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Inside Starwood’s Sheraton StrategyNovember 9, 2009 By: David Eisen Travel Agent
Economic Distress is Over
[email protected] (Sheraton Downtown Phoenix shown) is designed to revitalize the hotel chain’s lobby areas
1111 Westchester Ave. in White Plains, NY, Starwood Hotels & Resorts’ corporate headquarters, looks like any other ordinary office park. But the provident thinking within belies the generic facade. Inside, the phrase that pays is “Own the Upswing,” a mantra/course that is being promoted from the top down.
Frits van Paasschen, CEO of Starwood for two years, is leading the charge. He believes companies that survive the current economic morass will emerge stronger than before. “Owning the upswing is about taking advantage of our brands and our hotels and getting more than our fair share of growth as demand comes back,” van Paasschen tells Travel Agent, which was granted access through Starwood’s doors in September. (Van Paasschen told Bloomberg News in October that Starwood was starting to see demand for hotel rooms in New York City rise, a signal that, perhaps, the U.S. was beginning to emerge from the recession.)
Frits van Paasschen, CEO of Starwood, and Hoyt Harper, global brand leader for Sheraton
“We have nine brands that we think of as being both distinctive and compelling, meaning they’re really oriented toward a particular travel experience,” van Paasschen explains. He says that of the hundreds of Starwood-branded hotels, about 250 have been opened in the last three years, while another 350 have been renovated. “We’re really well-positioned to take advantage of demand as it comes back,” he says.
To understand Starwood is to know it has a laser focus on defining its brands. This begins with van Paasschen, whose background is in branding and marketing. (He was head of the Coors unit at Molson Coors Brewing Company and, prior to that, a division chief with Nike. His right-hand man is another former Nike executive, Phil McAveety, who is now Starwood’s chief brand officer.) “I came from the beer business, and prior to that the sporting goods business, and they had massive marketing budgets,” he says. “We could own SportsCenter on Thursday night—that kind of thing. Our brands are built by getting people to come to our hotels and it’s the experience they have there that really strengthens the brand.”
But the one brand in need of better definition was Sheraton Hotels & Resorts— a recognizable name that, nonetheless, needed a clearer direction. The Sheraton brand dates to 1937, and was acquired by Starwood in 1998. It’s Starwood’s largest brand and, while it was a consistent winner outside the U.S., domestically it needed help. In 2007, Starwood embarked on a Sheraton revitalization program: $4 billion was spent within the U.S., and another $2 billion outside of the U.S., either on renovations or opening hotels. Today, the process is 90 percent complete.
An undertaking of this magnitude takes composure. Hoyt Harper, the global brand leader for Sheraton, has it. “It’s been very exciting to see the changes in the Sheraton brand—seeing our plan come to life,” Harper says, relieved that the plan got underway when it did. “We were fortunate that our work had begun prior to the Dow turning and the market plunging.”
Governor’s Suite at the Sheraton Phoenix Downtown
Link to Success
Numbers don’t lie: over 300 new lobbies; 70,000 new or newly renovated guest rooms; 100,000 new Sheraton Sweet Sleeper Beds; and 98 renovated properties, which accounts for nearly half of Sheraton’s North American portfolio, including such properties as Sheraton Denver, Sheraton Boston and Sheraton Montreal. Sheraton Phoenix opened September 30.
Sheraton’s revitalization plan is as much about refreshment as it is about transformation. This is most evident in Sheraton’s lobby areas, which have been enhanced by the global launch of the [email protected], a unique lobby lounge where guests can surf the web and check e-mail. Sheraton has also partnered with HP to install its Business TouchSmart PCs with Windows 7 at select Sheraton properties.
“The beauty of all our initiatives is that we apply [what we learn] not only from consumer research but also from our sister brands,” says Harper. “W created a lobby experience that got people off the streets to come hang out in the lobbies.” This was the impetus for Link. “We said, ‘We’ve got to have that level of activity,’” Harper says in reference to W’s ability to attract crowds. “We found inspiration in parks; the theme of creating a place where people can socialize, get together, eat, play games, relax. What we created was a unique space, unlike anything our competitors have done.”
The success of Link has even spawned an offshoot called Design Link Café, which made its debut at Sheraton Phoenix. “We had more people in the lobbies, more people in the public spaces and they were consuming more beverages and food,” says Harper, “So we thought, ‘Wow, let’s capitalize on this,’ and it’s been a huge success.”
Other new elements are Sheraton Fitness (62 percent of Sheraton guests say fitness is important to them, Harper reports), a focus on F&B (Don Shula steakhouses are a partner) and service (Sheraton has rolled out new training around the world meant to convey to staff the meaning of “warm, connected, communal,” three principles of the Sheraton brand).
Brand-wide, Starwood is on course to open its 1,000th hotel. The past 10 months have seen Starwood’s 500th hotel opening in North America (The St. Regis Atlanta); its 30th W worldwide (W Fort Lauderdale); the fifth of its Element brand in North America (Element Denver Park Meadows); the 30th Aloft worldwide (Aloft Tallahassee); and the 100th Four Points by Sheraton in North America (Four Points by Sheraton Cambridge, Ontario).
W Fort Lauderdale is Starwood’s 30th hotel in the successful brand
It’s a lot of new hardware. The job of keeping travel agents abreast of all the new openings and keeping Starwood at the tip of their selling fingertips falls to Christie Hicks, senior vice president of global sales, and Chris Austin, vice president of global customer partnerships for leisure and luxury sales.
They are responsible for evolving and improving Starwood’s agent education programs through StarwoodPro. “We made a big bet on it and we think that bet is paying off,” says Hicks, adding that, offline, her sales team just made its first-ever global sales blitz during the week of September 21. “The online movement is something that everybody is taking to and having that presence is really important to us.”
Within StarwoodPro is ProLearning, a training program launched in October 2008, designed to help travel professionals better understand the reach of Starwood brands. To date there are three modules: 1) Getting to know the brands and growing customer loyalty; 2) Strategies for success; 3) Sharpen your sales cycle. Austin shares exclusively with Travel Agent that the first destination module will be out before the year ends and will cover the Caribbean. Other destinations will follow, including Mexico, South America, Hawaii and Italy.
“The modules appeal to a broad audience,” says Austin. “The consumer is changing and so are buying habits. If you aren’t keeping up, you’re not going to meet their needs.”
Austin is echoing the “Own the Upswing” mantra. “We are focused on what to do while occupancies are lower: spending time and effort on renovations, opening new hotels, exiting bad hotels. The agents need to also utilize this time to grow their skill set.”
To incentivize agents, plenty of rewards are on offer in ProLearning, along with special STARPRO rates that start at only $69. Then there is the Book Big and Win promotion. Agents qualify though StarwoodPro and they win Starpoints for every booking made. Every month, 50 thousand Starpoints are awarded and, by the end of the year, one million Starpoints will be given away.