Starwood Hotels & Resorts Worldwide is in the midst of refurbishing 10 W Hotels Worldwide properties in North America.
Its ownership groups, which include Host Hotels & Resorts, Rockpoint Group and Estein & Associates USA, have committed more than US$100 million to the renovations. Many of the renovations focus on the Living Room (W’s take on the lobby), which is a key element to the W experience.
To find out what’s behind this push and how it fits into Starwood’s luxury play, HOTELS Editor in Chief Jeff Weinstein sat down with Frits van Paasschen, CEO and president of Starwood Hotels & Resorts Worldwide, at this week’s International Hotel Investment Forum in Berlin for a wide-ranging interview, more of which will be published on HOTELSMag.com next week.
HOTELS: What is the strategy behind Starwood’s big push on the luxury side?
Frits van Paasschen: The decision to do this is a confluence of a few things. The first is, and I think maybe most important, is this massive secular growth in demand for and consumption of luxury brands. Not just for hotels, but in general, and that is a function of a fact that there are more people joining the ranks of the affluent with an appetite for luxury than there has ever been before.
That is the external drive for this. Internally, we look at our own luxury business and between the three brands — W Hotels Worldwide, St. Regis Hotels and Resorts and The Luxury Collection, where we have almost 160 hotels. We have essentially doubled that footprint in the last five years in spite of all that’s gone on and those hotels have all performed as well or better than before the crisis, and continue to do well.
Not only is there great demand for luxury, but we are meeting that with three brands that are very different in their character and their brand positioning and what people coming to those hotels looking for.
The challenge for us is to think about those things we can do in serving luxury travelers that can benefit from the platform of the three brands or the entire Starwood system.
HOTELS: Luxury Collection and St. Regis, no doubt they are luxury brands. W, I understand how you position it as luxury, but from the broader industry’s perspective, how do you position W as a luxury brand with its footprint compared to St. Regis or Luxury Collection?
Van Paasschen: So if you go to the W Maldives or the W in Hong Kong or Taipai, and even the rates that we get at Ws in New York, are consistent with high-end if not luxury positioning. And when you look at the W Barcelona and what it has done to that market, you have to keep in mind is that it’s a different interpretation of luxury, it is a different positioning. It certainly is not upper-upscale and it is a recognition that there are different people that want to have a different experiences and not compromise on the convenience of a great resort hotel or a business hotel at the same time.
So our logic is there are three different ways we can meet an increasingly diverse and unscripted view of luxury. It used to be luxury was all about wearing the right clothes, being formal and polite. Your butler was like the butler in Batman and it was just a very serious affair. There is no reason why luxury can’t be fun at the same time, and that is what we intend and are already seeing with the growth of the W brand.
There is this lagging perception, and that is why we’re going through the U.S. portfolio of the Ws and seeing which ones still belong with the brand the way it’s newly conceived, and those that don’t.
The W Atlanta Perimeter had some great associates but it wasn’t great W material to begin with, and so that hotel has been transformed into a Le Méridien.
There are a number of other hotels in our North American W portfolio that will probably be repositioned through this process, as well. It is a recognition of this brand as it went abroad, Santiago for example, that it would be hard to argue that isn’t a luxury hotel.
HOTELS: Yes, and the Paris W, would it be hard to argue that isn’t a luxury hotel?
Van Paasschen: It’s a very interesting discussion because if you go to the W in Leicester Square (London), the rooms are smaller than what you would expect for a luxury hotel but the design intensity and overall experience has made it a hotel that literally has competed way above its comp set.
Could you put a St. Regis in that location with that room size? No. But does that mean W is not luxury? I think it fits in this expanded space. The lens on luxury is a wide-angle lens.