Starwood Hotels CEO says luxury hotels are looking bright on their radar. Nadja Brandt, my favorite Bloomberg hotel news reporter, published an article this week saying US developers are shunning luxury hotels.
More than once in the past year I have read hotel industry reports that appear contradictory.
Frits van Paasschen, president and CEO of Starwood Hotels & Resorts, sees a growing wealthy class globally. Starwood Hotels are in a position to capture a portion of that travel market with their St. Regis, W Hotel and Luxury Collection brands. One of his comments is people who develop a new ability to travel globally look at Europe as an aspirational destination. People who can travel anywhere want to see London, Paris and Rome.
Interview statements to CNBC from the Starwood Investor’s Conference in Dubai last month indicate Starwood Hotels has a “laser focus on luxury,” while looking to target a younger audience of travelers. Starwood plans to open 50 luxury hotels in the next five years in 12 countries with 90% of luxury hotel openings in emerging markets.
He said that the company is also seeing an increased use of its loyalty program.
“Over half the beds that we fill in any given hotel on any given night are through our loyalty program. It’s about knowing which of our guests to treat in an extra special way,” he said, estimating that the top 2 percent of Starwood guests account for 30 percent of the company’s profitability. “We know who those people are, we know what they personally want and taking care of them is good business for us.”
CNBC’s Paul Toscano -
At the International Hotel Investment Conference Berlin, March 2013 another interview with Frits van Paasschen spoke about Europe being a region where a high-end hotel base already existed prior to the hotel brand development model prevalent today. The penetration of brand hotels in Europe is relatively low compared to the U.S., meaning there is room for growth of hotel brands.
Common in recent years is the branding of independent hotels as luxury collections. Starwood has The Luxury Collection. Hilton has Waldorf Astoria and Conrad. IHG has InterContinental Hotels and InterContinental Alliance Resorts. Hyatt has Park Hyatt and Andaz. The recent acquisition of The Driskill in Texas without a Hyatt brand name attachment opens the door to further independent hotels coming into Hyatt. Marriott has Autograph Collection and has been acquiring European independent luxury hotels within its portfolio for the past few years.
The King George hotel in Athens has joined Starwood’s Luxury Collection, marking the brand’s eighth hotel in Greece.
W Hotels opens its first ski resort with the W Verbier and The Residences at W Verbier in Switzerland in December. Starwood has opened five W hotels in Europe since 2008, including London, Barcelona, St. Petersburg, Istanbul and Paris. Next year, W Hotels will debut in Milan.
Travel Agent Central – March 29, 2013
On a different note:
Developers are shunning luxury hotels in the U.S. as room rates fail to rebound to peak levels – Nadja Brandt, Bloomberg News, April 9, 2013
Six luxury hotels will open in the USA in 2013. There were 23 luxury hotel openings in 2010 for the USA. Analysts predict the supply of luxury hotel rooms in the USA will be lower in five years than today. Investment money is going into higher profit margin upscale and upper upscale hotels rather than luxury hotels.
STR data shows a decline in luxury hotel rooms from 2.6% of all US hotel rooms in 2010 to 2.2% today.
My Loyalty Traveler interpretation is consumers are seeking better value than luxury hotels offer with their expensive fine dining restaurants and spa facilities. Are fresh flowers and an attendant escorting you to your pool chair the kind of service you want? Or more importantly, the kind of service you want to pay for at a luxury hotel?
New York, Chicago, Miami, Los Angeles and San Francisco will continue to offer luxury hotel experiences in the USA. Most places in the USA will see more hotel growth in the form of Holiday Inn Express, Courtyard and Fairfield Inn, Hilton Garden Inn and Hampton Inn and a variety of other generic brands marketing themselves to the masses.
Keep those hotel loyalty promotions coming.
And internationally there will be a Starwood luxury hotel or some other brand of luxury hotel waiting for you when you travel to the aspirational cities and resorts sought after by the growing class of wealthy travelers touring the world.
Cash bookings at hotels are welcome everywhere as an alternative payment when your loyalty points balance is not sufficient for a free luxury hotel room.