Starwood Hotels & Resorts Worldwide Inc. has unveiled a strategy to expand its upscale Westin and Sheraton brands into secondary and tertiary markets with newly designed prototypes. The hotels will be smaller than the company’s core Sheraton and Westin properties but will feature many of the same upscale amenities.
Company executives introduced the new prototypes at the Lodging Conference held Oct. 2-4 in Phoenix. The new prototypes are part of an effort to expand the brands beyond major cities and into "the new suburbia," says Ted Darnall, president of the Starwood Real Estate Group. First up for the company are two Sheraton prototypes in Tarrytown, N.Y., and Normal, Ill. Completion dates for the projects have not yet been determined.
White Plains, N.Y.-based Starwood Hotels will own about half of the properties built under the new prototype designs and franchise the other half. Darnall says the lower development costs will make the new prototypes attractive to developers.
"Developers looking to invest in full-service, turn-key prototypes… have not had the options until now," Darnall says. The hotels will be less expensive to build per room than the larger Sheraton and Westin properties because of design efficiencies in the rooms and a decrease in the amount of meeting space typically found in upscale properties.
Bill Linehan, vice president of product development for Starwood Hotels, adds that secondary and tertiary markets offer untapped potential. "We’ve found a gap in the marketplace for full-service upscale and upper-upscale hotels," he says.
The company plans to fill that void with its "upper-upscale, four-star" Westin brand and the upscale Sheraton brand. The goal, Linehan says, is to build 40 of the Sheraton prototypes and 20 of the Westin prototypes in the next three years.
The Westin prototype will feature 207 rooms — including 6 junior suites and one hospitality suite. There are two Sheraton prototypes — a 250-300 room design and a 150-250 room option for smaller markets. The development costs will be $125,000 per room for the Westin prototype and $85,000 per room for the Sheraton prototype.
Linehan says the company is not worried about launching the expansion effort at a time when the hotel industry is struggling with disappointing occupancy and revenue per available room (RevPAR) rates.
"I don’t really think this is a bad time for this. We have an obligation to our stockholders to grow our business," he says. "We choose to continue to refine and grow our business so we can be better prepared for the upturn."