Loews Leaps To The Lead For Upper Upscale Buyers

Business travel buyers rated Loews Hotels just a shade ahead of Westin Hotels & Resorts to take top honors in the upper upscale category of the Top U.S. Hotel Chain Survey. Westin was followed closely by the third-place chain, J.W. Marriott Hotels & Resorts. The victory especially was gratifying for Loews, which last year finished out of the winner's circle in fourth place.

Last year, J.W. Marriott led the field, followed by Sofitel Hotels & Resorts and Westin. Neither Sofitel, which is part of Accor Hotels, nor Le Meridien Hotels & Resorts had sufficient usage by survey respondents to be included in this year's listing.

Buyers rated chains in the category according to 13 criteria. Loews scored highest on five, including its meeting facilities and the quality of its in-room amenities and business centers. Westin earned the highest points on three criteria, including arranging individual travel and corporate rate programs. J.W. Marriott also scored highest in three areas, including the physical appearance of its properties and the overall relation of price to value. In addition, Westin and J.W. Marriott tied for first place on a fourth criteria: arranging group travel.

As the lodging industry bounced back in 2004, JP Morgan analyst Harry Curtis continually cited the performance of upper upscale hotels as a crucial component of the turnaround. "The driving force behind recent revenue per available room growth has been strong demand in the upper upscale segment," Curtis said, adding that a lack of new supply in key markets contributed to the rosy picture.

According to PricewaterhouseCoopers, 2004 RevPAR for upper upscale hotels increased 7.7 percent, year over year, more than the 7.5 percent increase for U.S. hotels overall and above 2000, the last year where the upper upscale segment showed positive growth. RevPAR that year rose 7 percent.

"Demand started to improve in the first quarter, but the momentum we felt in February and March accelerated through the year and has continued into 2005," said Loews president Jack Adler.

Demand particularly has been strong on the two U.S. coasts. "Our hotels in New York, Philadelphia, Washington and Florida, where we have a large concentration of properties, have fared well, while our California properties also performed strongly throughout the year," according to Adler.

Echoing Ritz-Carlton president Simon Cooper's view of the recovery in the deluxe tier, Loews' hotels in the middle of the country have not shown the same strength. Adler said the demand situation today is the opposite from 2001, when the downturn began. "The two coasts felt the falloff first and to a greater extent than the middle of the country," he said.

Loews, which has 20 properties, opened its most recent hotel in New Orleans in 2004. "We've pretty much doubled our size in the past five years, when you factor in the hotels we divested because they didn't fit the positioning we wanted for the brand," Adler said.

Unlike Westin, which is part of Starwood Hotels & Resorts Worldwide, or J.W. Marriott, which is part of Marriott International, Loews is a single-brand company. Adler sees this as an advantage and does not anticipate changing.

"The upper-upscale lodging tier has tremendous potential for one-of-a-kind assets," Adler said. "We expect to expand the brand selectively, whether through new builds or conversions, in gateway cities across the country as well as resort destinations."



Westin Expansion-Minded

With about 125 hotels at the end of 2004, many outside the United States, Westin is significantly larger than Loews and equally optimistic going into 2005. "Both individual business travel and the meetings market have benefited from the rebound, with individual business travel taking the lead," said Sue Brush, Westin's senior vice president of brand management.

Westin in 2004 opened hotels in Atlanta, Croatia and Shanghai, among others. On tap for 2005 are properties near Seattle and Toronto. "Development remains a combination of U.S. and international projects, conversions and new builds," Brush said.

As is true for other lodging price points, the pace of upper upscale development after 2005 reflects the economic cycle. "Hotels already under development in 2001, such as the Westin New York, went forward, but most projects that hadn't begun construction came to a halt," Brush said. "So, there's been a lull, but by 2006, the number of new openings will jump. We have 11 in the docket for that year."

Five years after Westin launched the Heavenly Bed, the chain in 2004 continued to gain marketing mileage from what turned out to be the first a long line of signature beds other chains offer.

"Others have tried to imitate, but none have been able to duplicate the superior sleep experience it provides," Brush claimed.

At the Westin property level, amenities such as the bed create positive word-of-mouth. "It's had a lot of staying power," said Craig Cupit, director of sales and marketing at Westin Savannah Harbor Hotel in Savannah, Ga. "Business travelers tell us they've come back to enjoy it again and recommend us to fellow travelers because of it."

Cupit said he has high hopes for the expanded workout program that Westin launched systemwide last month. "One of the biggest benefits seems to be the personal trainers we now have on the gym floor to work with guests," Cupit said. "They'll design an individualized workout regimen. When guests return, the same trainer is there to measure their progress. Frequent business travelers especially like that kind of follow-up. They like to be recognized."