Starwood Hotels and Resorts Worldwide Inc., the world’s biggest operator of high-end business and leisure accommodations, has taken the first step to re-enter the booming Philippine market, signing a preliminary agreement with Resorts World Manila on a five-star hotel project at the latter’s Pasay City development.
In an interview with the Inquirer, Starwood president and CEO Frits van Paasschen said his group signed on Thursday a letter of intent with Resorts World to explore the possibility of building a hotel under the Sheraton brand at Newport City, adjacent to the existing casino-hotel-mall complex and across from Terminal 3 of the Ninoy Aquino International Airport.
“The Philippine market is very attractive to us. Businesses are booming and the government is fiscally strong,” he said. “This will also mark the re-entry of Sheraton in the Philippines after an absence of many years.”
Van Paasschen declined to disclose specific investment figures for the proposed project but said that, on the average, hotel rooms of the Starwood group cost anywhere between $350,000 and $500,000 to build.
Matthew Fry, Starwood Hotels Asia-Pacific senior vice president for acquisitions and development, added that the group would enter a particular market with an initial operation of between 300 and 350 rooms per hotel. At this level, a Starwood-Resorts World partnership for the new high-end Sheraton Hotel would be worth between $105 million and $175 million.
Starwood operates more than 1,000 properties in 100 countries. Its nine brands are St. Regis, The Luxury Collection, W Hotels, Westin, Le Méridien, Sheraton, Four Points by Sheraton, Aloft and Element. In addition to hotels, Starwood operates premier time-share ownership resorts.
According to Van Paasschen, his group has noted the growing demand from their existing clientele for accommodations in the Philippines, both from business travelers and tourists.
In particular, he said he admired the country’s track record in the booming business process outsourcing business, the manufacturing sector, the growing level of raw materials and agricultural exports, and even the increasing affluence because of remittances from overseas workers.
“This is a time when the economic environment appears to be [favoring] the Philippines for sustained growth,” the Starwood chief explained. “And the fiscal situation, the government debt—the perception we have, at least—the relationship between business and government today suggests to us that this is a very optimum time.”
Fry said the group was also looking at new hotel operations in Cebu and Boracay to meet the demand for resort hotels from their clients. According to Starwood, it was experiencing “unprecedented growth,” having emerged from the global economic crisis with a lean cost structure and a strong balance sheet.
In addition to gaining market share, it opened a record 250 hotels in the past three years and an additional 300 are under construction. Both W and St. Regis have doubled their footprint and Aloft became the fastest and first global launch of any new hotel brand.
Starwood’s biggest brand, Sheraton, also underwent a $6-billion revitalization program and was now seeing the best performance in its 75-year history.