5 Minutes With Starwood's Brand Management SVP
-- Hotels, 11/17/2009 9:12:00 AM
David C. Marr, senior vice president of brand management in North America for Starwood Hotels & Resorts, shares his thoughts on Starwood's outlook for 2010 from a branding and marketing standpoint.
HOTELS: Generally speaking, what is the outlook for 2010?
Marr: "Before I look ahead, let me begin with a quick overview of Starwood’s current business outlook. If I had to sum it up, I’d say we’re in a better place today than we thought we’d be, with all signs pointing to a recovery, albeit a slow recovery. We saw our first signs of life this summer, with leisure travel coming back first, and occupancies at or near pre-crisis levels
"That said, rate continues to lag. In a typical recovery, rate comes back one or two quarters after occupancy begins to rise. From what we can tell, this is feeling like a normal recovery, but again, a bit slower. The return of the leisure traveler, we believe, reflects growing consumer confidence, and we for one are ready to declare the 'staycation' a passing fad versus a lasting trend. A great sign to be sure, though we live or die by corporate travel, which represents 75% of our business, so we were on guard as we entered the fall corporate travel season. While it is still early days, we like the trends we’re seeing.
"As for 2010, while business conditions have clearly stabilized, it’s hard to forecast the pace of recovery. For instance, as I mentioned earlier, we’ve seen occupancies rebound, and in a typical recovery, rates would come back one or two quarters later. More and more, this is feeling like a typical recovery, albeit a slow one.
"And when it comes to group pace, bookings have picked up for 2011 and beyond, which I think has a lot to do with savvy planners who know the value they’re seeing today isn’t going to last. That said, booking pace for 2010 has continued to lag, and booking windows for both transient and group business have shortened considerably.
"My gut is that businesses are still operating on contingencies, but instead of planning for scenarios ranging from bad to worse, we’re all budgeting from bad to better. As business continues to stabilize and improve, we’ll see more meetings booked in the year for the year."
HOTELS: How will the 2010 sales and marketing strategies and tactics differ from this year?
Marr: "We believe the marketing we'll do in 2010 will continue to be focused on creating demand and getting consumers back on the road again, for both leisure or business travel. Our marketing, PR and sales teams will be focused on the message that it is good for the economy to get back on the road. With many companies budgeting from bad to better, we want to make sure our hotels are top-of-mind as the economy continues to stabilize and improve.
"We will also focus on building awareness around the revitalization of our Sheraton brand in North America. We have spent US$4 billion on renovating over 100 hotels in North Amerca, and US$6 billion globally. We have introduced innovative experiences for our guests to stay connected, with initiatives like the Link@Sheraton powered by Microsoft. All of the exciting new changes to Sheraton need to be communicated to consumers, and they need to know it's a new day for the brand."
HOTELS: What are some sales and marketing trends to watch for in 2010?
Marr: "Social media applications like Facebook and Twitter will continue to evolve how we communicate and engage with our tech savvy guests who expect instant connection and instant results. And in 2010, we look to build on our early adoption of this technology through our sales and marketing efforts. We were the first loyalty program to establish a presence on FlyerTalk with our Starwood Lurker, the first to launch an iPhone app, and the first to move into Twitter. And we see clear benefits to this strategy as our SPG members are highly active social media participants, with 50% indicating frequent involvement—and those particular members book and stay more frequently. In fact, SPG members engaged in social networks are nearly 20% more likely to book a Starwood hotel than other SPG members. And SPG members who create blogs are nearly 80% more likely to book."
HOTELS: In the U.S. especially, do you expect the concept of luxury to lose the somewhat negative connotation that it has had this year?
Marr: "We believe that the demise of luxury is much exaggerated. Luxury will come back, as it always does. It is interesting to point out that luxury was also pronounced dead during the Calvinistic repentant period, after the excess of the '80s and the Bonfire of the Vanities, post-9/11 and so on, but throughout history we’ve seen that when people feel flush, they want to treat themselves.
"That said, the near term will continue to be challenging for the top tier. For instance, while the paranoia around meetings is largely behind us, corporations are still mindful of perception. The incentive industry will be sluggish for a few years, and while people may be planning vacations again, they're still paying close attention to their pocketbooks.
"Starwood is heavily skewed to the upper-upscale and luxury segments. And what have been temporary headwinds for the past year or so will be tailwinds again, and I would submit that Starwood is well positioned to benefit from a meaningful bounce-back in these hard-hit segments as the economy rebounds.
"Looking out a little longer term, secular trends have very positive implications for the luxury segment, especially when you consider that for the first time in history, half the world population is middle class, and there is still significant distribution of wealth in emerging markets. We’re building ultra-luxury St. Regis hotels today in destinations that we’d never heard of even a decade ago, and as newly moneyed travelers look to assert themselves in the world, where they stay on business or holiday will be every bit the badge of honor it was for previous generations of nouveau riche."
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