For Starwood, U.S. is 'blank canvas' for Le Meridien expansion

Exterior of the Le Meridien Chicago-Oakbrook Center.
Exterior of the Le Meridien Chicago-Oakbrook Center.

Le Meridien may have its roots across the pond, but the Starwood Hotels & Resorts brand has made its most recent strides in Middle America in an effort to better carve out its niche within the crowded upper-upscale hotel sector.

Long marked by a portfolio largely in Europe, the Middle East and Asia, Le Meridien, which has 100 hotels worldwide, has opened five of its 17 U.S. properties since debuting in Tampa in June. The following month, Le Meridien made its Chicago-area entry in Oak Brook, Ill., and since December, Le Meridien properties have opened in Charlotte, Indianapolis, New Orleans and Columbus, Ohio.

The expansion marks an effort by Starwood to attract both business travelers (the Oak Brook property is in the same city as McDonald's Corp.'s headquarters about 20 miles west of Chicago) and younger, more creative leisure customers who may be looking for accommodations that are higher-end and more boutique-ish than Starwood's larger upper-upscale Sheraton and Westin brands. Last year, Le Meridien's U.S. hotels had an average room rate of about $265 a night, which is about 45% higher than Westin's and about 74% more than Sheraton's.

A guestroom at the Le Meridien Charlotte, which occupies one of the two towers that formerly made up the Blake Hotel.
A guestroom at the Le Meridien Charlotte, which occupies one of the two towers that formerly made up the Blake Hotel.

"All of the major cities in the U.S. already have a Sheraton and Westin, but we pretty much have a blank canvas" for Le Meridien, said Anthony Ingham, vice president, North America brand management for Starwood's St. Regis Hotels, Luxury Collection, W Hotels and Le Meridien brands. "Since [acquiring Le Meridien], Starwood's expanded very aggressively internationally, whereas, at Le Meridien, we have a real opportunity to drive growth in North America."

The strategy illustrates a departure from the tradition of a brand that was founded by Air France in 1972. When it was acquired by Starwood a decade ago, Le Meriden had 137 hotels that were largely in the luxury market, were known for their classic European aesthetic and had very little presence in the U.S. Since then, about half of those properties have been deflagged as Starwood has looked to upgrade the brand with a more modern, less traditional look.

For the 172-room Oak Brook property, which was redeveloped out of a hotel that previously flew Marriott International's Renaissance flag, that means black leather couches and street art (by Chicago-based street artist Justus Roe) in its lobby, floor-to-ceiling conference-room windows and well-wired rooms with muted grays mixed with modern millwork and splashes of turquoise. In addition to leisure travelers, Le Meridien's design aesthetic targets professionals in more creative and less traditional fields such as architecture and technology.

The strategy also marks Starwood's aggressiveness — and ability to attract development partners — within the upper-upscale hotel sector, which has been keeping up with, if not exceeding, the growth rate of the overall U.S. market.

The lobby of the Le Meridien Chicago-Oakbrook Center, with art by Justus Roe.
The lobby of the Le Meridien Chicago-Oakbrook Center, with art by Justus Roe.

"Upper-upscale is really healthy," said Jan Freitag, senior vice president at research firm STR, adding that the sector's room rates increased by more than 5% last year. "There's really so little new construction going on in that arena, so investors want to get into that space.

As for further expansion, Starwood's Ingham said there are Le Meridien hotels in the works for Cleveland, Denver and "five to six" other U.S. cities that he declined to reveal. He added that Starwood has the opportunity to expand Le Meridien within the U.S. to about 100 hotels.

"Le Meridien is positioned upper-upscale, but the experience and target audience is quite different [from Sheraton and Westin]," Ingham said. "Le Meridien is much smaller, lifestyle-oriented hotels that will compete with the independent boutiques in a way Sheraton and Westin won't."

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