Strategic management and product differentiation at Starwood Hotels

Golden Tulip Hospitality Group was formed in 1962 by a group of Dutch hoteliers, with a small group of properties in the Netherlands. The group's first major expansion came in 1975, when it entered into an association with KLM, the Dutch flag carrier. This allowed the group to expand into many of KLM's destinations, spreading the chain around the world. The company went through a succession of ownership and management changes over the next couple of decades, eventually ending up in an alliance with the German TOP International to form the current Golden Tulip in 2001. The company today manages hotels around the world, some of which it owns or franchises, and others which have external ownership but strategic alliances with Golden Tulip. The current entity has worked to bring its hotels under the Golden Tulip brand, and in recent years has also begun to launch other brands for bars, clubs and loyalty programs (Golden Tulip, 2010). The company struggled, however, and went into receivership in 2009. At that point, Starwood Capital Group, an American investment firm that owns Starwood Hotels, bought 240 of the 260 Golden Tulip properties (Kar-Gupta, 2009)

Current Strategy

Golden Tulip current competes as a mid-level hotel, in roughly the same space as Intercontinental, Accor and Marriott (Kar-Gupta, 2009). The company has hotels in a couple dozen countries around the world, with properties as scattered as Ghana, Kazakhstan, Thailand and a single U.S. hotel, but with a primary focus on the European market. The greatest concentration of hotels is in the Netherlands. The company operates three hotel brands. The core is the Golden Tulip brand, which is a chain of 4-star hotels, with 135 hotels in 35 countries worldwide. The lower-end brand of 3-star hotels, Tulip Inn, has 75 hotels in 15 countries. Royal Tulip consists of 3 5-star hotels.

Non-Tulip brands form the bulk of the company's properties. Premiere Class features 227 hotels in the 0 to 1- star category; Campanile has 338 hotels in the 2-star market. Kyriad features 219 hotels, independently owned and primary in France, operating in the 2-3 star category. Kyriad Prestige is a 13-hotel brand extension, again focused on the French market. These different brands indicate that the company overall has no set strategic focus. Golden Tulip is instead attempting to cover a wide variety of strategies ranging from cost leadership to differentiation. The Tulip family is an attempt at creating a differentiated strategy across multiple brands and quality levels. Each of the other brands attempts to compete within its scope. All told, Golden Tulip seeks to have hotels to meet the needs of all consumers. Their lack of geographic focus relates in part to the company's history as strategic partner of KLM. The foreign hotels are generally aimed at European travelers who are already familiar with the brand, and may be enrolled in the company's loyalty program. Many hotels feature the company's three restaurant concepts -- Branche, George & Co. And The State Room. The latter is exclusive to the three Royal Tulip hotels but the others have a wider rollout.

Since the takeover by Starwood, Golden Tulip has expanded its international presence. Expansion has taken place in Thailand, Tunisia, Nigeria, Cyprus, Brazil (Golden Tulip.com, 2010).

The approach that management takes to competition is to build the core Tulip brands into strong international ventures. That expansion of the chain has been focused on global markets indicates that the company is attempting to aggressive challenge its larger, more established global competitors. The competitive focus is twofold -- Golden Tulip seeks to build its brand with the three Tulip-branded hotels. The second is that it believes building out its international presence is essential to the long-term viability of the brand vs. its larger competitors. The country has an aggressive expansion strategy for the Middle East (Muscat Daily, 2010) that will eventually include 65 properties. The company is also investing $200 million in building a footprint in India with an initial eight properties (PW India, 2010). The company in general views emerging markets as a key to future growth, and also has its eyes on expansion in Brazil, China, Russia, Turkey and Eastern Europe (TTN, 2010).

Overall, since Starwood purchased Golden Tulip, the company has embarked on an aggressive branding strategy, and an even more ambitious program of international expansion. The company views emerging markets and brand synergy as the keys to survival going forward, especially as its home markets have become saturation and are subject to slow growth as the result of the ongoing economic crisis.

Golden Tulip at this point does not have strong brand associations, in part because of its turbulent ownership history. But the recent focus on building out the Tulip lines in particular looks to improve this branding and make Golden Tulip more of a global name. The company needs to differentiate between its Tulip lines going forward, so that customers easily understand the differences between the different marques, and if Starwood can succeed in that initiative, Golden Tulip can emerge as a stronger competitor to its globally-powerful competitors like Marriott.