Ritz Retains Top Deluxe Spot, St. Regis Slides Into Second

Traditionally, the most intense rivalry for the number-one spot in the deluxe hotel category has been between Ritz-Carlton and Four Seasons. Last year, in fact, the two were locked in a dead heat for first place. This year, however, a third contender—St. Regis—gained sufficient momentum to give the two long-time mainstays a run for their money. When the final count was in, Ritz-Carlton held onto the number-one spot, while St. Regis and its sister Luxury Collection, narrowly beat out Four Seasons Hotels & Resorts for second place, unceremoniously forcing Four Seasons into the third berth.

In the entire field of six deluxe chains, Ritz-Carlton Hotel Co. placed highest in this year's survey in nine of the 13 criteria, including ease of arranging both individual and group travel and for its corporate rate programs. St. Regis Hotels & Resorts, meanwhile, scored highest for its meeting facilities and timely commission payments. Mandarin Oriental Hotels, which placed fourth in the category, scored highest for the quality and variety of its in-room amenities and its overall price-value relationship.

While 2001 was a difficult year for the U.S. lodging industry in general, it was especially trying for high-end hotels. Month after month, Smith Travel Research reported that the drop in occupancy rates and room revenues were more severe for deluxe properties than in any other lodging tier.

"At Ritz-Carlton, the downturn has been felt less outside of the United States," said Simon Cooper, who became president of the chain a year ago. "In fact, it's only been felt in those locations where you have a high percentage of either U.S. or Japanese travel. The reason for that in the United States is obvious and Japan is a country that's very sensitive to security issues."

As the economy starts to rebound in 2002, Cooper said the deluxe segment was likely to recover in two phases. "There is a luxury tier customer who isn't going to change his or her travel plans no matter what, but there is a lot of luxury business that is built around America celebrating success, and that aspect of the business does trend with the economy," he said. He cited the deluxe segment's experience recovering from the Gulf War as an example of how this recovery might proceed: "There did tend to be a lag time. Certainly, the luxury tier came back after the midprice and economy tiers," he said.

While the St. Regis hotel has been a fixture of the luxury tier in New York for generations, St. Regis as a brand only began in 1999. Since then, Starwood Hotels & Resorts Worldwide has opened St. Regis properties in a number of other key destinations, including Los Angeles, Houston and Washington, D.C., and Rome, Shanghai and Beijing. Some have been new construction, others conversions. Along with downtown business hotels in the portfolio is one resort location suitable for meetings, the St. Regis Monarch Beach in southern California.

"With Starwood's backing, our intention is to create a luxury presence in the international gateway cities," said Atef Mankarios, who was named president of the brand in August 2001. "For us, luxury means creating a high enough level of guest service to allow business travelers to be able to focus on the business they've come to conduct."

Starwood expects to have 20 St. Regis properties in operation by 2004. As a sign of Starwood's commitment, it recruited an entire development and marketing team that had worked with Mankarios previously to build the brand.

Similarly, segment leader Ritz-Carlton has been on an aggressive growth track, an expansion that's moving forward in 2002. "First off, the 12 hotels we have under construction around the world will open. These are all financed and will proceed," Cooper said. "Our two or three most recent openings actually have surpassed expectations."

Among the brand's 2001 openings were mix-use developments that included high-end condominium apartments along with the hotel in Boston and Washington, D.C. Two similar projects, built with the same developer, are opening this year in New York, one on Central Park and the other downtown in Battery Park City. The opening of the downtown property was delayed from October because of its proximity to the site of the World Trade Center.

"From the developer's point of view, these projects are attractive because they build on the power of the Ritz-Carlton brand and its association with prestige and quality," Cooper said. As part of their purchase, condominium owners have access to such hotel services as housekeeping and room service.

Similarly, a number of current or pending St. Regis and Four Seasons projects are these kinds of mix-use developments. St. Regis, for example, is developing the 269-room St. Regis Museum Tower in San Francisco, scheduled to open next year, that will include 100 condominium apartments. Also in San Francisco, Four Seasons opened a new 277-room hotel in October, also in the emerging Yerba Buena district, that includes 142 luxury apartments.

Part of the appeal of such projects for the hotel companies is that it gives them access to prime development sites in gateway cities that they may have difficulty acquiring otherwise because of high barriers to entry.

"There can be little suitable land available, development restrictions may be in place and there can be historical considerations," Kathleen Taylor, Four Seasons president of worldwide business operations told Business Travel News last month (BTN, Jan. 21). "Where the developer already owns the land and has obtained the necessary approvals, these issues are already resolved and the project can move forward quickly."

Taylor added that in many cases these projects are new constructions. "Accordingly," she said, "Four Seasons can be involved from the inception, providing input, for example, on the sizing of the hotel and the project's other components."