Brian McGuinness, Starwood's senior vice president, aloft hotels, talks about the new style hotel which is due to open in Europe
Aloft is in the limited service category, along with brands such as Hyatt Place. The roll out of the Hyatt brand has been very swift because Hyatt bought Amerisuites and refurbished and rebranded. Why did you not take a similar approach with your new brand?
We had identified that there was a huge white space in the category of select service or limited service, and we looked at the Amerisuites for Starwood. But we wanted to develop the concept from the ground up and build our own. Given the economic environment that the hotels have opened into, aloft is doing very well and certainly the hotels are resonating with the customer. It's a difficult economy at the moment, but that helps in one way since people will pay for the services that they need and not pay for the services that they don't need and so it's very timely for this brand and is helping us with its roll out. As far as the speed of the roll out is concerned, there have been delays, but for multiple reasons. The capital markets are one of those, but also construction schedules, weather, approvals from towns and municipalities and so in the scope of the roll out we haven't seen any wholesale delays.
The aloft brand still isn't well known, and you only have around 25 of them open. When will we see brand advertising for them?
When you get to a critical mass of 75 plus hotels, you generally see broad-based marketing with advertising in publications such as the Financial Times, USA Today or the Wall Street Journal, but those are broad based advertisements with a broad footprint. But with only 25 hotels open, they don't make sense. So what we do instead is a strategic tactical marketing plan. So we will market to people who have a propensity to go into certain locations, so if you were googling hotels in Chicago, we would be serving up an ad on the travel sites for the Chicago O'Hare aloft, so that the return on investment on that initiative is far more effective than doing a blanket $100,000 one-off ad in a publication such as USA Today or the Times.
Have you been surprised by the guests that are staying at aloft?
We've been a little bit surprised. Certainly the text savvy, early adopters, next gen, design-orientated people are coming. But what we are starting to realise is that that mentality is far broader than a demographic of 30 to 40 year olds. They might be a silver surfer, perhaps a gentleman who is retired and 65 years old but drives a Beetle and surfs on the weekend. So it's broader than we at first imagined.
How flexible is the design of the aloft concept?
We stick strictly to the guidelines but we allow some additional programming if it is branded separately. So for instance if you have a 200-room hotel and due to location you need to have a restaurant because there are no other facilities in the area, we will allow a restaurant to be bolted onto the hotel. But it has to stand alone on its own identity. So we have achieved the restaurant need for the market but we haven't changed the brand integrity for the consumer so they start believing that all alofts will have restaurants in them. Abroad, we would change our prototype for regions such as India. We recognise that social norms and religious traditions also need to drive our prototype, so based upon location and market, we have made certain considerations, primarily due to cultural reasons.
How green are the aloft hotels?
They would naturally be greener because there's a lot of new product that we can use out there that we do use. We can use recycled materials like the foam that's in the cushion seats, the paints are low VOC (volatile organic compounds) and those products were not in the market when you were building five years ago. That being said, we took an additional route, we got rid of the shampoo and the conditioner bottles that were in the bathrooms and we use dispensers in the showers so that saves a huge amount from the waste perspective.
What sort of size of properties and styles will you have?
The smallest we would see would be about 100 rooms. But if it was in a great resort location that made sense, it was a 50 room boutique hotel and if it showcased the brand identity and integrity, then we would be more than happy to look at that. The larger ones could go to 200 or 300 but it would be very specific use hotels, across from the convention centre, for instance. But that brand integrity is important and that's why we did new builds rather than adaptive and re-use.
People wouldn't notice the differences in the furniture fixtures and equipment. The look and the feel and the energy and the vibe of the hotel would be the same from a programming standpoint. The physical plant whether it is a shotgun, or a pipe or a stack would change depending on location, as appropriate. The footprint changes but the programming doesn't. The same applies to the meeting facilities. If it is across from a convention centre then you will have more than enough.
So how is the pipeline of properties looking?
We are right on the 20-zone. In three months we'll have around 25, then you will see additional hotels, with 20 to 30 in the next 12 months - most of the slippage is relative to construction delays - not necessarily challenges within the capital markets. Outside the US Beijing is open and operating. Montreal is also operating. Then there's a horse race to see what the third one outside the US will be with one in Abu Dhabi which is well in the running and Brussels which has been slightly delayed and India as well. The build cycle there is around 8 months.
Will these all be franchises?
Typically all franchises in the US - although we actually own two of them here in the US because we wanted to see how they run and how to build them. So we own Lexington Massachusetts in Philadelphia, for instance. We typically manage outside the US and that will continue in the short run, but in the end management companies and franchises will go global so I think that will explode in 2010.
How do you maintain prices?
We are four star at the price of three, but at the moment you have some heavy discounting in the market from full service hotels. We won't do that, we will stay the course. We don't believe cutting rate in short order is a long term strategy. We feel for the full service five star properties that need to put heads in beds, but from our perspective and to maintain our brand integrity we'll continue to hold rate. We've never said we're all things to all people but we will be the right thing for the right customer.
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