Case Study 4b

IMD-5-076631.12.2010

STARWOOD HOTELS: INNOVATION THROUGH MARKETING

Research Associate Sophie Coughlan prepared this case under the supervision of Professor John Walsh as a basis for class discussion rather than to illustrate either effective or ineffective handling of a business situation.

Starwood Hotels & Resorts Worldwide (NYSE: HOT) (referred to as Starwood) was one of the worlds largest hospitality companies in 2010, involved in ownership, management and franchise activities. It had 992 properties in some 100 countries.

Starwoods hotel portfolio consisted of upper upscale brands and luxury brands, including Sheraton, Westin, St. Regis, The Luxury Collection, W Hotels and Le Mridien. It also had several mid-scale brands, such as Aloft, Four Points and Element. Its Starwood Vacation Ownership subsidiary operated nearly 15 timeshare resorts. As of 2009, 95% of all of Starwoods hotel net income came from upper upscale and luxury hotels. Its 2009 revenues were $4.7 billion, a 19.5% decline on the previous years results, largely due to the global economic slowdown plus the dampening effect of the H1N1 flu virus on global travel.

The company had started out as an owner and operator of hotels in 1994. But in 2004, it had shifted its strategy to an asset-light model, whereby it reduced its ownership and focused attention on managing and franchising hotels.

Starwood had been highly successful in pioneering the worlds first portfolio of lifestyle hotel brands, positioning hotels as destinations in themselves (rather than as a travelers substitute for home). Its brands were differentiated by emotional concept, which was determined by the type of experience customers sought. Its customer loyalty scheme provided opportunities to maximize customer lifetime value, by cross-selling and up-selling hotel brands over time. Additionally, Starwoods partnership programs helped it to enhance its customer experience, while generating additional revenue from partners.

Having experienced some stagnation in the wake of the economic crisis, Starwood was looking at emerging markets as an opportunity for future growth. But to ensure success, would it have to adjust its brand portfolio?

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Starwood St Regis Hotel, New York

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Background

A Brief History

Starwood Capital Group was a private equity fund, founded by Barry Sternlicht in Connecticut in 1991. In February 1994, Starwood Capital acquired NYSE-listed Hotel Investors Trust (HOT). By 1998, with Starwood Capital acting as its acquisitions arm, the company which started out as an $8 million real estate investment trust (REIT) had become a $20 billion global enterprise. During this time, it completed the $1.6 billion acquisition of Westin Hotels and the $14.6 billion acquisition of ITT Sheraton (outbidding Hilton).

Corporate Structure

REITs did not have to pay federal income tax. They were required to distribute 90% of income in the form of dividends each year, and to keep 75% of revenue from real estate assets. This meant that hotel management had to be held by a separate entity. However, HOT was unusual: It was a paired share REIT (one of only four in the US that had been grandfathered, which meant it was allowed to both own and manage hotels). It therefore did not have to dilute earnings by paying a management firm to manage its hotels.

In a typical agreement between hotel owners and management companies, hotel owners received the profits made by the hotel after the management fees (bottom line), while management companies received a percentage of the hotels gross revenues (top line).

In July 1998, the US government amended tax laws to end the advantage enjoyed by grandfathered paired-share REITs (largely due to lobbying by the Hilton CEO to close this loophole). Starwood changed to a more traditional corporate structure and had to pay more taxes.

Moving to an Asset-Light Model

Sternlicht announced his resignation in 2003, and former Coca-Cola executive Steven J. Heyer took over as CEO in 2004. The company shifted strategy, reducing its ownership of hotels and concentrating on management, franchising and timeshare, thus increasing its cash flow. According to its annual report:

In furtherance of this strategy, since 2006, we have sold 60 hotels for approximately $5.2 billion. As a result, our primary business objective is to maximize earnings and cash flow by increasing the number of our hotel management contracts and franchise agreements; developing vacation ownership resorts and selling VOIs [vacation ownership interests]; and investing in real estate assets where there is a strategic rationale for doing so, which may include selectively acquiring interests in additional assets and disposing of non-core hotels (including hotels where the return on invested capital is not adequate) and trophy assets that may be sold at significant premiums.

Starwood 2010 Annual Report, p. 3


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Starwoods Business

Starwoods global network included owned, leased and joint venture hotels and resorts. (Refer to Table 1 for a breakdown of revenues). It planned to increase its 292,000 rooms by an additional 85,000 in 2010, 87% of which would be located in emerging markets.

