Today, Starwood Hotels & Resorts Worldwide announced Tribute Portfolio, a soft brand of four-star, upper upscale properties. It’s the company’s 10th brand and the first new launch in nine years. It’s also the biggest move the company has taken since CEO Frits van Paasschen stepped down in February. “I said on the day of my announcement that I had bias for action, and the board had tasked the company with picking up the pace,” says Adam Aron, Starwood’s interim CEO. “One of the fastest ways for us to grow is to take an upper upscale collection brand to market.”
While the Tribute soft brand has been on the drawing board for more than a year, Aron says he accelerated the pace of the launch over the past few months he’s been CEO. “Starwood’s historic strengths have been in the luxury upper upscale and upscale segments of the industry,” he says. “It’s easier for us to grow in those segments, because we already have such well-established brands.” He sees Tribute Portfolio hitting 100 hotels in four or five years.
Aron says Tribute is Starwood’s celebration of the independent hotel, which is half of the total hotel world. “Independent hotels aren’t that difficult to attach to the system,” he says. “You don’t have to put a new $400,000 sign on the roof. You don’t have to re-train the staff. There aren’t 57 brand standards that have to be adhered to or a big property improvement plan that they’re going to have to fund to come into the system.”
While Starwood’s desire to add more hotels to the system is high, he’s quick to add that the company is also focused on growing the top-line revenues and bottom line profitability of its existing 1,230 hotels as well as adding new properties. According to the Wall Street Journal, Starwood will spend $20 million to launch the Tribute portfolio, and will charge 10 percent of a hotel’s room revenue in fees to hotels that are part of the collection.
While the initial focus for growing Tribute will be in North America and Europe, Starwood is targeting high-demand destinations and markets where it doesn’t have much of a footprint. A good example is the Royal Palm in South Beach, Miami, which is the first hotel to be part of the new soft brand. Located near Ocean Drive and the area’s luxury retail shopping and entertainment district, the 393-room Royal Palm was recently purchased by Chesapeake Lodging Trust and is managed by HEI Hotels & Resorts.
“We believe that Miami is a independent-driven marketplace,” says Rick Adams, COO of Chesapeake Lodging Trust. “It has the third highest RevPAR in the United States, yet is dominated largely by independent products. So we wanted to keep the independence of this hotel, but we like the protection that a brand offers, not just when taking the top of the upside in an upcycle but also the protections when the economy naturally turns.” By going with Tribute, he adds, Chesapeake maintains the property’s unique identity while enjoying the benefits of international reservation system and the Starwood loyalty program, which can introduce the hotel to different customers.
While there are other four-star, upper upscale collection brands out there like Marriott’s Autograph, and Hilton’s Curio, Aron sees the unique selling point of Tribute being Starwood. “We’re bringing our customer base and it is large. We’re bringing our frequent guest program and our frequent guest program is producing tens of millions of hotel stays annually right now.” Aron adds that these hotels fit very neatly with Starwood’s current customer base.
“We’re looking at properties that have that independent personality and a unique feel,” says Dave Marr, Starwood’s SVP of brand management and global brand leader for Tribute Portfolio. “It could be 150 rooms to 400. It could be quaint little resorts in wine countries or resorts up in Maine.” As part of the announcement, Starwood revealed four soon-to-open hotel properties that would also be part of Tribute Portfolio. These include the 150-room Vandre Nouveau Hotel, an Asheville, N.C., property set to open in 2017; the Noel Place Hotel in Nashville, Tenn., which will open next year after a comprehensive renovation; and two as-yet-unnamed new-build properties in Savannah, Ga., and Charleston, S.C., opening in 2016 and 2017.
“We don’t want to just do one big thing and then go quiet, we want to announce a couple more hotels two weeks later and even more two weeks after that,” says Marr. “That’s our strategy for this brand as we move forward.”
He adds that Starwood is comfortable in saying hoteliers don’t need another lifestyle brand. The company sees Tribute as ideal for independent-minded hoteliers who have assets in urban markets as well as resort markets that don’t necessarily fit into one of Starwood’s other nine brands. “The time is now because there are a lot of owners transacting deals who want to work with us and haven’t been able to do that, because we didn’t have the right fit. Now, having this opportunity in the upper upscale space, they can get the power of Starwood behind them, which is important to them.”
For Aron, the launch of Tribute Portfolio is another step in a big year for Starwood. “Last year, 2014 was the biggest signings year in the history of the company, and I believe we will sign more hotels this year. But realize it’s only day 52 for me, so we’ll see where we get traction fastest in terms of growth.”
