For several years now Starwood has had an edge on its competitors because of its strong brand awareness amongst its target markets and the way in which it has developed a range of differentiated experiences. The company’s key asset is the associated diversification of the variety of brands, and the different market segments they serve, provide a broad base from which to enhance revenue. It aggressively attracts and cultivates new customers and maintains loyalty among the world’s most active travellers: As one example, Starwood Preferred Guest, its award-winning frequent guest program, first made headlines when it launched with a breakthrough policy of no blackout dates and no capacity controls, allowing members to redeem free nights anytime, anywhere. Since then, it has grown to include more than 33m members and is cited for its hassle-free award redemption, outstanding customer service, dedicated member website and innovative promotions and benefits for elite members.

Although smaller than some of its peers, Starwood uses its scale to support its core marketing and reservation functions across its brands and reduce costs in areas such as insurance, energy, telecommunications, food and beverage, furniture, fixtures and operating supplies. Its size also limits exposure to any particular type of lodging, brand or geographic region. Strategically Starwood has also moved away from investment in owned real estate and increased its focus on its management and franchise business. In furtherance of this strategy, it has been selling some of the older hotels in its portfolio to, in turn, release capital to fund its ambitious international and branded growth plans. Simultaneously the company has retained one of the world’s most profitable hotel net margins of around 15%, higher than many larger rivals.

Alongside these leading service based achievemets, Starwood has made a great success of its growing product innovation prowess. Having identified the bed as the key area for innovation opportunity in its mid-range Westin brand, Starwood designed the ‘Heavenly Bed’ providing the best night’s sleep by far of any comparable brand. Not only did this well-targeted development improve the all important occupancy rates in Westin properties, it also created a new business line as customers started to buy the Heavenly Bed for their homes. This has now been extended into the W chain where whotelsthestore.com now enables anyone to buy the key ingredients of the unique W experience. From the W bed, pillows and towels to books and an increasing range of male and female apparel, this is the latest incarnation of high-impact product innovation from this service sector pioneer.

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