Golden Tulip Extends Starwood Capital’s Reach
Taljaard charged with consolidating Louvre and Golden Tulip systems and winning over a new group of franchisees.
By Jeff Weinstein, Editor In Chief -- Hotels, 8/31/2009 11:00:00 PM
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| The Golden Tulip brand gives Louvre Hotels a more upscale brand to help attract more corporate accounts. |
Starwood Capital’s COO for Europe Desmond Taljaard compares his company’s recent acquisition of the bankrupt Golden Tulip Hospitality BV to tripping over a £50 note. “We were looking for something (to complement the budget Louvre Hotel portfolio), it came on the market, we were lucky enough to persuade the trustees that it had a compelling logic and it fit like a glove,” says the man who now acts as chairman of Golden Tulip and is responsible for delivering the business plan going forward.
What fits so snuggly into Starwood Capital’s hotel portfolio is Golden Tulip’s ability to raise the Louvre Hotels profile with its more upmarket brands than the existing Premiere Classe, Campanile and Kyriad budget and limited-service brands, as well as offer immediate access to several new markets that until now Starwood Capital had been unable to tap. “We faced a disadvantage against other hotel companies as we couldn’t offer a full range of 1- to 4-star brands to corporate accounts,” Taljaard says. “Golden Tulip in a stroke solves both issues with representation and market entry platforms in more than 30 countries—many of these not represented by Louvre Hotels at the moment.”
In fact, the combined horsepower of the Louvre and Golden Tulip portfolio will create access to more than 1,000 hotels and 82,000 rooms in more than 40 countries. Although Golden Tulip will be managed and operated as a separate company in a soon-to-be consolidated Netherlands home office, the combined network operated through a strategic alliance cooperation agreement should create multiple sales and marketing benefits, huge distribution synergies and more relevant appeal to both direct customers and the business-to-business marketplace.
Initial Reaction, Plans
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| Desmond Taljaard, Starwood Capital’s COO for Europe |
The deal closed in late July, giving Starwood Capital the franchise business, its development and representation businesses, joint venture interest, as well as the brands, trademarks and intellectual property of Golden Tulip, Tulip Inn and its related brands. The acquired portfolio generally adds up to 220 franchised hotel units, but does not include about a dozen leased Golden Tulip hotels that are operating under a separate bankruptcy process. Taljaard says it remains to be seen whether Starwood Capital will try to take the leased hotels, as well.
“This was an interesting opportunity for us and the more we get into it the more excited we are, which is a nice feeling to have about an acquisition we just made,” says Taljaard, who in late July had visited about 50 properties and found them in pretty good shape.
One of the early dialogues the Starwood team has been having with the Golden Tulip franchise community, which evidently has enormous affinity for the brand, is the benefits of installing a property management system (PMS). “We will have to bring them with us rather than mandate it, but these are commercial business people and they are intrigued about how we were able to improve RevPAR substantially after the rollout of a PMS at Louvre Hotels,” he says.
Taljaard says there are a series of initiatives he wants to kickoff and plans to use most of the existing Golden Tulip management team and a bit of Starwood Capital firepower to do so. Initial focus will include the creation of a seamless marketing program for all of the brands through the Louvre Web site, further development of the corporate account strategy and helping existing Louvre brands leverage off of Golden Tulip’s broader development platform. The PMS initiative should come in the next phase, he says.
Looking Ahead
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| Starwood’s Taljaard says Tulip Inn will benefit from marketing programs available through Louvre Hotels’ Web site. |
On the development side, Louvre Hotels will deliver opportunities in existing markets where Golden Tulip hasn’t had much traction, such as France and Poland. At the same time, Golden Tulip gives Louvre entrée into markets in South America, the Middle East and even Eastern Europe.
Golden Tulip already has strong pipelines in Brazil, good partners in the Middle East with some 20 hotels and three hotels under development in India, where Starwood Capital has been trying to establish itself for a long time. “So far there are only nine countries with Louvre Hotels, so we expect to leverage off of Golden Tulip’s contacts and expertise,” Taljaard says. “They give us access to 30 new territories, which would take us years to achieve.”
With about 25,000 guestrooms in the Golden Tulip system, Taljaard’s aim is to grow the newly acquired system 15% per annum. To do so, Taljaard has to win over the existing franchise community, who he says have some consternation after a bankruptcy process. “We hope to have a typical cycle of rollovers and renewals, and improve upon it with a growth and action plan,” Taljaard says. “Some franchisees have already expressed how pleased they are with us and look forward to having the financial strength of Starwood. Once we demonstrate we are putting our resources into beefing up the Web and marketing programs, people will believe. Now we have to deliver.”
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