Hyatt Hotels, for instance, will be affected the most because it directly competes with Starwood and Marriott brands. All three chains target the premium end of the market with high-end products, and all of them are aggressive about their plans for the Indian market. Brands such as Hyatt Regency, Hyatt and Grand Hyatt have product placement similar to Starwood's Westin, W Hotels, Sheraton and Le Meridien, and Marriott's JW Marriott and Marriott hotels. As per hotel consultancy HVS, Hyatt is the seventh largest hotel chain in the country in terms of room inventory. It has slipped over the years in rankings. In 2013, for example, it was fifth largest brand. Since then, Marriott (#4 rank) and Accor (#6 rank) have overtaken it. Starwood is currently the fifth largest chain in India.
The combined entity will give a tough fight to Hyatt and a much-smaller IHG because it will have a much larger presence, and a vastly bigger product portfolio. This spread helps in attracting corporate clients who constitute a large chunk of the customer base.
Corporates demand higher footprint because executives tend to travel across different parts of the country. Corporates also have need for products across different segments. For instance, a CEO would typically stay in The Ritz Carlton (top-end brand) when travelling whereas a mid-level executive would stay in a Fairfield or a Courtyard by Marriott (mid-market brands). Having a wide brand portfolio ensures that a hotel chain caters to demand across different price points.
From the real estate developers' perspective, they would want to tie-up with a Marriott-Starwood because it will give their properties access to the largest global distribution and reservation network in the world. So, smaller brands like Hyatt, IHG and even Hilton stand to lose. These chains will have to either work on their fee structures or acquire smaller brands to expand the presence.
It must be noted that Hyatt was one of the two chains that were vying for Starwood before it was snapped up. Things would have turned upside down for Marriott if Hyatt had gobbled up Starwood. Carlson and Accor would be other international chains likely to be affected but not as much as Hyatt and IHG. Carlson is a mass-market chain with more brands at the mid-market and budget segments, namely Park Plaza, Park Inn and Country Inns & Suites.
The key question remains on who will head the India operations of Marriott-Starwood now, which would be critical in determining on how the brand will do going forward.
In recent months, Marriott has seen changes in leadership. In March, its India head Rajeev Menon moved to Singapore to take over a bigger role in Marriott International. Menon has been associated with Marriott for over 14 years, and has driven the chain's growth. Under his leadership, Marriott has grown from just about six operating hotels to 29 operating hotels and another 45 in the pipeline. His successor Neeraj Govil has far lesser exposure of the Indian market. The global Marriott management also have the option of tapping Dilip Puri, who is heading Starwood's India operations since January 2011.