| Raising the glamour quotient
Calcutta, July 3: ITC can use the Sheraton tag at its nine premier hotels for another three months.
ITC and the US-based hospitality major Starwood Hotels & Resorts Worldwide have extended the existing exclusive marketing tieup for the latter’s Sheraton brand till September 30.
The original agreement spanned 30 years starting 1975 and ended in December 31, 2005. It was renewed for only six months, ending June 30. However, the two companies failed to reach a long'term deal on the use of the Sheraton name. Sources say ITC is now looking to formalise an agreement for one of the upscale brands in the Starwood stable.
Discussions between ITC and Starwood began a long time back but the talks gathered momentum since March.
“We hope to conclude the agreement within the next three months,” S.S.H. Rehman, executive director of ITC, told The Telegraph.
At present, nine ITC properties carry the tag of Sheraton, the most widely known brand of Starwood.
Tobacco-to-FMCG major ITC, which has lined up about $1 billion investment in the hotels business over the next five years in India, believes the company has moved up the value chain and a more upscale brand would be appropriate for its five-star deluxe properties, industry sources said.
Starwood has eight brands. Its top-of-the-line brands are St Regis, Luxury Collection and Westin. Starwood has already entered into an agreement with the Vatika group of Delhi to launch the Westin brand of hotels in India last year. This leaves St Regis and Luxury Collection for ITC.
Even though there are no set benchmarks to determine the royalty fee that a company pays for such exclusive franchisee/marketing agreement, industry observers believe ITC may have to shell out more for a deal on the upscale brand.
When contacted, a Starwood spokesperson said both companies were continuing discussions on a model for the two companies to operate in future.
“ITC and Starwood/Sheraton have a long 30-year relationship. During that period, both companies have grown substantially and the Indian market itself has grown and changed as much,” the spokesperson pointed out, adding that a formal announcement would be made shortly. ITC now owns 66 properties with six more due to come up soon.
Rehman said the focus for ITC would be in the five-star deluxe category. The company plans to add 2,500 rooms in the next five years. ITC is looking at new properties in Bangalore, Chennai, Hyderabad, Goa, Delhi NCR, Pune, Ahmedabad and Calcutta. Some of them may be covered by the new arrangement with Starwood.
ITC is also exploring an exclusive arrangement for its mid-market hotel Fortune with Starwood, among others.
Four Points by Sheraton and Aloft are two moderately priced select service brands Starwood owns globally.