Starwood Swot

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SWOT Analysis:
Strengths:
Starwood has created a brand name for itself worldwide and has been able to gain a high number of loyal customers. The group has provided good service to customers and has received a number of positive feedbacks from the customers. The popularity of the group is seen clearly by its ranking in the Worldwide Top 10 hotels.

Starwood has over 897 hotels worldwide which shows the large operational scale. Starwood has grown by 3.0% in one year (in Rooms) and this shows how rapidly the company is expanding and now has almost half the number of rooms as its biggest competitor (Intercontinental HG - 556,246 rooms vs. Starwood -.265,598 rooms as per Table 1) (Hotel-Online, 2007).

The main assets of a hotel are the properties owned by it. Starwood puts a great deal of focus on ensuring they get very distinct properties and have built the hotels in locations that are very sophisticated and well placed for the most sophisticated travelers. They provide impeccable service with high style and high quality (Starwood, 2008).

Starwood has shown great returns on investments over the years and has been over market average in 2006 (Datamonitor, 2007). Good returns reflect assets being utilized in profitable avenues (Gillespie et al, 1997).

When compared to other groups, one major step that Starwood has taken is to venture into residential projects as well. The diversification is very beneficial not only monetarily but also for the brand name. Starwood has also ensured to keep in pace with time and has developed a fully functional website which is very informative as well.

Starwood has always tried to keep its long term debts to the minimum. They reduced the debt $3297 million in 2004 to $1827 million in 2006. It has managed to keep its debt to equity ratio lower than the market as well (Datamonitor, 2007). This allows the company to start off organic initiatives. The lower the gearing ratios, the easier it is to raise further capital for through debts (Pendleberry and Grooves, 2004). Hence Starwood has the ability to raise its capital in a short period whenever required.

Weaknesses:
Starwood has recorded low revenues when compared to its closest competitor Hilton. In 2006 Hilton’s revenue reached up to $8162 million, which was an increase of 84% over 2005 figures (Hilton, 2008). Also Host hotels and resorts, another close competitor of the company recorded a growth of 29.8% in revenue when compared to 2005, whereas Starwood recorded in 2006 - $5979 million which was an increase by just $2million as compared to 2005 (Host, 2008). The Starwood group’s employees have also shown very low productivity and the revenue earned per employee is below the average of the market.

Starwood’s prices are costlier compared to its competitors operating in the same sector. The expectations from the customer are high, in terms of quality, when they pay such high prices (Fisk et al, 2000). However a few reviews from customers just show that they lack in customer service in a few areas (Starwood-Lobby, 2008). Hence all these areas have to be addressed. Also the number and variety of holiday packages available are lesser comparatively. The marketing strategy is not very focused on the target segments. The high levels of sophistication and amazingly beautiful locations definitely add value, however not the best in service on a few aspects causes a drawback for the group.

Starwood has concentrated its business in the US and thus depends on the US market to a high extent. However, competitors like Hilton and other companies have utilized the international markets effectively and so are not completely dependent on the US markets. Over 50% of the company’s inventories are based in the US market, making it more prone to risks (Starwood, 2008). Hilton receives about 39.6% of its revenues from international markets and as for Intercontinental, 54.9% is derived from the international markets.

Opportunities:...
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