Starwood earned revenues in three ways:

1) It owned 63 hotels and 13 vacation ownership resorts (timeshares), and earned a profit from their operations. This was the source of the bulk of its revenues.

2) It managed hotels and earned management fees from 440 hotels. The fees consisted of base fees, which were tied to gross revenue; incentive fees, which were tied to profits; and fees for services (centralized reservations, sales and marketing, public relations and national and international media advertising). The industry average for hotel brand owners was 12.5% of the gross revenues of hotels they managed.1 Starwoods contractual responsibilities included hiring, training and supervising managers and employees operating the facilities. Additionally, Starwood prepared and implemented annual budgets and allocated owner funds for regular maintenance and repair of buildings.

3) It franchised 476 hotels (Sheraton, Westin, Four Points by Sheraton, The Luxury Collection, Le Mridien, Aloft and Element brands) and earned licensing fees from franchisees based on a fixed percentage of room revenues, as well as fees for services (centralized reservations, sales and marketing, public relations and national and international media advertising). Franchising had the highest operating margins.

Table 1: Starwood Operations 2009 and 2008

Year Ended 31

December 2009

($000)

Year Ended 31

December 2008

Increase / (Decrease) from Prior

Year

Percentage Change

from Prior Year

Owned, leased and consolidated joint venture hotels

$1,584 $2,212 $ (628) (28)

Management fees, franchise fees and other income

658 751 (93) (12)

Vacation ownership and residential 523 749 (226) (30) Other revenues from managed and

franchise properties 1,947 2,042 (95) (4)

Total revenues $4,712 $5,754 $(1,042) (18)

Source: Starwood Annual Report 2010

1 Asset-light or asset-right? The Economist, 13 November 2010.


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Cost Structure

Hotels have different kinds of costs: fixed costs, variable costs and semi-variable costs.

Fixed costs: administrative and general expenses, marketing, property taxes and insurance.

Variable costs: room expenses, direct expenses for food and beverages, allowance for bad debt expenses, management fees and reserve for replacement.

Semi-variable expenses, which have a fixed portion and a variable portion: energy costs, payroll, property operation and maintenance expenses.

Around 60% to 70% of the property costs of hotels are fixed including mortgage payments, taxes and energy. Luxury and upscale hotels had higher operating expenses than economy and budget hotels. Table 2 illustrates the trend of revenues and expenses of upper upscale branded hotels, while Table 3 shows how undistributed operating expenses had evolved.

Table 2: Revenues and Expenses of Upper Upscale Branded Hotels2 Per occupied room revenues and expenses

2006 2007 2008 2007 % chg 2008 % chg Rooms Room revenue $159.19 $167.93 $169.96 5.5% 1.2% Room expense $39.62 $41.02 $42.13 3.5% 2.7% Room payroll $24.55 $24.87 $25.75 1.3% 3.5% Food & Beverage F&B revenue $80.18 $83.21 $83.05 3.8% -0.2% F&B expense $57.58 $59.48 $59.13 3.3% -0.6% F&B payroll $33.13 $33.76 $34.33 1.9% 1.7% Source: STR HOST data, November 2009

Table 3: Undistributed Operating Expenses per Available Room in Upper Upscale Branded Hotels

Undistrib. Op. Expenses 2006 2007 2008 2007 % chg 2008 % chg A&G expense $13.93 $14.94 $15.05 7.2% 0.8% A&G payroll $6.82 $7.15 $7.37 4.8% 3.1% Marketing expense $12.49 $12.94 $13.03 3.7% 0.7% Marketing payroll $4.36 $4.41 $4.56 1.0% 3.5% Property maintenance $8.39 $8.77 $8.60 4.5% -2.0% Payroll $4.35 $4.46 $4.50 2.5% 0.9%

Source: STR HOST data, November 2009

2 Yoshii, L. Upper-upscale Branded Hotels Operating Expense Trends. HotelNewsNow.com, 23 November 2009. http://www.hotelnewsnow.com/Articles.aspx/2258/Upper-upscale-branded-hotels%E2%80%99-operating-expense-trends (accessed 23 November 2010).


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Starwoods operating profit declined by 95.7% in 2009, compared with 2008. In 2009, its operating expenses were 99.4% of revenues.

Product Portfolio

Starwood had nine brands in its product portfolio: St Regis, The Luxury Collection, W Hotels, Westin, Le Mridien, Sheraton, Four Points, Aloft and Element.

