Starwood Hotels & Resorts CEO Frits van Paasschen was in Denver recently to mark the completion of a $70 million overhaul of the Downtown Denver Sheraton, one of the largest examples of the brand's global makeover. During his visit he sat down with hotels editor Jeri Clausing.
Q: Are you seeing any signs that conventions and meetings bookings are improving?
A: It's starting to pick up. In the last four or five months people have recognized it doesn't look like we as an economy are going to swerve into the abyss. That recognition and the opening of the capital markets have led to the belief that our next opportunity to create value is not by cutting costs but by getting out and generating more business.
We're seeing some healthy bookings for 2011 and 2012. Many people are recognizing that they want to lock in attractive rates. Bookings for 2010 are beginning to pick up.
Q: What about the luxury market, which was so hard hit this year?
A: Rumors of the demise of luxury are greatly exaggerated. I do think that we all felt poor and felt uncomfortable being extravagant, but I think it's a basic aspect of human behavior that when we feel comfortable, feel like we have resources, we like to treat ourselves.
And the use of luxury we saw going into this last bubble, whether it was the Internet and the rise in luxury or even the 25-year-old billionaire in the late '90s or the "Bonfire of the Vanities" [era of] the 1980s, people come back to luxury. It's a function of prosperity, and while I think 2010 may end up being a challenging year, the rise in prosperity that we are seeing around the world bodes extraordinarily well for luxury. It will take some growth. We're already seeing it in China and also in the commodities-driven economies, where it's Australia or Africa. Things are back.
Q: What about all the talk of opportunities to convert distressed hotels? Are those opportunities out there now, or are they farther down the road, when more debt from the boom comes due?
A: This Denver Sheraton is a great example of what conversion can do in terms of bringing brand standards and sales to a property like this. I think more and more of that will happen. While capital is certainly starting to build up on the sidelines looking to take advantage of those opportunities, we haven't yet seen that play out. That will create some conversion opportunities, but that may be a few months out yet, or a year.
Q: Starwood recently sold Bliss Spa to Steiner Leisure for $100 million. Why?
A: We want to put a very direct focus on being the global manager of hospitality: hotels and resorts. And while Bliss was related to that, it wasn't front and center. From a strategic standpoint, we knew at some point it wouldn't be part of our own organization. We wanted to find the right partner, because we knew we would have that ongoing relationship. So this was a transaction that made a lot of sense for us.
Q: The press release said the spas will remain exclusive to W and St. Regis hotels. Will Bliss products be discontinued in your other hotels?
A: We will continue to use Bliss amenities as we see fit for our other brands.
Q: You recently opened a 400-room Aloft hotel in Abu Dhabi. That is quite a bit larger than most of your Aloft hotels. Is this a new direction for the brand or an aberration?
A: Typically a select-service hotel in North America would be smaller than that, but as you go around the world, certain specs about a brand might change. Particularly in a market like Abu Dhabi, you end up with a bigger footprint.