Marriott faces huge challenges in Sheraton overhaul

NEW YORK • Marriott International made a down payment of sorts on a sweeping overhaul of the Sheraton brand last year, buying the Sheraton Grand Phoenix for US$255 million (S$349 million) to remake it into a prototype for the new face of the brand.

Work began in March on an extensive renovation of the 1,000-room hotel. Guest-room furniture will be lighter in colour and more streamlined. There will be adjustable tables in lieu of desks, updated lighting and multiple seating options. Public spaces are being restyled to be gathering places, with semi-private studios and phone-booth-like pods in the lobby where people can retreat for private calls.

Sheraton was one of the brands that came with Marriott's acquisition of Starwood Hotels in 2016, and Marriott knew from the start that travellers saw the chain - now 82 years old - as tired and dated.

As Mr Douglas DeBoer, chief executive of Rebel Design and Group, a hotel design consulting firm that is not working for Marriott on the rebranding, put it, Sheraton is "the epitome of the beige hotel".

Mr Julius Robinson, a senior vice-president at Marriott International who oversees the Marriott, Sheraton and Delta brands, offered a similar opinion. "Sheraton's been a brand that's had a relatively rough road," he said.

In June last year, Marriott chief executive Arne Sorenson pledged to invest half a billion US dollars into updating the look of Sheraton and, hopefully, its reputation. But creating a consistent brand identity will take time.

The Phoenix renovation is expected to wrap up at the end of this year or early next year, and Mr Robinson said it would take five to seven years for a "critical mass" of Sheraton hotels to be renovated.

"There's no easy answer here, and I think Marriott knew that when it bought Starwood," said Mr Michael Bellisario, a vice-president and senior research analyst at Robert W. Baird and Co, a financial services company that buys and sells Marriott stock. "The issue is really brand inconsistency."

So far, the most visible part of the undertaking is a new Sheraton logo, unveiled in March, that includes a nod to the brand's history with "Est. 1937" at the bottom.

Reminding travellers of its date of birth is a risky move, given Sheraton's reputation. But it is a calculated risk that Marriott deemed necessary for a credible repositioning of the brand, said global brand officer for Marriott International Tina Edmundson.

"We're not shying away from or trying to pretend this is a new brand," she added. "We have to own who we are."

She added: "In so many ways it's so much easier to create a new brand. One of the biggest challenges with a new brand is awareness. Now, we have awareness that might not be all positive."

Ms Jennifer Johnson, owner of the Johnson Meetings Group, a meeting planning company in Raleigh, North Carolina, said she was hesitant to book Sheraton hotels sight unseen even though they often had spacious guest rooms or other desirable attributes.

"I can't counsel my clients to commit to it without seeing it," she said. "You're still seeing mauve and brass, and things like that take it back to the 80s."

A major hurdle for Sheraton's reinvention is its sheer size. The brand has roughly 200 hotels in the United States and 250 or so overseas, in big cities, suburbs, airports and resort destinations. Sheraton hotels, in fact, made up close to half of the Starwood portfolio that Marriott bought.

Mr Bjorn Hanson, a hospitality industry consultant, said it would be a challenge for Marriott to reconcile the diversity within Sheraton and create a unified brand identity.

"It becomes very difficult to say, 'Here is the model for Sheraton,' " he said, "because what is a Sheraton hotel?"

The overhaul will also take a long time because aside from a few notable exceptions like the Sheraton Grand Phoenix, Marriott is not the company paying for all the renovations.

"It's not as easy because there are long-term contracts with hotel owners and operators," said associate professor of services marketing Helen Chun at Cornell University's School of Hotel Administration.

Most higher-end hotels are not owned by the management company whose name is on the marquee. The management company - or its corporate parent, like Marriott International - sets brand standards, but it cannot require an ownership entity (often a real estate investment trust) to sink millions of dollars into a renovation years earlier than the contract stipulates.

According to industry trade publication Hotel News Now, 18 brands were introduced last year alone, although some experts predict the pace of new openings will slow. Still, they say, it is unlikely that big hotel companies will shrink their stables of brands any time soon.

The stakes are higher than ever for Marriott to get it right with Sheraton's redone image.

"Because of that saturation of the marketplace, the notion of where they are really has to resonate with that guest at the end of the day," said Ms Meg Prendergast, principal at hospitality design and consulting firm The Gettys Group.

"They have a huge market share of the hospitality marketplace. It behoves Marriott to pay a lot of attention to this brand."


A version of this article appeared in the print edition of The Straits Times on May 15, 2019, with the headline 'Marriott faces huge challenges in Sheraton overhaul'. Subscribe