Joining Forces

Unlikely partnership or match made in heaven? So questioned many in the industry with the surprising late June announcement that hospitality goliath Marriott International has partnered with lifestyle-hotel pioneer Ian Schrager to launch a new boutique brand of hotels that will be conceived by Schrager and managed by Marriott.

By Staff -- HOTELS Magazine, 8/1/2007

or match made in heaven? So questioned many in the industry with

the surprising late June announcement that hospitality goliath Marriott

International has partnered with lifestyle-hotel pioneer Ian Schrager

to launch a new boutique brand of hotels that will be conceived

by Schrager and managed by Marriott. The brand leader and antibrand

innovator aim to create as many as 100 highly individualistic hotels

that will combine the unique experience of a Schrager property with

the operational expertise of Marriott, a company used to developing

concepts on a global scale.

"This is a new version of what we started doing back in 1982-I would

never have had the wherewithal to do it myself on such a large scale,"

says Schrager, in explaining why he was interested in this partnership.

"What is exciting for me is that I've been involved in this type

of business for the last 25 years, and now I have a much bigger

stage and platform-it was just irresistible to me. And how could

I not want to work with Bill Marriott, who is a hotel guy, an icon?"

Ian Schrager (l.) and Bill Marriott will combine style and muscle to create a lifestyle brand for Marriott.

From Marriott's perspective, the boutique segment is a sector the

company has been monitoring carefully over the last several years

to assess its viability on a long-term scale, according to Arne

Sorenson, Marriott's chief fi nancial offi cer. "We've watched the

boutique space for a good number of years. It's been developing

fairly quickly- boutique has become fairly broad now, from the ultramodern

hotels that are more about the bar than anything else, to the less

'edgy' but still design intensive and appealing," Sorenson says.

"We wanted to see what had the most lasting power and who the customer

base was, and over the last two to three years we had come to the

conclusion that we wanted to participate, to have an entrant into

the space."

Although Marriott already operates a diverse portfolio of brands

from ultra-luxury Bulgari and Ritz-Carlton to select-service leaders

like Courtyard by Marriott and economy brand Fairfi eld Inn, it

decided that to give the company not only expertise, but also credibility

in the lifestyle category, it needed a partner. "We looked at a

bunch of scenarios, but fundamentally we wanted a partner to bring

us in-to offer expertise internally and credibility externally,"

Sorenson says. The relationship with Schrager began fairly fortuitously

with Bill Marriott reading an article about Schrager's latest hotel

project, The Gramercy Park Hotel in New York City. Interested in

seeing the space, Marriott traveled to the hotel where he was greeted

by Schrager; therein began a series of what Sorenson describes as

"nonstop conversations" between the two icons about developing a

new hotel concept together.

Since that initial meeting

much time and energy has

been spent clearly dividing

up responsibilities of the

new partnership. Schrager's

realm of expertise is concept

creation, and he will design

not only the physical assets,

but also the positioning of the

hotels. Marriott will bring its

development muscle to the

table as well as operational

expertise. The aim is to seek

third-party management

agreements for most of the

hotels, although Marriott may

be willing to joint venture on

some strategic concepts early

on, Sorenson says. Target

markets will be "fairly opportunistic,"

he adds, citing top

global gateway cities such

as New York, Los Angeles,

London, Paris, Mumbai and

Shanghai as high priorities.

While the initial focus is

on urban hotels, resorts will

not be ruled out. Product will

be a mix of new builds and

conversions, with about 150

to 200 guestrooms. The goal

is to have at least fi ve deals

signed by the end of 2007,

with 100 hotels open or in

development in the next

decade. Having received

three phone calls from eager

developers on the day of the

announcement and "dozens"

by the end of the following

week, Sorenson believes that

announced fi gure is "a very

achievable goal."

Beating The Competition

So what about the concern

that the boutique or lifestyle

category has become very

crowded and increasingly

competitive? "There's always

room for a distinctive product,

even when the market is full,"

Schrager maintains, confi -

dently citing comparisons to

new books, songs or movies.

"There is always room for

something original no matter

what time in the cycle."

While it is too early to give specifi c examples of what the hotels

will look like, Schrager stresses that no two hotels will be the

same-as he plans to leverage the location of each property to give

them all a distinct ambience. Service, he says, will be modern and

casual, "but no less attentive," making the hotels accessible to

a wider variety of customers. "It may sound funny, but I've never

considered my hotels to be about design," Schrager adds. "It was

always about the experience- reflecting popular culture. I always

just wanted to create something that showed my generation and lifestyle-something

for people who wanted something unique."

As experience is the top

priority, Schrager says food

and beverage will be an

essential part of the mix as

"in the know" restaurants and

bars that serve as a social hub

for hotel guests and locals

has been a recipe for success

Schrager has utilized throughout

his career. "You don't

have to leave the hotel to get

the microcosm of the city,"

Schrager says. "F&B is part

of the promise you make to

customers-bed and board."

No name has yet been

chosen for the brand (and

Sorenson says it is unlikely

that the Marriott name will

be attached to whatever brand

name they choose), and for

now the partners are just

immersed in talks with

developers and the challenge

of starting a new brand. "I

think the biggest question

that could be posed about this

is the fact that we've chosen

to do it together. Now we

have to build on that relationship,"

Sorenson says. "We, at

Marriott, have had to ask

if we are prepared to step

out of our comfort zone to

succeed in this space-it's

about verve and design and

lifestyle. But the fact that we

have done it with Ian is proof

that we are prepared to do it

and to do it well."