New Brands, Global Expansion Top Hotel Executives’ Growth Initiatives

The opportunity to introduce new brands, re-energize old ones, and to tap into fast-growing global markets present the most fruitful growth opportunities for three major hotel companies, whose chief executives spoke on Monday at the NYU International Hospitality Industry Investment Conference in New York. J. Willard Marriott, chairman and chief executive officer of Marriott International, Inc., said the global hotelier sees significant growth opportunities for its new Editions brand, a partnership with boutique hotel trailblazer Ian Schrager. “We are the odd couple,” Marriott said of his alliance with Schrager. “He is hip, and I am definitely not hip.” But, despite their outward differences, Marriott sees the potential to build 100 Editions hotels within the next seven to eight years, which will range in size from 200 to 300 rooms. Target markets for Edition are Los Angeles, New York, Miami’s South Beach, and Hawaii’s Waikiki. And while Marriott sees ripe potential for growth in China and India, he said other countries and areas of the world also hold much promise, noting that the company signed 11 franchise deals in Thailand in 2007. And while the new brand is a focus, he called the Marriott hotel brand still its strongest one. “That is our power brand,” Marriott said. Launching an “eco-luxury” brand, “1”, is a major initiative for Starwood Capital Group chairman and CEO Barry Sternlicht. He said one reason he decided to launch this environmentally friendly brand is because he is the father of young children. “1” must strike a brand between being appealing to guests and being environmentally friendly. “You don’t want [to have guests] shower with an eye dropper, or serve indigestible food,” he said. Growing its mid-market brands in India and China presents major expansion possibilities for Hilton, said Jonathan Gray, senior managing director and co-head of the real estate group for The Blackstone Group. He said its LXR luxury hotels will be rolled into the Hilton brand umbrella, such as the Waldorf Astoria Collection. But, Blackstone will keep LaQuinta separate from Hilton, and will concentrate on growing LaQuinta’s footprint by franchising. From 450 hotels about two-and-a-half years ago, there are now 650 LaQuintas, with 200 more in the development pipeline. But, the executives do see challenges posed by a slowing U.S. economy. Marriott said that business travel is likely to be cut back by major corporations, but high-tech companies and companies in the defense industry are still traveling. Sternlicht said the banking crisis and credit crunch would not ease quickly. While noting that employment numbers in the U.S. are “not bad,” troubles with the airline industry may spell troubles for hotels in secondary and tertiary markets, as airlines may cut flights to those cities. “Chicago to New York won’t be affected,” he said. “But if an airline cuts a twice-a-week flight to one-a-week,” the impact could be severe.