Many new hotel projects have been on hold since the financial market meltdown, but upscale and luxury hotel brands are expanding their ranks by signing independent properties eager for broader recognition and the marketing and sales clout that big brands bring.
From the Graves 601 Hotel in Minneapolis to the Ivy in San Diego to luxury hotels in Amsterdam and China, Starwood and Wyndham alone in the past few weeks have announced a number of additions to their high-end brands.
Even Marriott, known for its strict brand standards, recently announced a new "collection" that enables upscale properties to join Marriott’s marketing and sales network without having to make dramatic changes to fit specific brand criteria.
Wyndham has announced several big signings recently, including the luxury Graves 601, which is joining its Wyndham Grand Collection; the Apollo Hotel in Amsterdam; and four Palace Resorts in Mexico — the Xpu-Ha Palace and the Playacar Palace, both on the Riviera Maya; the Beach Palace in Cancun; and the Isla Mujeres Palace.
The latter three will become Wyndham Grand Resorts while retaining Palace ownership and management.
Hotel executives said the pipeline for conversions is strong for several reasons. For one thing, credit remains tight, and development projects that were not already financed when the credit crunch hit are still on hold. That means growth opportunities for big brands are limited to reflagging existing properties.
In addition, with occupancy and room revenue down across the globe, independent hoteliers are looking for help and shopping for relationships that they didn’t need when the market was peaking.
"There are a lot of independents looking for new opportunities to drive new revenue," said Jeff Wagoner, president of Wyndham Hotels and Resorts. "Clearly the brand can be a nice contributor. But what comes with that, too, are things like big-brand websites and rewards programs.
"One of the things that we are doing is making sure we are allowing the independents to keep their uniqueness, not forcing them to de-ID from their current existence. I think that kind of flexibility is being taken very well, and many are tapping into it."
Indeed, many of the higher-end conversions have been to so-called "collections" that are designed to do just that.
Like Wyndham’s Grand Collection, Marriott last month introduced Autograph specifically to lure independent properties.
Marriott President and COO Arne Sorenson said the collection would target four- and four-and-a-half-star hotels.
Unlike other Marriott brands, Autograph will not require consistent brand standards, although there will be quality standards. Marriott will offer participating properties the option of being managed by Marriott or operating as franchised properties, Sorenson said. By the end of next year, Marriott hopes to add 25 to 30 properties around the world to the collection.
At the five-star level, Starwood has its Luxury Collection, which is also targeting conversion opportunities.
The Luxury Collection brand has signed two deals to open the brand’s first hotels in China. The Astor Hotel in Tianjin is scheduled to open as a Luxury Collection Hotel in May after a $22 million renovation, and the Malus Sanya, a Luxury Collection Resort, is a newbuild resort set to open in late 2012.
"In addition to newbuild properties, Starwood is attracting a growing number of owners and developers who seek to rebrand existing properties as Luxury Collection hotels," Simon Turner, president of global development for Starwood, said in a statement announcing the conversions. "By doing so, they maintain their independence while tapping into the power and breadth of the Starwood network."
Hyatt’s new Andaz brand is also looking to conversions to expand its presence in gateway cities.
At the opening of its new Andaz Wall Street, the company announced that the Ivy Hotel in San Diego would become an Andaz on Feb. 1, and company executives said they were looking for more opportunities in key cities.
Although the high-profile hotels attract more attention when they convert, hotel companies for the past year have been focused on opportunities to convert distressed and independent hotels of all categories to their brands.
"We are seeing very nice growth across all of our brands," said Wagoner; Wyndham’s brands include Ramada, Days Inn, Super 8 and Howard Johnson.