Four Points by Sheraton is fueling its portfolio expansion with a new, cost-neutral design that will be rolled out in 2013 and 2014.
While the Starwood Hotels & Resorts Worldwide, Stamford, Connecticut, brand has been exiting hotels that do not meet brand standards, it has also been adding primarily new-build properties with globally with a focus on China and Latin America. HOTELS spoke with Brian McGuinness, senior vice president, specialty select brands, Starwood Hotels & Resorts Worldwide to find out more about the brand’s strategies moving forward.
HOTELS: What regions/destinations is Four Points targeting for growth? Where is the pipeline?
Brian McGuinness: We’re operating in 28 countries. China is a major focus for us. Latin America is a big push for us as we move forward, with Mexico. Over the past five to six years we have been exiting hotels from the system that did not meet our brand standards. It’s been an interesting story — cleaning up the portfolio while at the same time growing the portfolio.
HOTELS: Is expansion strictly new-build or does it include conversions, too, and what is the percentage of each?
McGuinness: We were at about 80% new-build through the economic downturn, but now we are at about 70% new-build, 30% conversion. During the downturn there were independents that didn’t perform well whose owners find a flag more attractive now. We have seen an uptick in conversions as the economy has recovered. Weathering the storm is one thing, but to fully come out of it owners are finding the assistance of a brand useful.
HOTELS: What is attracting investors?
McGuinness: I think the attraction is boosted by our repositioning of the brand over the past few years with the “best for business” messaging, and then delivering that message by not nickel and diming guests. Guests are given a complimentary bottle of water on arrival, free WiFi while staying at the hotel and offered local brews with our Best Brews menu at the hotel bar.
Repositioning the brand as being “best for business,” it slightly changed our target customer, which is a good thing for our occupancy rate.
As the owner looks at this, there’s also the cost-effective development model. We’re looking at about US$90,000 to US$100,000 per key without the land cost.
HOTELS: Is Starwood helping with financing? If not, where are developers finding the capital?
McGuinness: We typically don’t help on the financing side. Our strategy is to be asset-light. We don’t want to be in the hotel ownership game. That said, each deal is very specific and we look at all options.
Right partner, right brand — if we believe we have achieved those, we will entertain discussions to get the deal done.
Certainly what we have seen is that local banks have been investing based upon their long-term relationships with developers. The banks look at the lending as bringing jobs to the community, for construction and operations.
Big funds, like GE Capital, are also starting to get back in the game.
HOTELS: Are building costs holding true to projections?
McGuinness: They are, yes.
HOTELS: What building cost trends are you seeing?
McGuinness: We did see for a period of time increased costs in China with concrete being more expensive, but that has settled down. We are seeing costs holding now. No significant fluctuations at this time compared to three years ago.
HOTELS: What renovations trends are you seeing?
McGuinness: In general you’re seeing more open spaces in the lobbies, with us and our competitors, for example at a Courtyard by Marriott.
Hotels are getting rid of the formal business center that was a room hidden away on the second floor and instead incorporating that into open spaces with lots of light and making the fitness center prominent, rather than an afterthought.
Also bars are back in hotels. Our Best Brews offer, which has a signature local beer, that has improved our bar business. Our competitors are investing more in the bar experience from an FF&E standpoint.
HOTELS: Given these trends, tell me more about how you are tweaking the Four Points product.
McGuinness: We are now mandating minimum WiFi bandwidth, as that is something customers are demanding. It will be treated as a utility.
In the downturn years, we knew we couldn’t roll out a lot of new brand standards as the property owners couldn’t afford them. So instead at corporate, we redid the design of the hotels with cost-effectiveness in mind. At a minimum it is cost-neutral. We believe cost-neutral is a good thing as well, as we take into account 3% to 4% annual inflation.
We have essentially flipped this brand upside down over the last two years, and you are going to be seeing that in the new properties. We are going to roll it out next year 2013 and in 2014.
The new design includes new guestrooms and lobby design. All the collateral has the new feel, there has been an overall modernization of it. There will be a softer color palette.
In the guestroom, the desk has been reconfigured, the bed has been reconfigured and we have changed the lamping so it is easier to read in bed.
In the lobby, the changes include a completely different front desk to make it easier for associates to work and an added retail component for guests looking for sundries. We are doing away with the business center and enhancing the bar experience by incorporating those into the lobby.
We’ve done a lot of pilot programs for these changes — two months ago we installed this at the Four Points by Sheraton Plainview Long Island, located in Plainview, New York and are getting guest reaction data.
HOTELS: What does “best for business” mean?
McGuinness: I think it means that our room rates are competitive and that the experience is true to what we offer, with free WiFi is actually free and high speed.
You can get on the Internet and get your work done and head downstairs to watch a game and sleep well to get back on your game the next morning.
We have redone the collateral so it is straightforward — believe it or not there are hotels that still have desks that are not by outlets. The last thing you want at is to be fumbling around. Or questioning the charges on your folio — having to expense a US$7 bottle of water is not comfortable for today’s business traveler.