economics

February 3, 2010

Independent Hotels Sign On With Marriott

Filed under: Uncategorized — ktetaichinh @ 6:26 am
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Marriott International Inc., known for its rigid uniformity, is loosening up a little.

This week the company is unveiling the first properties in its new brand—the Autograph Collection—which allows upscale boutique hotels to retain local character even as they sign up with Marriott.

MarriottThe Grand Bohemian Hotel in Asheville, N.C., is among the independent hotels in Marriott’s Autograph group.

MARRIOTT.jp

MARRIOTT.jp

Traditionally, Marriott has strived to create a dependability for travelers at all of its hotels around the world, down to the cocktails on the menus, toilet flushers in the bathrooms and amount of bleach used to clean the floors. Marriott, for the most part, doesn’t own hotels but instead has franchise or management agreements with some 3,200 hotels around the world.

But in order to still grow during the downturn, it needs to find a cheap way to bring more existing hotels under franchise agreements.

Don Semmler, Marriott’s executive vice president of full-service brands, says the company developed the Autograph Collection at a rapid pace—in just six months—as a way to quickly expand at a moment when capital for new hotels is scarce.

Industry experts say that it presents a tough challenge for a company known for tight control. “Marriott’s immense competitive advantage was uniformity and standardization,” said Bjorn Hanson, a professor of hospitality and tourism management at New York University. “People aren’t building new Marriott hotels. They know that if they’re going to grow, they better be flexible.”

The first group in the Autograph brand are seven hotels operated by the Orlando-based hotel owner Kessler Collection. Located in cities such as Asheville, N.C., Savannah, Ga., and Celebration, Fla., the luxury hotels are filled with original oil paintings, marble sculpture and mounted game shot by their owner, Richard Kessler. The Savannah hotel, Mansion on Forsyth Park, contains a collection of vintage hats.

“I did not want to become part of something that would standardize what we have done,” Mr. Kessler said. “I did not want the Marriott name because it would change our image.” Instead, Mr. Kessler said he will display only the name “Autograph” at each hotel, along with their original names.

Mr. Kessler said he’s eager to access Marriott’s reservations system and its database of 32 million people who earn points toward hotel stays and airline trips when they stay in a Marriott franchise. In exchange, he’ll give up around 5%-6% of revenue to Marriott, versus 10%-12% of revenue that most Marriott franchises share with the company, he said.

While they won’t carry the Marriott name, hotels in the Autograph Collection will have to adhere to Marriott’s standards of quality and service. Room prices will vary but generally be at the middle or upper range of the properties that come under the corporate umbrella of Marriott, whose brands include the less expensive Fairfield Inn as well as the swanky Ritz-Carlton.

Like other hotel companies, Marriott has suffered from the downturn in travel. The company recently said that in the fourth quarter it expects to announce a 14%-16% decline of revenue per available room from a year earlier. It expects revenue per available room in 2010 to be flat or as much as 5% lower than 2009.

Marriott also has struggled to develop the kinds of boutique hotels with quirky traits that became popular among some travelers in the last decade. Early attempts at hipness never caught on, even as Sheraton owner Starwood Hotels & Resorts Worldwide Inc. saw success with its W brand, first introduced in 1998.

In June 2007, Marriott announced a partnership with Ian Schrager to develop 100 hotels under a new brand, Edition. Each would be given a unique look overseen by Mr. Schrager, an early innovator of boutique hotels. But hotel owners struggled to come up with financing for the expensive new projects. Just five Edition hotels have broken ground and the first will not open for two more years at the earliest.

While Marriott will earn less in fees from Autograph members than other hotels, Mr. Semmler said he expects it to catch on rapidly because it will be much less expensive than normal for owners to convert to the new brand. That could be attractive following a year when, according to Smith Travel Research, the number of hotels switching to new brands was down 19% from two years prior.

Mr. Semmler predicts Autograph will add 35 to 50 hotels this year. He’s courting independent hotel owners like Al Spector, of L’Auberge de Sedona in Sedona, Ariz., and emphasizing to them that they won’t be given rigid design standards to which they must conform. Instead, Marriott will construct sub-brands to fit the collection, with such categories as “boutique arts,” “casino resorts” and “urban edge.”

“The key for us is to maintain our appearance to the public that we are still an independent brand and not part of a chain that tends to get rooted in what I’ll call sameness,” said Mr. Spector, who is weighing the Autograph invitation.

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