yosithezet

Hopefully in Indigo Pearl in Phuket joins SPG. Really interesting property with an industrial tin mining theme. Stayed there in September.

makin'miles

It seems pretty certain that the Ion Luxury Adventure Hotel in Selfoss will join. IIRC it was mentioned in the earnings call, and earlier today Starwood was using pictures of it on the spg.com front page content to advertise the new Design Hotels, along with a bit of text that said provided the property name and said 'joining soon'. That same ad has now been switched up and the Gramercy Park Hotel is being featured, but it sure appears this is close to a done deal.

iflyjetz

Here's the latest data I could find.
Design Hotel fee structure is broken into 3 categories (percent of Design Hotels revenues):
License Fees (membership and admission fees) (28%)
Transaction Fees (booking fees) (45%)
Marketing and Consultation Services (27%)

License Fees range from 5000-20,000 Euros/yr for each hotel. The larger the hotel, the higher the fees.

Transaction Fees range from 3-20%. Again, larger hotel, lower fees. For your 'normal' SPG property, they'd almost certainly qualify for 3%. The average transaction fee charged by Design Hotels was 5%.

Overall, I could see where most current SPG properties would pay less than 6% in total franchise fees to Design Hotels if they changed over to Design Hotels from SPG. Compare that with the >10% fees currently paid by SPG properties. http://www.hospitalitynet.org/news/4067413.html

When hotels are cutting corners everywhere, reducing expenses by 5% of gross revenues is a big saving. And that doesn't even count the savings from giving reduced benefits. Design Hotels are paying lower fees but still get full access to the SPG booking engine and give less benefits than SPG properties. I would expect a lot of SPG franchisees to be unhappy about this.

heakja

Since many Design Hotels are small, I can understand that platinum (suite) upgrades and late check-out cannot be offered. But why not include breakfast? That's just a cost issue.

I would probably pick a regular SPG hotel over a Design hotel in places (eg. major cities) where that is possible, as the platinum benefits for me usually are more important than staying in a unique hotel. Especially in Europe, where the platinum benefits can be great.

One can only hope that some Design Hotels eventually will include more platinum benefits, as they see that this will attract more elite (and returning) customers.

Xiaotung

There would probably be additional fees if a member of Design Hotels wanted join SPG, wouldn't there? So it can't be just as simple as that. If they prefer to keep their cost low, they can simply remain in Design Hotels but not join SPG.

makin'miles

I totally agree. Much as Starwood allows resort properties to be exempt from the 4pm check-out, I'd very much understand if they allowed any property with, say, 50 rooms or less to also be exempt from this requirement - it would be understandable. Breakfast should be an option for Plats.

bhrubin

I confess to not caring so much about breakfast--even as SPG Plat 100. When I travel for business (and especially leisure!), I much rather order room service. When the hotel allows me a credit towards room service, I consider that a nice bonus; maybe 50% of hotels do that for me IME. But either way, that benefit never makes me consider one hotel over another. I suspect I am exactly the type of SPG customer who the Design hotels have in mind when they decide to join the SPG Design soft brand.

Obviously, many herein care significantly about the Plat breakfast benefit. These obviously will want to avoid the SPG Design properties. That being said, I doubt that losing SPG Plat customers who must have breakfast will have a big impact on the bottom lines for such small boutique hotels. I strongly suspect there are enough SPG Golds and SPG regular members, not to mention Plats like me, who will enjoy a stay at a unique Design Hotel far more than there are Plats who will avoid them due to a missed breakfast benefit. Not to mention the regular customers who now might decide to stay more often at a hotel they already love but can now get SPG credit/points for.

I care more about upgrades...but I also care about having more interesting properties at which to stay. The SPG Design soft brand has my interest. I can't wait to see what other Design properties might elect to join. I also cannot wait until my first stay at the Gramercy Park Hotel.

iflyjetz

There are probably additional fees but those are details you and I won't be able to find very easily. Would most of the fee be paid from Design Hotels (with a small additional fee to the individual property) to SPG? How much is the fee? I had to dig for a few hours in order to find Design Hotels' fee structure so I don't expect to easily find details of SPG/Design Hotels' agreement.

If you want to see how adding hotels to a major chain can go poorly, look no further than IHG's acquisition of Kimpton. More than 10% of the Kimpton portfolio has left the chain so far, all in San Francisco. So now Kimpton has 2 San Francisco properties where they used to have 9. I recently read somewhere of possible loss of one or more Kimptons in Chicago - there are currently 4 Chicago Kimptons.

