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The Sheraton Gateway Hotel in Toronto
The Sheraton Gateway Hotel in Toronto

Starwood going on-site in China to educate executives Add to ...

When Starwood Hotels opened its first Chinese hotel in 1985, the chain was placing a small bet on the country's future.

The New York-based company - one of the largest hotel chains in the world with brands such as Sheraton and Westin - is about to place another bet on China as it moves its executive team to Shanghai for a month to better understand what is fast becoming its most important market in the world.

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Chief executive officer Frits van Paasschen and seven of his top executives have packed their bags and will spend the next month living in Shanghai, immersing themselves in the country's culture and trying to better understand what Chinese travellers are looking for when they go abroad.

It's an extreme example of the lengths multinational corporations are going to tap into the country's massive potential, at a time when traditional markets such as the United States and Western Europe are ailing.

"We're going where the growth is," said Mr. van Paasschen in an interview. "China's transformation is hard to understand second hand, you can't really understand a market until you buy groceries there."

Eighty per cent of the company's expected growth is outside of North America, where it has been a dominant player. If the month-long Chinese experiment is successful, Mr. van Paasschen wants to expand it to other countries starting next year, including Brazil, the United Arab Emirates and India.

Canada is Starwood's third-largest market behind the United States and China. There has been little hotel development in Canada this year, although revenue per available room has been slowly improving.

"New hotel openings will come at a slower pace in 2011, keeping future supply growth rates at low levels, thereby aiding the recovery in lodging operations," data firm Lodging Econometrics said in a recent report, adding that it will be "mid-decade" before construction returns to pre-recession levels.

Starwood opened the first internationally branded hotel in China in 1985, when the business model for the Great Wall Sheraton Hotel in Beijing was far from certain. But, the company now has 70 hotels in China, with another 90 in the planning stages or under development.

It owns, operates and franchises hotels under the names St. Regis, The Luxury Collection, W, Westin, Le Meridien, Sheraton and the Four Points by Sheraton.

Mr. van Paasschen thought of the plan a year ago, and originally wanted to spend a year in the country. His wife convinced him a month would be a better idea, and his executives bought into the concept quickly.

The executives won't be tourists. The company will continue to operate with them in charge, calling all of the shots from China despite the 12-hour time difference. They will host meetings, and the board of directors will also gather for their regularly scheduled conference.

"I couldn't spend five weeks on a publicity stunt," Mr. van Paasschen said. "This is a big time investment, with the objective of better understanding this market that is increasingly important to our future."

The executives also want to better understand what Chinese travellers look for when they leave the country - by 2015 the country is expected to have about 100-million outbound travellers a year.

"That is more people than visit France each year, which is the number one international tourist destination in the world," said Simon Turner, the chain's president of global development. "When they travel abroad, the Chinese will stay with the hotel brands they know from home, which underscores the significance of our growing footprint of flagship hotels in China."

The move is inspired, said Joanne Gellatly, who runs the hospitality and tourism program at Toronto's George Brown College. The school has a partnership with a college in China, and she's been impressed by how Chinese hotels have learned to cater to Western travellers.

There's always room for improvement, however. On one recent visit, she was served a very traditional North American pancake breakfast. One thing was missing - maple syrup.

"The hotels put so much effort into catering to those from the West but you miss details like that sometimes and it can hurt your authenticity," she said. "If you stay there a month, you are certain to notice those sort of things and really enhance what you offer."





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