Turner

HOTELS: Compare your new job to your position at Hotel Capital Advisers.

Turner: In many respects, there are more similarities than differences. I was a representative of the brand, but at the same time a representative of the guy who owned real estate. I had to reach into the brand organization and achieve the right balance between the goals of brand and the real estate owner. In many respects, that is what I do here at Starwood.

HOTELS: Starwood still owns a fair share of real estate. Are you a net seller or a net buyer in a down market?

Turner: The good news is that we have a global portfolio; we have an investment grade debt rating; we have significant financial resources (a real estate portfolio with estimated value of US$10 billion); and no reason for us to have to sell real estate. However, if we find an owner who embraces our vision for an asset and has an interest in owning that asset subject to a long-term management contract that achieves our financial and strategic objectives, we are willing to have a conversation.

One of the things I found appealing about this job is that I am growing the pipeline and also determining strategically the right way to use our asset base. As business cycles through its ups and downs, we are well positioned to take advantage of opportunistic situations, whether they be acquisitions of other brands, joint ventures with other brands or acquisition of strategic assets to help build our brands… The market is taking a little bit of a wait and see attitude right now. However, there are a number of situations bubbling along, but we don’t expect to see any real action on the M&A front until later this year.

HOTELS: Which brands have the strongest growth opportunity?

Turner: When you see an announcement for an opening of a 125-room aloft, which is extraordinarily important to us, and then you have a 450-room Four Points in China, we try not to differentiate too much with so many different brand strategies. aloft will have 15 open by October and is moving from what appeared to be a good idea to a reality with 15 assets and realistically 50 live deals on top of that. By the time we get to 2009, even in a challenging capital market and operating environment, we will have significant select-service lifestyle offering… The design and positioning works from a consumer’s perspective and incredibly well from a developer’s perspective. The operating model is very efficient. This thing works.

HOTELS: Based on market conditions, it appears the pipeline is shrinking. What is your perspective?

Turner: The weaker the brand, the greater the shrinkage. I don’t think our pipeline is shrinking. It might be slipping from a time standpoint but not shrinking. It is early for a qualitative assessment on any delays. We signed a lot of deals earlier this year, and now they are working their way through the financing process. If there are constraints on the pipeline, it is financing.

Turner (r.) at the opening of aloft Montréal, with Paul Sacco, senior vice president of North American development.

HOTELS: How do you grow W when everyone else is coming after the same market?

Turner: The nice thing about W is that it has been in existence for 10 years and will be a 60-unit brand within a narrowly defined product definition. You don’t compete with that on a global basis overnight. While there are capable competitors who have recognized what we recognized 10 years ago, you don’t just wake up one morning and say, 'I think I will have a W competitor.’ It will take many years for any of our competitors to come up with anything close to paralleling W’s global footprint.

HOTELS: What markets other than the obvious have you most excited?

Turner: You are probably tired of hearing about the BRICs (Brazil, Russia, India, China), but when you look at the global economy, that is where the growth is. When we look at where to deploy resources for the greater benefit of shareholders, we have to go where global growth is… Given that we have enormous strength in Brazil, is that a market we are going to focus our attention? Absolutely. Russia is a new market for all of us and we decided to put certain development resources on the ground because it is the only way to understand and penetrate the market. We have a base of operations and a number of very talented people who understand India, and a number of very strong capital partners so we will see growth there.

We just announced our 100th hotel in China. It is hard to skim over it. The Starwood story in China is Miguel Ko and Steven Ho, who are so seasoned and experienced… One of the fascinating things I learned when I first joined the company is when I asked Steven Ho which of our brands gets the most developer receptivity and he said Sheraton and Four Points due to Sheraton’s halo effect that exists in Chinese market… Relatively soon, we will have more Starwood guestrooms in Shanghai than in New York City.

HOTELS: Who are your mentors, and where do you go for advice?

Turner: I run the most important decisions by my wife. She is someone who went to hotel school, spent many years in operations and consulting, and then took on the very critical job of being the primary person guiding the growth of our three kids. But when we travel, she is about as educated a consumer as exists. So whether it is branding or hotel operations experiences, I get some of the most valuable insight from her as anyone.

HOTELS: What is your obligation to the owner and franchise community during this difficult operating environment?

Turner: Our overriding obligation to owners and developers is to stay committed to the vision for our brands. The purer our brands are, the more focused we are in positioning our brands, and the better it will be for owners and developers. Secondarily, we have to be able to talk to owners and developers in the same language and with the same mindset. That is the most encouraging thing in my first 60 days: So many of the owners and developers are people I have come in contact with throughout my career. The ability to talk to them and have open dialogue about what we are doing well and what we can do better might be the most valuable contribution I can make to the organization… One of the critical things I have to do is be accessible and make sure the organization is accessible to make sure we are approaching this as a true partnership.

Direct comments to: jweinstein@reedbusiness.com