4 takes on Starwood’s new Tribute soft brand
16 APRIL 2015 6:07 AM
Tribute Portfolio represents the company’s latest step to ramp up unit growth. The brand could count as many as 100 properties within five years.
NEW YORK CITY—Adam Aron’s foot is firmly on the accelerator at Starwood Hotels & Resorts Worldwide. The Thursday morning launch of the company’s new soft brand, Tribute Portfolio, is evidence of that.
Work on the brand started before Aron took his place in the chief executive’s suite at Starwood Hotels. But he had a big role in moving up the timeline for deployment.
“I think it’s safe to say we accelerated the pace of the development of the brand because it’s such a good idea,” he said. “This is not something we should study to death. This is something we should launch and implement well. And so far, so good.”
Tribute represents Starwood’s 10th brand and first new brand since 2006. It gets off the ground with the Royal Palm South Beach Miami. Tribute-branded properties also are coming to Nashville, Tennessee; Savannah, Georgia; Asheville, North Carolina; and Charleston, South Carolina.
Adam Aron, CEO of Starwood Hotels & Resorts Worldwide, has made unit growth a top priority for the company. This infographic shows the growth of Starwood’s nine brands between 31 December 2007 and 31 December 2014, a time period which coincides with former CEO Frits van Paasschen’s tenure.
The brand is targeted to a wide range of markets, including secondary, resort and urban locations. For now, however, the focus will be on markets in the United States and Europe, officials said, though conversations are ongoing with owners in Latin America and Asia/Pacific.
Starwood executives have been working “furiously” on Tribute for the past several months, said David Marr, senior VP of brand management in North America and global brand leader for Tribute. The company wanted to take advantage of hot performing independent markets for urban and niche resort areas.
The brand takes its place beside the company’s other soft brand, Luxury Collection, which had a portfolio comprising 92 properties and 18,063 rooms as of 31 December 2014.
Starwood executives initially discussed the possibility of simply expanding the base of the Luxury Collection, Marr said.
“Some companies have expanded their luxury base and had luxury hotels in with upper-upscale hotels,” he said. “That confuses the customer.”
Tribute differs from Luxury Collection in that it will focus on 4-star, upper-upscale independents as opposed to the 5-star hotels under the Luxury Collection umbrella.
Starwood also has a 49.8% stake in Berlin-based Design Hotels AG, a publicly traded collection of 280 independent member hotels in 50 countries.
Starwood spokesperson Carrie Bloom said Tribute will be fully integrated into the company’s existing structure.
“We are in the process of determining the business model of Design Hotels; however, we know it will continue to operate as an independent unit from Berlin and will not be folded into Starwood’s existing operations,” she wrote via email.
During a series of interviews a week ago at Starwood Hotels’ Starlab, a 46,000-square-foot design studio and workspace in midtown Manhattan, Hotel News Now discussed Tribute with officials who have a vested interest in the brand’s success. Following are their perspectives on Tribute and what the outlook is for the brand moving forward.
View from the top
From the first day Aron was installed as CEO on an interim basis at Starwood, the chief executive’s rallying cry has been for unit growth. The birth of Tribute is another step forward in the company’s expansion.
“What we’ve seen elsewhere in the hotel industry is that there is room for a 4-star, upper-upscale hotel collection,” he said. “It seems to us Starwood would do very well if we took a 4-star collection opportunity to hotel owners and developers. So far, the reaction has been great.”
As of the end of 2014, Starwood had a total of 1,222 hotels in its system, representing 354,225 rooms.
What is particularly attractive to Starwood is that there is a wide swath of potential hotels from which Starwood could draw for the new brand. Independent hoteliers represent roughly half of the global hotel industry, he said.
“If you’re spending any part of your life in hospitality, it’s almost impossible not to know independent hotels are there,” he said. “When we see the strategy of Luxury Collection, and when we see the strategy of other 4-star collection brands like Marriott (International’s) Autograph, it’s pretty easy to envision Starwood would be successful with a 4-star, upper-upscale collection brand.”
Members of the executive team are taking bets on when the brand will open its 10th, 25th, 50th and 100th hotels.
“We will go from one to 10, to 25, to 100 at a robust clip,” Aron said.
View from the brand leader
Tribute-branded hotels will hold between 150 rooms and 400 rooms, Marr said.
Marr said Tribute is likely to resonate with owners of independent hotels in part because Starwood loyalists tend to pay a higher rate during their stays.
One of the primary differentiators for Tribute will be its wide variety of hotel offerings to potential guests, Marr said. The hotels will be a mix of new builds, conversions and adaptive reuse.
“This is a collection of really cool hotels located all over the world where SPG members want to be,” he said. “Some will be limited-service hotels. Some could be beachfront resorts in Maine. We’re going to celebrate that bandwidth.”
View from an owner
When Chesapeake Lodging Trust acquired the Royal Palm on Miami’s South Beach, executives originally thought they would make the property independent. But they then decided a soft brand might be best as they wanted to leverage a brand’s reservations system, rather than relying on online travel agencies to fill rooms, as many independents do.
“There’s a place for OTAs,” said Rick Adams, executive VP and COO at Chesapeake. “There’s certainly a place for the wholesale business. But to be your primary driver of roomnights is not a good idea in our opinion. We wanted to shift a portion of that to the (brand’s) reservations system. Roughly 50% of systemwide roomnights could from SPG (members). If you just take a portion of that OTA business and move it over (to the brand’s reservations system) and do nothing else, we’re significantly enhancing our rate and our bottom line.”
Executives at the real estate investment trust decided to brand with Starwood, in part because of the long relationship between the two companies, Adams said. A third of the company’s rooms are branded through Starwood, the biggest presence in Chesapeake’s portfolio.
“It’s a leap of faith to be the first of anything,” he said. “That leap of faith is made more confident with the deep relationship we have. We feel very comfortable taking that jump with Starwood.”
Adams said Chesapeake might consider branding at least one other hotel in its portfolio with Tribute. The brand helps fill a gap that Starwood had in its portfolio, he added.
“Frankly, I wish it was around a few years ago, because there were a few opportunities we had that we probably would have put these into,” he said.
View from the guest
SPG members had a big role in shaping Tribute, said Mark Vondrasek, senior VP, distribution, loyalty and partnership marketing at Starwood. The company reached out to a wide range of SPG members—150-night-a-year road warriors and occasional travelers alike—and asked guests what they wanted to see in a brand.
“I had a nice dinner with a dozen members and talked to them about what they would like to see in a new brand and what they would enjoy,” he said. “In a lot of ways, they helped us to curate Tribute, which is pretty cool.”
Among their suggestions: Add more unique experiences and destinations.
“They said don’t lose the unique, independent experience,” he said. “’I sometimes like to experience a hotel that doesn’t have to feel it’s got the traditional branded elements.” He added that the members also said they did not necessarily want to only be recognized as Platinum or Gold Preferred loyalty members, but as individuals with unique needs.