It's too early to tell, but this could cause a lot of negative changes within SPG from a reduction of program benefits at SPG properties to a lot of current SPG properties deflagging. It's been pointed out that SPG's benefits are more generous than Hilton, Marriott, and IHG - this change may cause franchisees to demand reduction in SPG program benefits. After all, SPG has already reduced member benefits for Design Hotel stays. Hilton, Marriott, and IHG don't have SNAs and don't have to give suite upgrades - SPG franchisees could demand that SPG's suite policy matches those programs. The precedent of no suite upgrade is already set with Design Hotel stays booked through the SPG engine.

Look at it this way: You join a health club and pay an initiation fee of $500 and a flat $100/month fee. The health club changes its fee structure after you've joined to a $100 initiation fee and $50/month plus $1/visit fee structure but does not extend that fee structure to current members. If your membership is about to expire, are you going to cancel it and then rejoin under the new fee structure? Perhaps you're not happy with this health club extending the new (lower) fee structure to you and you decide to join a different health club. A lot of current SPG franchisees may be unhappy with this new partnership with Design Hotels so they may deflag from SPG. This may also have a deeper impact on benefits since Design Hotels are able to deliver less benefits to SPG members while having full access to the SPG booking engine.

I understand the desire to stay at a Design Hotel - it's something different. If one wants to stay at a Design Hotel, they can book a stay there - there was and is no need for SPG to make an agreement with Design Hotels for anyone to book a stay there.

CLEguy

This is entirely off base. The Kimpton properties in San Francisco left because the local unions had a contract with IHG, and the Kimpton properties didn't want to fall under the same umbrella. It has nothing to do with the acquisition or reflagging--unless you can point to a similar situation with regard to SPG/Design.

Further, you make some pretty broad assumptions elsewhere in this thread regarding SPG brand standards, the portfolio, and the ability of properties to unilaterally change brands and their underlying fee structure. All of which are pretty unrealistic in my estimation.

Now, if you don't want to stay in these properties because of limited elite benefits, that's another matter entirely. For me personally, breakfast isn't typically my benefit selection, so that's not a big deal. My upgrade percentages aren't the best either, so in practice there isn't much loss there either. Perhaps there is a plan in place for these properties to further integrate into the program and provide such benefits over time.

But as bhrubin said above, I'm really looking forward to staying at GPH later this month.

iflyjetz

Yes, and there was quite a bit of negotiation in an attempt to resolve this issue before the 7 Kimptons left the brand. IHG had choices in this matter; they chose to require a vote for unionization rather than opt for status quo. I understand why they did that; they wanted IHG personnel in those hotels so that they could get management fees. I didn't expect the hotels to leave the Kimpton brand and I doubt that many others saw it coming - there wasn't any public discussion about this until the properties up and left Kimpton. Did you see it coming? That's the Law of Unintended Consequences.

To you, my comments broad assumptions - I prefer to call them a discussion of possible effects of the Law of Unintended Consequences. Whether they come to fruition is unknown - I freely admit that I'm speculating on this matter.

Many here have commented on how poor SPG management has been. I thought that they were doing a good job until now. I see potential landmines in this agreement and am questioning why they are exempting these new properties from honoring all of my SPG program Platinum benefits. One thing that I do know is that a whole new group of SPG branded hotels do not have to honor some of your and my Platinum benefits.

Xiaotung

What's different with Kimpton from my understanding is eventually once Kimpton joins IHG Rewards all Kimpton properties will be required to join. A member of Design Hotels however will have the option of not joining SPG.

The other difference is the Kimpton brand is visible at Kimpton hotels whereas with Design Hotels if you don't book from Design Hotels, you probably won't know it's associated with Design Hotels. Design Hotels is nothing more than a booking engine. Those joining SPG however probably will need to display SPG signage.

FD1971

Not only additional fees, but also other contract conditions, i.e. the length of the contract and lower brand standards (toiletries etc.)

This is a crucial factor, many lite memberships only come with a contract length of 5-7 years on average, significantly shorter than the usual 10-30 years.

iflyjetz

Never mind all of my previous complaints about Design Hotels' exemption for Plat benefits. It looks like Design Hotels' benefits are closely in line with SPG's acquirer, Marriott.

Time to move Fairmont to #2 in the rotation behind Hyatt. I'll look at Kimpton for #3.

All the best to everyone - a lot of people here have commented about wanting more hotel options in spite of decreased elite benefits. With Marriott, we'll all have a lot more hotel options with decreased elite benefits. Win-win, right?

Kagehitokiri

i posted the actual revenue numbers (very low) for designhotels, their financials are on their own investors site

wonder why starwood couldnt launch 2 weeks earlier for Q3 financials
maybe staggering news releases - Q3, design hotels, marriott

"40 hotels" is a bunch of design hotels portfolio
but could be interpreted as good/bad re others

general manager is ex amanresorts and six senses

sfozrhfco

More hotels to be added to the SPG portfolio:

http://www.businesswire.com/news/hom...ds-Partnership