, but we are upbeat on India and Asia and are predicting growth in both occupancy and rate in the region for 2012.