Sheraton refreshed as Starwood fate unclear
01 JUNE 2015 9:16 AM
Starwood’s reimagining of its Sheraton brand is happening against the backdrop of a yet unclear future for the company overall.
NEW YORK CITY—As rumors continue to swirl regarding the future of the company, Starwood Hotels & Resorts Worldwide is pressing forward with a 10-point overhaul of its iconic Sheraton brand.
The company announced Monday a comprehensive plan to push Sheraton into the industry’s spotlight. Included is the addition of a Sheraton Grand designation; plans to add more than 150 Sheraton hotels by 2020; a redesign of lobbies to increase revenue potential; a refresh of guestrooms; and more.
During a one-on-one interview with Hotel News Now, CEO Adam Aron said the company is 100% focused on lifting the profile of the brand worldwide and hitting all 10 aspects of the plan during the next five years.
“This is not a list of 10 things we’re just talking about internally,” he said. “By announcing this externally, we’re showing we’re serious. We’re not going to do two of the 10. We’re going to do 10 of the 10.”
Starwood’s announcement comes as speculation continues to mount over what the fate of the company might eventually be. During a HNN-sponsored roundtable meeting of the Lodging Industry Investment Council on Sunday, JMP Securities analyst Robert LaFleur said there is a 75% chance Starwood will be sold. He added there is a 25% chance nothing will happen with the hotel company, or that it will make an acquisition.
“You have a company that sort of wandered off the path,” LaFleur said of Starwood. “You had growing frustration with shareholders. The CFO left and the CEO was fired earlier this year. There was a lot of shareholder discontent.
“Marriott (International) has a clearly articulated return of capital strategy. Starwood would always sort of hem and haw and maybe we can sell assets or buy back stock. Maybe we’ll pay a special dividend. When everyone was selling assets at record levels, Starwood wasn’t.”
Year to date, Starwood’s stock was up just less than 2% as of mid-morning Monday. By comparison, the Baird/STR Hotel Stock Index is down 1.2%.
Aron said company executives are walking separate but parallel paths as it relates to Starwood’s future. One path leads to the reinvention of the Sheraton brand; the other has to do with the company’s strategic review process that was initiated at the end of April.
“There’s no news on that other than what we discussed on April 29,” Aron said of a potential Starwood sale. “The board is looking at every opportunity for Starwood to improve itself operationally, and Sheraton 2020 represents a significant step in that effort.”
As it relates to Sheraton’s new Grand designation, Aron said the hotels that would be elevated to that status have not yet been released. The CEO was planning on talking about the Sheraton plan with owners the rest of the day on Monday to gauge interest in who might be willing to move up to Grand status.
Hotels that might be a good fit for Grand would include any of the following characteristics, Aron said:
- hotels in major world capitals or otherwise “spectacular” locations;
- hotels or resorts that feature an outstanding architectural design; and
- hotels that are distinguished not just by design, but also by customer service efforts.
Investment required by owners to move up to Grand will be determined on a hotel-by-hotel basis. Some properties might require no capital expenditures, while others might, he said.
He said the move is necessary for the brand, which counts 438 properties worldwide, because there is some consumer confusion about the brand. He said Sheraton Grand will help clear up any questions potential guests might have.
“It’s our goal now to show them off and create a halo effect for the entire brand,” Aron said.