Starwood Hotels & Resorts
Starwood on Sunday opened its 25th hotel in India, the Westin Pune Koregaon Park, which falls under the upper-upscale category of hotels. The No. 8 hotel operator also operates Le Meridian and Four Points by Sheraton hotels in India.
Typically, hotels begin to deliver a return on their investments in their third of fourth year, but Starwood's chief executive, Frits van Paasschen, said in an interview on Friday that he expects Indian hotels to fare better.
Because India is relatively underserved and business is so strong, these hotels will ramp up more quickly, van Paasschen said, adding it could take only two years.
The majority of the costs associated with building the properties are borne by the developers, he added.
Hotel experts have been discussing India's merits as an investment ground for years, but India, the world's second biggest country with 12 billion people, remains underserved.
By contrast, Starwood has more than 500 hotels in North America.
The major thing for all non-Indian companies to focus on is how to compete with home-grown chains such as Taj, Oberoi and Welcomgroup, said FBR Capital Markets analyst Patrick Scholes.
For these companies to grow meaningfully, they will have to expand beyond the major three to four cities.
Among the 15 hotels Starwood is expected to roll out are six Aloft-branded hotels, van Paasschen said. Given the size of the market, Starwood is likely to exceed that target over the next two to three years, he said.
The new hotels will be in New Delhi, India's capital, as well as Mumbai, Hydrabad and Chennai.
(Reporting by Deepa Seetharaman; Editing by Leslie Adler)