Starwood Begins Franchising The Luxury Collection Brand

"Distribution to the continued success of Starwood Preferred Guest [loyalty program] is always a consideration in every decision we make," said Chuck Tomb, who took over as the company's senior v.p. of franchise development in mid-February. Starwood refiled Uniform Franchise Offering Circular documents in all 50 states on April 1. Ted Darnall, president of Starwood's real-estate group, said all of the UFOCs should be approved by mid-May at the latest. "We relaunched our franchise group," Darnall said. "We weren't aggressively pursuing franchise projects."

One key element of the refilings was the franchising of The Luxury Collection. Bill Linehan, Starwood's v.p. of marketing and brand alignment, said the company decided that if it wanted to hit critical mass with The Luxury Collection, then it needed to do so by using third-party developers. The Luxury Collection, launched in 1995, has 74 hotels comprising 15,901 guestrooms in 26 countries. Darnall - Starwood North American properties that belong to The Luxury Collection include The Palace in San Francisco; The Phoenician in Scottsdale, Ariz.; and the Kapalua Bay Hotel and Ocean Villas in Maui, Hawaii. Those aren't hotels that typically attract guests driving by while on their way to visit the in-laws. The Luxury Collection properties typically attract guests with an annual household income of $250,000 or more, Tomb said. "This is really targeted to guests who know what they want," he said. Darnall said independent luxury hotels throughout the world will be targeted for franchising. "We have a terrific product for that," he said. "These hotels might need a boost from the sales-and- marketing perspective and from the frequent-guest- program perspective," Tomb said. "Independent reservations systems can't provide everything that these hotels need."

Darnall said Starwood brings plenty to the table for luxury hotels, including: access to Starwood's guest-loyalty program, which has more than 15 million active members an international sales office to boost meetings connectivity to national-account business state-of-the-art technology that make the properties more efficient "There's a great synergy there," Darnall said. "We've been talking about this for quite awhile. It gives 4.5- and five-star independent hotels an opportunity to have a robust frequency program and all of the things that [help] them maximizing their revenue." Tomb said the sales-and-marketing support Starwood brings to the table is huge for potential TLC properties because of the 29 offices the company has worldwide. Linehan said the company also provides purchasing power, reservations advantages and other technology- related advantages, including its Starwood Technology and Revenue Systems program.

There's plenty in it for Starwood, too, Darnall said. The company lacks a presence in certain key markets, and this is one way to break into those markets quickly. That will help satisfy its frequent guests looking for new experiences, he said. "We've just got a lot of markets we're not in," Darnall said. "We haven't been able to meet all distribution areas. We're looking to put hotels in locations that we don't already have." Robert Koren, v.p. of brand operations for Starwood and the leader of The Luxury Collection, said that because the brand predominantly is located in resort areas, urban areas will be looked at closely for expansion. He said Boston, Chicago and Palm Springs, Calif., are among the markets in which The Luxury Collection would like to have representation. Darnall declined to offer a goal for the number of Luxury Collection franchises he'd like the company to sell. "If it's a good fit, we'll seriously consider it," he said. "It's not a matter of chalking up lines on a board, it's about strategically growing the brand," Linehan said. Koren - Starwood Tomb said The Luxury Collection's franchise fees are at or slightly below where the company's current brand and royalty fees are. "By becoming part of The Luxury Collection, you automatically create an awareness," Koren said. "The added values it brings is being in a collection of properties. That denotes something special." The hotels will retain their original name and use The Luxury Collection as a secondary tagline. Tomb and Linehan said Starwood doesn't want to detract from the significance the hotel has in its market. "The owners have spent a lot of money, time and history in building their hotel's 'brand,'" Tomb said. "Each hotel has its own identity," Linehan said. "The Luxury Collection identity is not as important as the individual hotel's identity."

Source eTurbonews.com

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