moondog

I often wonder why more property owners that want to have two hotels in the same building or complex don't go with two different management companies. I still see this on occasion (e.g. Hyatt/Ren and Conrad/SL in HK, and Hilton/LM in KL), but 2 flags from the same company (e.g. Hyatt House and Hyatt Place; is there even a difference?) appears to be much more common.

MSPeconomist

In some cases, there's one GM over the properties and staff seem to switch back and forth at times for promotions, etc. so it would be convenient to use the same systems. [I even know of a case where a Westin and a Sheraton about five miles apart had the same GM. They were owned by the same real estate investment company and the extremely successful Westin GM from the time the hotel was built had his duties enhanced to include being responsible for major renovations at the Sheraton.]

C17PSGR

Plus the owner likely has a noncompete of some type. Hilton, IHG, and Marriott wouldn't allow it.

But a Sheraton and a Marriott xtended stay concept would be fine

La live has an RC and JW in the same building.

I might disagree on that. Internationally, Sheratons focus has drawn on its ITT legacy with countries such as Argentina, North Africa, Eastern Europe, etc. They're fine for markets but just fine.

Hmmm. I tend to avoid Sheratons in the US but didnt see that this week. Lounge was only open for breakfast M-F, open in the evening on Tuesday and Wednesday, and definitely didnt have any smacks although I did grab a diet Pepsi from the fridge. Seems like the last couple didnt have snacks either but can't remember for certain

moondog

Owners of properties in extremely desirable locations often have quite a bit of bargaining power. I could go on and on about this topic because the dynamic fascinates me, but I don't want to derail this thread.

flying_geek

The lady in the club lounge told me today that she was under the impression that customers will be able to use the Sheraton and Marriott lounges - I have a hard time believing it - but hey...
I used to like the Sheraton Lounge at hotel - the hotel was low on upgrades (meaningful ones - not talking about club rooms) though - wonder if one will work out better in upgrades than the other...

C17PSGR

The Sheraton and LM in Charlotte share a complex. You can use either lounge but they are definitely different standards.

MSPeconomist

There's a place in Tokyo with several Prince hotels located on the same grounds where one supposedly can use different lounges. They're different Bonvoy brands too.

EuropeanPete

It would also be less surprising if the lounges end up being identical

drewp123

Please derail

moondog

Alright. I've been meaning to start a new thread about this, probably in Travelbuzz, but here's some food for thought I've been assimilating over the years:

1. At your typical hotel off interstates in rural America, the ownership team and management team are often one in the same. I suppose this is for economic reasons (e.g. much cheaper to hire locally than staff from corporate), as well as the fact that the brand standards of a Residence Inn are not especially difficult to maintain (e.g. clean the rooms, put out breakfast/snacks, learn how to use the internal systems, meet with a site auditor on a quarterly basis)

2. But, higher value properties often generate enough revenue to offset the increased costs of retaining veteran staff and younger folks who are are on the corporate track. Furthermore, management agreements typically require such, at least to an extent (i.e. there is definitely a middle ground in which owners still play a role)

3. Where things start to get interesting is when owners of higher end properties can't resist inserting themselves into operations. For example, one of my friends used to date the daughter of the owner of a Marriott property in Shanghai (I won't name it, but if I were to give you guys 3 guesses, you would figure it out), and they asked me to help with their marketing program so I got an opportunity to observe how things worked there. Their team consisted of TEN people who were constantly in the hotel, watching over shoulders of pretty much everyone from the GM on down to the bellboys. They also had a heavy focus on digital strategy (e.g. Tripadvisor, in particular comes to mind) and local events. I must admit that I was impressed with their results; whether or not the ROI was positive (owner didn't really care), they pulled off some good things that corporate wouldn't have done, if left on its own. That having been said, as you can imagine, their relationship with corporate was less than stellar. The owner was unfazed because he knew he could easily replace them

