Starwood Lowers Volume Bar

Starwood Hotels & Resorts Worldwide this month announced it has relaxed the criteria for granting corporate customers national account or global account status—the first among the major multi-brand hotel companies to do so. The Starwood move is seen as an inevitable acknowledgement of the effect the downturn in the economy, and subsequent cutbacks in corporate travel, have had on the U.S. lodging industry. Other large hotel companies are expected to follow Starwood's lead as the bid season for 2003 negotiated rates actively gets underway in the coming weeks.

"We've expanded the number of accounts we work with," said David Ogilvie, Starwood vice president of global corporate travel, "and are being somewhat more flexible in the requirements for them to be a globally managed account." The criteria themselves, whether the number of hotels or brands used or the amount of room nights, marketshare or overall revenue produced, have remained relatively constant. "The basic requirements look at the amount of revenue that a buyer will generate to Starwood through multiple hotels. That's really what we're looking for," Ogilvie said. "But, if the right customer wants to be a global customer with us and doesn't have as many hotels or the revenue that normally would be needed, but is looking in particular at some key markets for us, then we'll certainly consider working with them."

In having this special status, buyers receive hands-on management of the account by a global account director and preference in terms of availability at high-demand hotels during peak periods. This was more of a concern when the market was stronger for hotel companies, but still can be an issue in certain circumstances. In 1999 and 2000, banner years for the industry, buyers were frustrated at hotel companies' unwillingness to grant them the status.

Ogilvie cautioned, however, that in relaxing national or global account requirements, Starwood hardly was opening the floodgates. "When you manage a portfolio of corporate accounts with a set number of sales people, you can only manage a certain number," he said. "You can't just keep giving more accounts to the same number of sales people, because then they won't be able to effectively manage the ones that are the big producers and the ones we're moving marketshare on."

Ogilvie declined either to spell out specific criteria or to cite the names and number of Starwood's national or global accounts, citing competitive realities. Similarly, Starwood's two main U.S.-based competitors, Marriott International and Hilton Hotels Corp., don't disclose this information. Starwood's brands include Sheraton, Westin, St. Regis, Luxury Collection, W and Four Points by Sheraton.