Upper Upscale Chains Seek Chic Boutique Status
Two upper upscale chains, Renaissance Hotels & Resorts, a unit of Marriott International, and Le Meridien Hotel Group have reiterated their determination to go forward with plans announced this summer to refine and reposition their brand identities. Both chains plan to bring themselves closer to the boutique hotel model proven so popular with business travelers during the past few years.
Traditionally, boutique hotels have been independently owned, though Starwood Hotels & Resorts Worldwide has had recent success with its W Hotels brand of boutique hotels, as has Ian Schrager with his small collection of properties.
For both Renaissance and Le Meridien, trying to attract and retain the business traveler, their core consumer, is central to their strategy. Competition for these travelers already was growing increasingly intense from a weak national economy and cutbacks in corporate travel budgets before September's devastating terrorist attacks, followed by the United States' military response, made an uncertain situation even more problematic. Consequently, the chains see the change in positioning as a way to gain competitive advantage and, hence, build market share.
Strategically, these chains view the current slowdown as an opportunity to regroup and prepare to gain market share when the situation turns around.
At Renaissance, the chain envisions its hotels as the "body of a full-service hotel with the soul of a boutique," said Sid Yu, global brand vice president. Rather than stress a commonality of design and service levels the way chains usually do, the emphasis now is on each property's individuality and unique features. "We want to instill a sense of delight and discovery for Renaissance guests by having each of the 118 hotels in the group deliver distinctive experiences," Yu said. Renaissance operates in 29 countries with 53 U.S. hotels and 65 international properties.
Yu said the new positioning would be visible not just in the design of guest rooms and public spaces, but in two other ways: There will be more personalized service from staff members, who he described as being more "savvy," and development of a different signature restaurant and bar at each property that would attract local clientele, as well as hotel guests. Along with a cutting-edge interior design, a hot bar scene that generates attention has been a key component of boutique hotels' recent success.
Renaissance's new 356-room property in London, the Chancery Court, is a prime example of what the chain is trying to accomplish. The building, a historic conversion, originally had been the headquarters of a 19th century insurance company. "We worked hard to retain as much of the original marble and other architectural details, but to set them off in a way that would be very contemporary and appealing," said Brenda McDowell, Renaissance area director of sales and marketing. The hotel's signature restaurant, QC, is fashioned out of the original building's highly ornate banking hall.
For Renaissance, the new positioning is the culmination of a four-year effort to distinguish itself from its parent's core Marriott Hotels & Resorts brand. Acquired by Marriott International in 1997, Renaissance basically shares the same upscale customer demographic with the core Marriott brand. "Some business travelers are more comfortable with a "more predictable choice, while others want a sense of uniqueness," Yu said. "This latter group is the segment we're targeting."
By contrast, the brand repositioning underway at Le Meridien began more recently when Japan's Nomura Corp. prevailed over Marriott International this spring in acquiring the chain from the U.K.-based Compass Group. One of Nomura's first moves was naming Juergen Bartels, who had been CEO of Starwood, chief executive.
Bartels intends to convert some, but not all, of the chain's 144 hotels into what he calls "Art & Tech" hotels. "Le Meridien remains the brand name and a majority of the properties are expected to become Art & Tech hotels, a process that will occur over the next 18 months," he said. "We're creating a brand within a brand, trying to claim the territory of cool hotels in the world. But, unlike local independent boutique hotels, we'll have 1,000 sales people around the world selling the concept." Le Meridien operates in 57 countries and includes 16 properties in the United States.
Bartels said he saw the growth of the boutique approach as inevitable. "Going back as far as the 1960s and 1970s, hotel companies thought the traveling public wanted every room to be the same, but this wasn't true," he said. "If we all offer the same room product, how can one hotel company claim it has customer loyalty? On top of which, hotels changed brands so regularly, some would have three names in five years."
Bartels said the Art & Tech room is intended to "surprise and engage" guests the way he feels the best of the boutiques do. The cutting-edge design emphasizes stainless steel and glass. Surfaces are kept clear to provide a minimal, clutter-free feel. The bed headboard, for example, features a handcrafted etched glass panel that's lit at the edges. A highlight of the technology that's built into the room is a 42-inch plasma screen television mounted on the wall.
Bartels is using Le Meridien's hotels in London as a laboratory to fine-tune the concept, and perfect the pricing model. London was chosen because it's a strong market for the chain, as well as a key international gateway.
Yet, the chain is not focused solely on the concept. "There'll be hotels that will be Art & Tech, but others where the owner says, 'No, J.B., you have to do me something else.' Art & Tech is very edgy. We're now designing additional rooms less edgy," he said. Some hotels also will have a mix of Art & Tech and non-Art & Tech rooms. All Le Meridiens, however, will be renovated and none will be traditional. "We're not going to do traditional anymore," he said.
In choosing to follow the boutique model, Bartels credits his former colleague, Starwood CEO Barry Sternlicht, with creating W Hotels, which opened its 15th property—and second in Chicago—this month. "Much to Barry's credit," he said, "he didn't make his new concept for a hotel a Sheraton or a Westin, he made it a W."