4. I can think of two cases (not related to point #3 ) where individual properties weren't investing enough to maintain brand standards, in part because they were cheap, but also because they weren't generating enough revenue to justify costly renovations. Both had influential owners who were not to be messed with. In the first case, the hotel was reflagged somewhat laterally to a less prominent brand, and this worked okay for both sides (you guys could probably also guess this one pretty easily, also in Shanghai). But, in the second case (non Marriott), the local government weighed in on the side of the owner, and compelled corporate to stop being annoying (I'm oversimplifying a bit, of course)

5. I used to hang out with the husband of an FTer who worked in management for Wanda, rotating between properties, both Wanda flagged, and third party managed. On the surface, Wanda's relationship with third party managed hotels was similar to point #3 , but unlike point #3 , Wanda's owner always had a desire to build the next Shangri-La, and was pretty ruthless in his pursuit of such (e.g. build reputation, knowledge transfer, boot the third party). They also made sure to work with as many hotel groups as possible in order to diversify their learnings

writerguyfl

(Apologies. Brevity is not in my wheelhouse.)

Years ago, I worked at a corporate owned and operated hotel. We were the "flagship" for the brand. I worked a number of different jobs ending as a Revenue Manager for a number of years. We served as the beta testing site for products, training programs, promotions, and software. Because of all that beta testing, I worked closely with the person in charge of Revenue Management for the chain. (She was one step under a Vice President.) Most managers at individual hotels never met her but I met with her several times each month.

I picked up a lot of information on how hospitality corporate offices operate in my interactions with her. I remember talking with her about the issue to which moondog alludes.

At the time, the chain was attempting to simultaneously ditch a large number of hotels that didn't meet brand standards and add a large number of hotels. The first task was fairly successful but the second task failed. (Had they been more patient and got rid of the hotels that tarnished the brand prior to trying to expand, I think they would have done better. But, that analysis really does derail the thread.)

Our chain lacked good hotels in "gateway" cities across the globe. We often had a presence with a suburban and/or airport property. But, if you want to be a real alternative to the Marriott and Hilton, you need hotels in Manhattan, Central London, Tokyo, Shanghai, Toronto, and so on.

The problem with getting a geographically ideal location in a gateway city is that the best locations either already have a hotel or the cost to build a new one are steep. The good thing is that most hotels are franchises. That means the owners of the existing hotels can be persuaded to change flags. Since rebranding isn't cheap, those owners have all the power. A smart owner will enter into negotiations whenever the franchise contract is up. Even if she or he decides not to rebrand, they can probably extract something of value out of the current brand.

As for new construction, the bad thing about hotels is that most are franchises. Most hotel groups don't want to put their own money into real estate development. That means the owner has most of the power. They can shop around across multiple hotel groups to find the best terms. Additionally, for high profile high-rise developments, the majority owner might actually be a corporate entity like an insurance company. Those companies will often choose the "safest" option. That would likely be one of the hotel groups that already dominate the market. As such, it's really tough for a smaller company (like the one for which I worked) to break into a gateway city.

As with anything complex, there will be exceptions. So, no one should read the above and think it applies in every scenario. It's just an overview based on my personal experience.

C17PSGR

The China market is unique. Imho, those concepts don't apply in Western Europe or the US.

Properties in the US and Western Europe are financed. So there are investors, property owners, management companies, and hotel franchisees. All have an interplay. Investors won't finance the development or purchase without a franchise agreement in place. Owners can negotiate some degree of control with management companies but want to avoid what's happening in Moondogs example since it might expose them to greater liability. They can, however, in some circumstances tell the management company to apply certain policies, aka Aspen St.R. Changing the franchise requires approval of the investors.

Sometimes, like the W in Las Vegas or Habtoor, people want a divorce. Most of the time, however, the owners, investors, and franchiser have a lengthy contract. At the end of the contract, it may not make sense to keep the same franchise because of upgrade costs. So hotels go with Delta, Tribute, Autograph, etc.

Hipplewm

The steakhouse in the Sheraton is very good as well

moondog

Which Sheraton?

ftrichard

St. Regis to Luxury Collection? Do I win a prize?