LOS ANGELES — Though the company's name changed nearly a year ago, Starwood Hotels still has the same mission.
“The objective was to send a signal to the world that it’s back,” Starwood Hotels President and CEO Raul Leal said in an interview about the March 2025 rebranding of SH Hotels & Resorts. “It’s not the same Starwood, but it’s certainly a platform for growth.”
The growth will be intentional, focused on unique legacy assets with the company’s three brands: 1 Hotels, Treehouse Hotels and Baccarat Hotels. Leal said it's possible Starwood Hotels will add another brand along the way and continue to scale as it expands across the world in premier locations.
Intentional growth requires finding the right partners, the right locations and what happens with the cost of money in the future, he said.
“It's easy to build or acquire a lot of hotels when the cost of capital is cheap,” he said. “Anybody can do it at that point, but that's not our objective."
The goal is to build a relevant hotel that is a good partner to all the communities that Starwood Hotels is in, Leal said. That follows the ethos of 1 Hotels, which is to do all the good one can.
"It's a bit of our guiding principle across the three brands," he said.
Scale isn’t necessary to be recognizable, Leal said. It’s about relevance, and Starwood Hotels will be more relevant through its properties and the unique experiences they offer. Baccarat Hotels is the ultra-luxury hotel brand while 1 Hotels is its fast-growing eco-brand and Treehouse is a lighter, “cheekier” version of 1 Hotels.
Starwood Hotels' internal model is about improving the planet one hotel at a time through all of its brands, not just 1 Hotels, he said. They are unique assets that cater to today’s generational lifestyle nuances. There are perspectives on new money and old money, but to some degree, these types of guests want the same thing.
“They want very high-level service and comfort, but they also want hotels that are active and programmed and have wellness components to them, so a lot more choices,” he said. “I think that's how we separate ourselves. We program our hotels heavily, probably way more than anybody in our competitive set.”
Portfolio update
Last year, Starwood Hotels opened the Treehouse Hotel Manchester in the United Kingdom; the Treehouse Hotel Silicon Valley in Sunnyvale, California; the 1 Hotel Seattle; the 1 Hotel Melbourne; and the 1 Hotel Copenhagen, Leal said. This year, the company plans to open the 1 Hotel Tokyo in March, the 1 Hotel Austin in August and a Treehouse Hotel in Adelaide, Australia, in October. If the company can hit certain construction targets, it will open the Baccarat Hotel Rome in December.
Starwood Hotels is also active in the Middle East, he said. It has several projects in the works there, specifically three in Riyadh and in Dubai. The company recently announced the Baccarat Residences Saadiyat as well.
“On the average, we’re going to do four to five a year,” he said, adding that 2028 is shaping up to have eight hotel openings. In total, Starwood has 45 hotels in operation and in progress.
Starwood isn’t building hotels for the sake of building them, Leal said. At the end of the day, they have to be profitable ventures. Market dynamics and whether the location endears itself to one of the brands matter, of course, but the biggest issue becomes the basis of construction.
“In some cases, we’re seeing some softening on the basis of existing hotels that can be converted,” he said. “In some cases, we’re seeing a little bit of a softening of people that want to get out of these assets. Then the real issue becomes the cost of construction, the development timeline and also sometimes various hiccups.”
Developing new hotels means weighing all the factors to make sure the returns are reasonable, he said. There must be an analysis to show that even if something goes wrong, the returns are still healthy.
“Selective, intentional ... not jumping at anything that doesn't make sense for the brand,” he said.
Starwood Hotels recently reviewed a branded hotel and decided the numbers wouldn’t work even with the high average daily rates the company's portfolio has been achieving, he said. The construction costs and length of renovation weren’t going to work.
Residences play a part in the development decision, Leal said. Some of the more higher-end projects and locations have enough space to build residential units, and that’s helpful especially for the Baccarat and 1 Hotels brands. The first Baccarat residential project had a price per square foot of about $4,000.
Adding residential units to a new development project is sometimes a necessity, he said. In some markets, the cost of construction and operations means something more is needed.
“You’ve got to be able to make sure you’re going to be able to actually hit that rate that you’re targeting,” he said.
People and technology
Culture is king at Starwood, Leal said. In the hotel business, that’s what it’s all about.
“We think that culture is the engine that drives profit,” he said.
The employee-as-consumer experience is just as important as the regular consumer experience, he said. As a result, Starwood goes to great lengths to make sure it’s hiring the right people for the hotels as well as providing them with skills so they can operate in this environment. Overall turnover has been low.
“I think a company that always has your best interest in mind like that is never going to have a hard time attracting good people,” he said. “As long as we lead with culture and we are continuing to do what we’re doing, we’ll grow within the company.”
Artificial intelligence is a good tool to analyze processes and friction that the standard operating procedures in the industry have had for decades, Leal said. It will help hoteliers understand how to get solutions and free up more time by getting quicker answers to things that people have to dig for. It can answer questions about how to do things better and how to connect better, giving people more time to be more human.
In the beginning, it’s about eliminating that friction on the operating side, he said. On the sales and marketing side, it's critical in providing the data necessary to prepare campaigns more effectively.
“I think it's got all kinds of applications that we're certainly feeding into and have a path that we're on,” he said. “It's going to continue to get better. I just think about being more human, not less, so our perspective is not the elimination of bodies. It's getting the most out of the bodies that we have through AI.”