Sheraton Converts NY Hotels Into Full Business Properties

Sheraton is spending the next few months and $30 million turning two of its three upscale New York hotels into all Corporate Club Room properties and creating a new executive conference center.

The conversion will nearly triple to 1,250 the room count at the New York Sheratons, where for an extra charge business travelers can get amenities and a room suited for working.

The Sheraton Russell, set to reopen in May, will be the first all-Corporate Club Room hotel. The Sheraton Manhattan, which will close down at the end of June for its total room conversion, will become the second when it is completed in August.

Every room at the Sheraton Russell and the Sheraton Manhattan will provide, for a $40 premium, a big desk, an easy chair on rollers, a task light, an in-room fax copier printer, free local phone calls and health club use, plus the club lounge breakfasts and hors d'oeuvres.

Occupancy in upscale New York hotels these days is above 80 percent, yet even in this environment demand is strong for the business-class room product.

"There's a tremendous demand for the product," according to Paul O'Neil, president of Sheraton Hotels New York and senior vice president of Sheraton North America. "We have currently about 450 club rooms between the Sheraton Manhattan and the Sheraton New York, and we just can't keep up. We disappoint a lot of people when they come here because we don't have the rooms available."

O'Neil expects to recoup the costs of the renovation in the next two years. "Our projections are saying that the investment we are placing in both of those hotels for that particular marketplace will be paid back in a short period of time," he said. "So the demand will definitely be there. The overall occupancy for the city is right around 80 percent. And we believe that our occupancy for the corporate club rooms would be about the same."

O'Neil said 65 percent of his current clientele are business travelers and expects that percentage to increase by 20 to 25 percent a year as a result of the Corporate Club Room focus.

"The demand has been increasing for the business traveler for sure in the city," said O'Neil, who also serves as chairman of the New York Convention and Visitors Bureau, "but at the same time we are trying to develop a product to attract new customers at the Sheraton. It's a move to do two things: take care of existing demand from Sheraton customers for the corporate rooms and then to try to convert customers from other hotel companies, which don't have anywhere near the number of such rooms, to be Sheraton customers."

The Sheraton New York will not add to the 350 corporate club rooms already in its tower area, focusing instead on converting 30,000 square feet of exhibit space into an executive conference center by late August (Meetings Today, March 17).

Designed to support advanced technology, the center will have telephone outlets in the floors of the conference rooms every six feet to provide easy access for laptops, special lighting, telephone lines and other electrical equipment. Con Ed has put a new transformer on Seventh Avenue to deliver the power needed to support the conference center.

To protect the electronic infrastructure and to keep the center completely soundproof despite nearby subway traffic, the new space will be encased in quarter-inch steel.

O'Neil said that the space previously was used about 20 percent of the time; in its new incarnation the space will be used every day.

While the conference center is not linked to the corporate club concept, they complement each other. "The customer that we are going to attract to the executive conference center will appreciate the Corporate Club Room," he said. "When we sell the executive conference center we will sell it in a package and prices will vary according to the room type that people want to use. So if you have a meeting for 20 people, you probably are going to want Corporate Club Rooms."

The property renovations, however, are not the only things that set the New York Sheratons apart from other hotels. They also are unique because the three properties are managed by a single management group as one complex.

"This effort began when we bought Equitable's share of the hotels in 1990 and totally renovated the Manhattan and New York properties," O'Neil said. "In 1992 we complexed the two properties. And then 1 1/2 years ago we purchased the Sheraton Russell, a property we operated for about 20 something years for a joint venture group we were in with John Hancock. We bought out John Hancock when we developed a plan to convert it into an all-Corporate Club Room property. When the property reopens in May, all systems will have been interconnected into a single property system, GEAC, and integrated to the point were we will be able to answer the telephones, take all reservations and do the accounting from the Sheraton New York."

While the New York Sheratons are more integrated than Sheratons in any other city, the Sheratons in Atlanta and Hawaii complex their operations to some degree, and the company is looking at other complex opportunities around the world.

The New York Sheratons also have worked on reducing checkin time. "We are at a point now where we are at anywhere between 30 and 40 seconds per checkin," O'Neil claimed. "We have some interesting concepts on checking in and one of them is that you just walk in to the lobby and you are greeted in the lobby by a guest service agent and you don't sign anything. All you do is just get your key and you are gone."

O'Neil said Sheraton also had just finished installing a new interactive system in guest rooms at the Sheraton Manhattan and the Sheraton New York for movies, in-room video games and video checkout. The new system is provided by Lodgenet, which also is developing a system to provide Internet access via the hotel room television (See Page 46). While O'Neil is confident that he will begin installing such a system within the next year, one of his competitors, Ian Nicholson, resident manager at the New York Inter-Continental, said he would put them in every room in June as the first to test the Lodgenet product this summer.

The Sheraton New York also has developed plans to build a new virtual reality sports entertainment complex, but O'Neil conceded, "we had to prioritize where we want to spend our money, so we had to postpone it until a new budget period because we wanted to spend the money on the guest rooms and the conference center first."

The very nature of the current marketplace dictates that other hotels can be supported in New York, he said. Sheraton currently has all but one of its price points covered, the one represented by the Four Points brand.

"There are a number of deals that are currently in discussion," O'Neil said. "If we build another property it probably would not be an all-corporate club property at this point. I think we will have enough for the market.