Chains Try Dual-Brand Sites

<B>Chains Try Dual-Brand Sites</B>

By Bruce Serlen

As the 2001 hotel request for proposals process gets underway this month, many travel managers are seeking greater coverage in key U.S. markets--and at different price points. In response to this demand, such hotel companies as Marriott International, Carlson Hospitality Worldwide and Starwood Hotels & Resorts Worldwide have begun putting two brands from different industry segments at one site.

In pursuing such a strategy, hotel companies' motivation is clear: They're interested in capturing more of their major accounts' market share in a given destination, giving them more of a competitive advantage. Travel buyers, meanwhile, have a handle on the travel patterns of their travelers--and know more or less the nature of the travel, so they can include hotels for that destination from different industry segments in their hotel programs, as they feel appropriate.

Each of these dual-brand hotel projects has its own set of particulars, yet all share a common denominator: giving the buyer more options.

When Marriott looked at a project in Houston, for example, it faced the choice of redeveloping the historic Humble Oil building downtown into a single, 400-room, full-service hotel or two smaller, more targeted brands.

"There was pent-up business travel demand in this section of Houston, but the single hotel concept seemed too great a risk," said Bob Deeley, regional vice president for lodging development. "Our research, however, indicated that the market was devoid of an upscale or moderate extended-stay property and could also use a moderately priced property."

As a result, the project, which was announced in July, will become a 171-room extended-stay Residence Inn, combined with a 191-room midprice Courtyard. The objective was to match the business traveler's expectation with the right segmentation. "The goal of segmentation is always to get the right customer in the right building," Deeley said.

Fortunately, the historic building lent itself to this kind of approach. "The building's footprint worked very well," Deeley said. "There are a lot of old buildings around, but not all of them will make a good hotel, no less dual hotels with complementary identities." Yet another portion of the original building is slated for residential development.

Carlson faced a different challenge when it announced the development of a 136-suite, midprice Country Inn & Suites property in Augusta, Ga., last month. A full-service Radisson Hotel had been built on the adjoining property two years ago and was successful. "We could have built an extension to the original hotel, but wanted to provide greater coverage in the market," said Nancy Johnson, senior vice president of development for Country Inns & Suites. "Travel buyers putting together a national program will now have upscale and midprice options in the same location."

The Augusta project is the first time two Carlson brands will share one site. To reinforce the connection, the architecture of the new building will resemble the existing one, though they will be separate. "It's our way of saying to travel buyers, 'We want more of your business,' " Johnson said.

Brand segmentation was very much on the mind of Starwood in projects in Los Angeles and New York as it sought to establish St. Regis as a distinct deluxe brand in travel buyers' eyes. In Los Angeles, the former Tower at Century Plaza, which opened in the 1980s, has undergone extensive renovation and is scheduled to reopen in November as a 297-room St. Regis. The building, meanwhile, was part of a complex that included an adjacent, larger structure that dates back to the 1960s. Known as the Century Plaza, the second building now is operated as a 727-room Westin, Starwood's upper upscale brand.

"Branding the two structures separately gives travel buyers more choice for their travelers," said Sue Brush, vice president of marketing for St. Regis, Westin and the Luxury Collection. "Each brand is distinct in the portfolio and should appeal to buyers looking to add coverage to their hotel programs in this area of Los Angeles."

For senior-level business travelers, Brush said there was a shortage of luxury accommodations in many U.S. destinations. It's a gap the St. Regis brand, with its upgraded service levels, intends to address. For example, in New York, where the original St. Regis is based, Starwood last month announced that it's cloning the concept, creating a variant called the St. Regis Club Hotel. Again, this new entity will exist in relation to a Westin. Actually, the new 105-room hotel will comprise the top 21 floors of the existing 600-room Westin Essex House.

"It's being envisioned as two hotels within one building," Brush said. "Yet, the St. Regis portion clearly will have St. Regis-caliber rooms and amenities, including the signature butler service." St. Regis-caliber negotiated rates will apply as well. At present, no other St. Regis Club Hotels are planned.

For as much sense as these two-in-one projects may make from the point of view of the travel buyer, they pose interesting questions operationally. The hotels can save money, for example, by taking advantage of economies of scale. "There's a definite compatibility of systems, which is part of the appeal," Johnson said, "especially in such areas as maintenance and engineering."

The St. Regis Los Angeles and Century Plaza Westin each will have its own general manager. "Yet, in New York it made sense for one GM to be responsible for both the St. Regis Club and the Essex House," Brush said.

Signage also can be an issue, if travelers aren't sure which brand is housed in which wing or tower. "The Country Inn & Suites building will be separate enough from the Radisson to warrant its own signage," Johnson said. Yet she acknowledged that, given the two hotels' proximity, there would be certain synergies, food and beverage being one. "Seeing that the Country Inn & Suites has no restaurants, it'll be a demand generator for the Radisson's F&B operations."

Similarly for overflow situations, these projects would seem well-positioned. According to Deeley, in the case of an overflow, there would be two ways to proceed. "If the traveler's loyalty is to Courtyard, for example, and the Courtyard is full, the traveler would be directed to the nearest Courtyard where there was a room available," he said. If, on the other hand, travelers are location-driven, they'd likely be offered the adjoining Residence Inn, even though it's an extended- stay property and more residential in feel.

"What's most important," Deeley said, "is that whenever possible, the customer's expectation is not compromised.