Starwood is, in general, an upscale hotel chain. It’s stock price is high relative to its size and peers. But it’s stagnating, because it hasn’t had a workable plan for growth. Even if it’s Tribute Portfolio brand succeeds, success means adding an extra 1% of growth onto the company a year. So that’s not a silver bullet.
They’re in the mergers and acquisitions market but as an acquirer and as a takeover target.
They’re also working to fix some of their problems. Everyone wants a lifestyle brand and Starwood has one of the originals in W. But it’s not a driver of growth. Aloft and element were strategic additions to the portfolio but haven’t been growth engines, either.
Four Points is rarely the category leader in any given city. There’s little consistency or brand value, other than ‘by Sheraton’ at the end of the Four Points name.
But Sheraton itself is perhaps the biggest brand problem that Starwood faces. It simply doesn’t carry a clear message.
- In Asia Pacific, the Sheraton brand is strong. It signals quality. In fact, Sheratons are generally nicer than nearby Westins. The Sheraton Grande Sukhumvit is a true world class hotel, for instance.
- In the US it’s pure inconsistency. There are perfectly decent Sheratons such as in Seattle and there are run down Sheratons. The Sheraton name in the U.S. alone doesn’t tell you what you’re going to get, other than the club lounge is likely mediocre.
- That’s a great contrast from Europe, where a Sheraton club lounge can be quite nice such as at the Frankfurt airport.
Sheraton Frankfurt Airport Club Lounge
Sheraton does, to me, mean an excellent bed. I’m a big fan of the Sweet Sleeper.
Hotel News Now details the 10 point plan Starwood is using to revitalize the brand. It’s called ‘Sheraton 2020’.
Sheraton 2020, a nod to the plan’s clear five year vision, includes a new $100 million Sheraton-focused marketing campaign; the launch of the new premier tier, Sheraton Grand; continuous innovation of the Sheraton guest experience; an unwavering commitment to service excellence; the implementation of revenue and profit-driving initiatives to benefit owners and developers; and a goal of opening more than 150 new Sheraton hotels worldwide by 2020.
View from the Royal Orchid Sheraton
- They’re going to work on branding — which to me misses the point or at least comes last. The problem isn’t the marketing, it’s what they’re marketing, it’s the product that’s inconsistent.
- They’re going to spend $100 million on marketing through 2017. I could do without the ad campaign, but was pleased to see an intention to “[e]xecute the richest Sheraton-focused SPG promotions in Starwood’s history” (they’s already detailed the first salvo).
- Add a sub-brand, Sheraton Grand, with 100+ properties. The moniker is already in use of course at some property, but by designated premier properties they hope to cajole owners into spending on renovations in order to signal the quality that will accompany the new moniker. They think showcasing quality will also make customers feel better about the brand as a whole, though it could also have the reverse effect — a belief that the non-“Grand” properties are inferior.
- Make their owners happy. Here they may run into difficulty with the rest of their initiatives. And they resort to a bunch of corporate-ese. Although reducing the fees they charge, if that’s where re-evaluation goes, would ‘earn owners confidence’ though I’m not sure it would earn Wall Street’s.
– Laser-focus on revenue and profit-driving initiatives and programs to boost owner value
– Balance building and conversion costs with exceptional guest experience
– Reevaluate brand standards and fee structures to improve owner economics
- There’s no question that the weak link in any hotel chain is that no matter what benefits and investments are made they rely on frontline front desk staff and other relatively low paid employees to deliver on their promises. So there’s no question the next pillar to ‘Ignite Associates’ Passion for Sheraton’ matters but it’s also the most challenging.
- They want to get execution right every time, which means tackling the brand’s inconsistencies, and that’s important.
- Focus on meeting spend.
- Improve their premium offerings like food and beverage and club. That would be nice.
- Improve design — of both the room, and of lobbies to become a more social space that drives revenue.
- Open 150 new hotels by 2020 (these should be mostly conversions). Lower fees could help here.
View from the Sheraton Iguazu Falls