Nov. 18–As Marriott International works to complete its $12.2 billion acquisition of Starwood Hotels, its CEO said he would move aggressively to "cull the bottom end" of Starwood's Sheraton brand if hotel owners fail to maintain base standards under the Marriott flag.
The acquisition of Stamford-based Starwood (NYSE: HOT) would make Marriott (Nasdaq: MAR) the world's largest hotel company with some 1.1 million rooms. With Sheraton alone having more than 137,000 rooms globally, the brand would have significant heft under Marriott, with about 13 percent of the combined company's room count.
Sheraton has been saddled with a comparatively dowdy image next to Starwood stablemates like Aloft and Element that market to younger professionals, and interim CEO Adam Aron has been attempting a dual strategy to reinvigorate the Sheraton brand through an ad campaign and a new "Sheraton Grand" label for more modern properties.
On Monday, Marriott CEO Arne Sorenson indicated that while he liked the carrot as a strategy to induce improvement from Sheraton hoteliers, he made clear that he is not averse to applying the stick as well for those that fail to invest in their properties.
"We really haven't had a chance to sit with the Sheraton brand team … or dig as deeply into this as we certainly will in the months ahead," Sorenson said. "The notion that the hotels … that get enough capital to become better hotels (are the ones that) get the Sheraton Grand branding, I think is the right idea.
"We've got to have the resolve to make sure that the hotels that don't meet those standards … don't remain in that brand," Sorenson continued. "With those things we should be able to drive continued improvement."
Starwood and Marriott have matching business models in which they allow the use of their brands by independent hotel property owners, rather than seeking to own facilities outright. For instance, the Marriott in Trumbull is one of just 16 in the U.S. still owned by the family of founder J. Willard Marriott.
The Trumbull Marriott is one of nine hotels in Fairfield County managed either by Marriott or Starwood, including the Stamford Marriott Hotel & Spa, the largest by room count; and the Sheraton Stamford Hotel a few blocks east. The Stamford Marriott and Sheraton are the 13th and 15th ranked venues in Fairfield County by TripAdvisor members.
Previously a Holiday Inn, the Sheraton Stamford Hotel was acquired in 2007 by affiliates of Rockbridge Capital and Davidson Hotels & Resorts and converted in 2011 to a Sheraton, less than a year in advance of Starwood moving its headquarters to Stamford from White Plains, N.Y. It is the lone Starwood hotel in Stamford, where the company has quickly grown to become the city's largest corporate employer. Marriott is on its way to adding a third hotel under management in Stamford in the Residence Inn by Marriott under construction that will be connected to the Courtyard Stamford Downtown.
Connections mean everything in an "asset light" business model that emphasizes getting people to adopt a brand and stay loyal to it throughout their travels, rather than the hotel companies owning the facilities themselves. Sorenson made clear hotel owners must hold up their end of the bargain to get plugged into brand loyalty programs like Starwood Preferred Guest.
"(It) is an often devastating event for a piece of hotel real estate that ends up without a system to support it," Sorenson said. "We'll go through that work, but that's work that has to be done on a hotel-by-hotel basis."
Alex.Soule@scni.com; 203-964-2236; www.twitter.com/casoulman
