In conjunction with the 37th annual NYU International Hospitality Industry Investment Conference, Starwood Hotels & Resorts Worldwide today introduced Sheraton 2020, a comprehensive 10-point plan designed to reinvigorate the Sheraton Hotels and Resorts brand. This five-year vision encompasses a $100 million Sheraton-focused marketing campaign; the launch of a new premier tier, Sheraton Grand; the implementation of revenue and profit-driving initiatives to benefit owners and developers; and a goal of opening more than 150 new Sheraton hotels worldwide by 2020.
“There are a lot of upper upscale hotels that are places to stay, and we want Sheraton to be a differentiated brand that stands for something unique,” said Adam Aron, interim Starwood CEO. With good reason, since the 430 Sheratons account for 40 percent of Starwood’s global footprint. Given the size of the brand and its age—80 years—Sheraton seems like a natural starting point to accelerate the company’s growth and improve operational performance, Aron said. Initiatives are scheduled to roll out as early as this month, and a new brand positioning and multichannel global advertising campaign is slated to launch in September.
One of the key goals of Sheraton 2020 is to earn owners’ confidence in the brand. To achieve this, Sheraton aims to balance building and conversion costs with exceptional guest experience, and reevaluate brand standards and fee structures to improve the rate of return for investors and developers.
“As we come up with some great, innovative ideas for Sheraton from a guest experience perspective, we want to be thoughtful and partner with our owners to make sure there is something else we can take away to help offset cost of the new initiatives,” said Dave Marr, global brand leader for Sheraton. “If we’re not thoughtful, this plan will be that much harder to execute against. You need to be in step with owners and have the confidence that the brand is doing the right things to differentiate itself in the upper upscale space.”
To stand out from the competition, Sheraton intends to transform its public spaces and guestrooms. New design elements will include various lobby zones that will create energy and inspire guests to congregate—and spend more money in the F&B outlets, Marr said. While there will be foundational aspects to the design, Marr said owners will have freedom to weave in local touches to make their hotels more relevant to their city or region.
Keeping in line with its goal to improve owner economics, Sheraton will respect the life cycle of existing properties, meaning owners can stick to their capital plans. Many owners who are on cycle to start a renovation will be able to take the new design concepts and start implementing them as early as first quarter 2016, Marr said.
Another way owners can boost value is by qualifying for the new Sheraton Grand premier tier. Distinguishing characteristics of a Grand property may include a prime location in a key gateway city, exceptional culinary experiences, impressive architecture and design, and superb service. More than 100 existing hotels will be elevated to the new tier, which is intended to better match guests’ expectations, showcase Sheraton’s best properties, and create a halo effect across the portfolio. Based on market research, 75 percent of frequent business travelers said their perception of the entire portfolio would be lifted if one-third of all properties were designated as Sheraton Grands. Aron and Marr hope the launch of Sheraton Grand will encourage more owners to renovate their properties to achieve higher stature and command higher rates.
Igniting associates’ passion for Sheraton is another integral component to moving the new vision forward, Marr said. To get this piece right, it will require a full revamp of service culture training to ensure employees understand the changing needs of today’s travelers. “With the new positioning and $100 million ad campaign, we’re giving consumers, owners, and developers a reason to believe in Sheraton,” Marr said. “We need to do the exact same thing with our associates, because we know they are the heart and soul of brining the Sheraton brand experience to life for our guests.”
When Starwood last zeroed in on the Sheraton brand in 2008, its $6 billion revitalization effort yielded a 300 basis point increase in RevPAR index and a 45 basis point improvement in guest satisfaction scores, according to Aron. Other brands in the Starwood portfolio currently perform 5 to 10 percent better than Sheraton, Aron explained. If Sheraton were to hit this target range, it could generate as much as $1 billion in additional revenue, he said. “Because Sheraton is so big today, and because its heritage is so vast, it’s like moving a supertanker. But once you move it, there’s a big amount of motion.”
As a result of the last revitalization effort, more than 40 hotels exited the system. This time around, Aron would prefer not to kick people out. “We’re more optimistic that we can focus on improvement within the current system rather than having to worry about forcing people to leave it,” he said.
