Marriott International may reduce the U.S. presence of the Sheraton brand formerly overseen by Starwood Hotels & Resorts, as the world's biggest hotel company looks to boost standards of the upper-upscale badge.
Marriott, which acquired Starwood last September, began surveying many owners of U.S. Sheraton properties in December to better define brand standards and communicate how they can best be met, Marriott CEO Arne Sorenson said on Thursday morning's earnings call with analysts.
"That means that for hotels that don't meet those standards, we move with due speed to either get them onto brand standards or get them out of the brand," Sorenson said. "I suppose we will see in 2017 that some of the hotels that are most obviously at the bottom of the brand ... that we will see that renovations actually occur or that some of those leave the system."
Marriott is looking to better delineate the Sheraton brand from its sister upper-upscale brands such as the Westin brand that also used to fly under Starwood and Marriott's legacy Marriott and Renaissance brands. Sheraton has 449 hotels worldwide totaling almost 159,000 rooms, making the brand the second-largest among Marriott's full-service badges, trailing only the Marriott flagship brand's 546 hotels. During the fourth quarter, Sheraton outperformed Marriott and Westin, achieving RevPAR growth of 0.9%.
As Starwood's largest brand, Sheraton had been targeted for expansion in 2015. That year, Starwood said it would try to revitalize Sheraton by investing $100 million advertising and marketing the brand within the ensuing three years while updating its "visual identity" both on property and on the brand's website. Starwood said at the time that it looked to add as many as 150 hotels to the brand by 2020.
While discussing the possibility of de-flagging underperforming Sheratons, Sorenson reiterated that Marriott will keep all 30 of its brands, including the 11 it gained with the Starwood acquisition.
"If we were to start with a plain piece of paper, we wouldn't start with 30 brands. But we think that more choices and more brands is a positive, not a negative," Sorenson said. "We're going to keep them all."