With tougher brand standards, Sheraton expects to drop about 30 hotels

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Sheraton Jumeirah Beach Resort
Photo Credit: Kiev Victor

Marriott International is deflagging underperforming Sheraton hotels – about 6,000 rooms this year and 4,000 in 2018, CEO Arne Sorenson said during Marriott's third-quarter earnings call Wednesday.

As of Sept. 30, there were 444 Sheraton hotels totaling 156,740 rooms, a decline of five hotels and about 2,100 rooms since the beginning of the year. Sheraton is the company's third-largest brand by room count behind Marriott and Courtyard.

"We believe we are making real progress, and owners are noticing," Sorenson said.

Marriott, which acquired Sheraton and the rest of the Starwood brand portfolio last year, said in February that it might raise Sheraton's brand standards and drop hotels that didn't meet them. Sheraton's third-quarter revenue per available room (RevPAR) in North America fell 0.9% from a year earlier, compared with a companywide increase of 0.4% in North America. Globally, Marriott's RevPAR advanced 2.1%.

With Marriott's acquisition of Starwood, the strategy for Sheraton has changed. In 2015, Starwood launched a Sheraton marketing campaign, saying it planned to spend $100 million on the five-year initiative and add as many as 150 Sheraton hotels by 2020. At the time, Starwood launched the Sheraton Grand sub-brand for higher-end Sheratons.

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