Tag: Loved

Starwood Hotels Relaunches Next Month: Will It Bring Back the Loyalty And Lifestyle Travelers Loved?

by Gary Leff on January 25, 2025

Barry Sternlicht, who founded Starwood, reacquired the name that Marriott retired and plans to re-launch next month.

The Birth Of Starwood

Barry Sternlicht acquired a number of hotel brands. Westin hotels, founded in 1930, was acquired by ITT Corporation in 1966 and sold to Starwood in 1994. Westin’s first hotel was in Washington D.C., and so was Sheraton’s, in 1937. It too was acquired by ITT Corporation (1968) and merged with their Statler Hotels in 1972, and the brand was sold to create Starwood.

They launched W Hotels and reintroduced the storied St. Regis brand. In 1999, Starwood launched Starwood Preferred Guest, tying the brands together and bringing together Westin Premier and Sheraton Club International. Westin became a preferred chain with its “Heavenly Bed” which Starwood later leveraged across brands with the introduction of the Sheraton Sweet Sleeper and Four Points Four Comfort bed, and the branding with the “Heavenly Bath” whose main innovation was a curved shower rod.

Starwood was lifestyle hotels and innovated in loyalty: they were first to market with “true redemption” (any standard room was available for redemption on points) and suite upgrades for frequent guests, if available at check-in. Starwood also innovated with guaranteed late checkout.

Extreme Wow Suite Living Room At The Former W San Diego

Eventually Hyatt added suites and late check-out, and Marriott added late check-out only after acquiring Starwood. No capacity controls on standard room awards became commonplace throughout the industry. In 2012, Starwood added breakfast (taking a cue from Hilton, something Hyatt had already done but Marriott had not) and launched innovative loyalty features like 24-hour check-in (“Your24”) and Ambassador service. Starwood’s customer service, exemplified online by William Sanders, the ‘Starwood Lurker’, was consistently top of industry.

2016 Sale To Marriott Ruined Both Companies

Starwood was unique, and hit fair above its weight. It delivered lifestyle hotels and earned a revenue premium, and took care of guests. The chain owned and largely protected the brand (out of U.S. Sheraton and Four Points, perhaps). Standards were enforced, at great expense to owners. W Hotels was famous for imposing rigorous style guidelines and purchasing requirements. And when a customer had a complaint, it was common for the chain’s customer service to compensate the customer with a free night’s worth of points – and bill the property.

The chain almost didn’t get sold to Marriott.

• Hyatt was arguably the high bidder, but the complex deal structure got in the way. The Pritzker family’s shares have 10 times the voting rights of ordinary shares. While Hyatt was going to restructure their stock in order to do the Starwood deal, the restructure wasn’t really going to give this away (privileging shares held for long periods with extra voting rights).
• China’s Anbang Insurance was also outbidding Marriott consistently but eventually backed out.

Marriott used to be known for consistency. It didn’t promise much, but it always delivered. That changed with the Starwood acquisition, where it promised everyone everything. Owners were promised lower costs. Guests were promised they’d love everything about the combination. Complaints were dismissed by Marriott’s CEO as “noise around the edges” and whenever hotels let down a customer, the chain’s customer service either backed the hotel or abdicated completely. Failure to deliver became the sine qua non of the brand.

Now, under CEO Jim Capuano, the mantra is “net rooms growth.” They try to be as owner-friendly as possible, making promising to customers but enforcing relatively little, in order to attract more property and rooms to their brands. The only thing of value they own is those brands, and they’re sacrificing brand value for short-term growth. Hence the opportunity.

New Starwood Already Has 3 Hotel Brands

Sternlicht has three hotel brands today: Baccarat, 1 Hotels, and Treehouse. He reports “working on at least one more brand.” And they all have development pipelines:

The new Starwood has plans to open 22 hotels in the pipeline through 2028, including 1 Hotels in Austin, Texas; on Crete and in Seattle; Treehouses in Manchester, England, and Miami; and Baccarats in Dubai, United Arab Emirates; the Maldives and Rome. All three brands are expected to open locations in Riyadh, Saudi Arabia, as well.

That will add to 30 hotels today, bringing the chain to 52 hotels plus any additional they sign, develop or acquire. That’s merely the size of Omni Hotels & Resorts, and doesn’t approach the scale that will make them a challenger to Marriott, Hilton or IHG. But it’s a start.

1 Hotel Brooklyn Bridge

Unclear What Ties The New Starwood Together

Starwood was an innovator in loyalty. 1Hotels offers modest rebates, guaranteed late checkout, and upgrades – plus at top tier a complimentary personal training session each year. They’ll need to exceed the offerings of competitors in order to convince guests to stay loyal, since it’s always harder to remain loyal to a smaller chain. Loyalty and additional progress to scale would be the difference-maker.

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