CEO and Project Manager
February 11, 2016
Barry Sternlicht, founder and former CEO of Starwood Hotels & Resorts and current CEO of Starwood Capital (operator of 1 Hotels and Baccarat Hotel & Resorts), offered his analysis of why Marriott International is acquiring Starwood Hotels: “[Marriot CEO] Arne [Sorenson] thinks the best offense against Expedia and Airbnb is scale.”
Speaking at an Afar magazine “Conversations” event at the newly opened Marmara Hotel, Sternlicht said he expects to see more consolidation among hotel companies, and suggested that hoteliers’ perception of OTAs as a significant threat has not diminished over time. “Booking.com has been a disaster for the hotel industry,” he said.
He also discussed his efforts to greece email list organize hotel companies into a joint booking site similar to Orbitz, but said that failed in part because “Bill Marriott didn’t believe in the Internet. He didn’t believe it would affect us.” (The Starwood, Marriott, Hilton and InterContinental hotel groups joined forces with Priceline and Pegasus Solutions to launch Travelweb in 2003. The site was later taken over by Priceline. Priceline and Booking.com are both part of the Priceline Group.)
Citing airlines’ success in disintermediating OTAs and travel agencies, he said that in hospitality, “you would think the middleman would go away. But Expedia achieved a peak of 22% [commission] on bookings.
This started, he said, because hotels could fill rooms on weekdays with business travelers but “they [the middlemen] brought us weekends.”
Sternlicht reviewed key moments in the history of Starwood Hotels & Resorts and commented on the trends driving his current strategy for Baccarat and 1 Hotels.
He zeroed in on bedding relatively quickly, he said. He recalled asking his team for a sample of every pillow used by a competitor, as well as finding out the cost for each. “The Four Seasons was paying $23 a pillow, the Marriott was paying $7. Here I was, spending $70,000 a key, and I’m going to skimp on a pillow?” For only a minor incremental cost, he said, gesturing to a guest resting his head on a pillow, “you can’t get any closer to a customer than this.”