Segmentation

Starwood was the first hotel company to want to position hotels as destinations (often called lifestyle brands), rather than a home away from home. As such, much of its marketing efforts were focused on the type of experience it wished to create for a specific customer segment. Heyer explained Starwoods approach to segmentation:

The big aha for us was that demographic segmentation schemes didnt work. Guests with the same age, income, net worth and number of family members were seeking different experiences. Demographics could not tell us about what the customer saw as a quality experience. We began segmenting based on emotions how the customer wanted to feel in our different brands. The industry had been innovating relying on architecture and amenities, but this innovation was contextless. Segmentation and innovation based on unique promises that make people feel different, better and special are key to a successful business. 3

Starwood therefore used psychographic segmentation, differentiating its offering according to the customers specific usage situation (rather than just business vs. leisure, which was the distinction that had traditionally been used by hotels). Usage situations typically referred to occasions such as a family vacation, pampering break, etc. Starwoods hotels catered to both business and leisure travelers.

While most Starwood brands were full-service properties ranging from luxury hotels and resorts to more moderately priced hotels, it also had the Four Points, Aloft and Element brands, which were select service properties catering to more value-oriented customers. Each of these had specific target segments within the value-oriented category. The Aloft brand (which was launched in 2008) aimed to serve the urban air jockey, a tech-savvy, aesthetically inclined, culture-seeking road warrior. Aloft features included a check-in kiosk that allowed guests to choose their preferred floor and room; free WiFi and 42-inch flat panel TVs; 9-foot ceilings reminiscent of urban lofts; and a 24/7 food bar. Element was a more eco-friendly brand designed to appeal to the affluent green set.

Branding

In 2006 Starwood had undergone a major branding initiative. Each brand was assigned its own team with a general manager who developed three key words to summarize it (refer to Table 4). Starwood then set about developing the brands and integrating them into the hotels. The same year, all 225,000 employees were trained in the new philosophies.

3 Quoted in DAveni, R. How to Escape the Differentiation Proliferation Trap. Strategy & Leadership Vol. 38, Iss. 3, 2010 :44-49. http://www.emeraldinsight.com/journals.htm?articleid=1858858&show=pdf (accessed 23 Nov 2010).


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Each of Starwoods hotel brands had its own concept, defined by physical attributes (architecture, bedding, furniture and fixtures) as well as emotional concepts such as rejuvenation, family bonding or personal discovery. Brands were further differentiated by individual scent, as well as music style.

Table 4: Starwood Brand Portfolio

Brand Name Keywords Tagline Sheraton Warm comforting connections Because you dont just stay here, you

belong.

Westin Personal instinctive renewal This is how it should feel. Le Mridien Chic cultured discovery W Flirty insider escape An Exclusive Whatever/Whenever

Experience. St Regis Uncompromising bespoke

seductive address The address is the experience.

Four Points by Sheraton

Honest uncomplicated comfort Comfort isnt complicated.

Aloft a vision by W Hotels

Sassy savvy space Aloha

Element by Westin Smart renewing haven A place to thrive. The Luxury Collection

Unique enriching collectable Collect the worlds experiences.

The brand values were reflected in the hotel amenities. For example, the Sheratons emphasis on connection led to the setting up of social areas with free WiFi, and upon arrival guests received a stamped postcard to send home. Westins key words personal, instinctive and renewal were reflected in the welcome pack with a cool towel in the summer and an elixir drink to refresh weary travelers. All Westin hotels were infused with a white tea scent.

The W was the first attempt to create a brand around the concept of a boutique hotel, offering stylish rooms, signature restaurants, bars and destination spas. The W had pioneered the living room or open lobby space where younger generations could use their laptops or mingle with friends while enjoying a cocktail. (Refer to Exhibit 1 for a detailed description of each hotel brand.)

In the words of Trevor Bracher, Starwoods director of service culture:

Guests check in with expectations, and they check out with memories. Years ago, we thought of our hotels as just a place to stay. But then we realized it was much more than that for our guests and that we had to build an entire experience.4

Each location had its own permanent service culture trainer, to train new associates when they joined the hotel. All employees received training, from management down. Those working with guests received the most training, on creating experiences for the guest. This included appropriate greetings, behavior and tone of voice down to the wording used when phoning a guest for a wake-up call (refer to Exhibit 2).

4 Taylor, D. Brand Culture Times Nine: How One Company Builds Its Brand Lineup. Central Penn Business Journal, Vol. 26, Iss. 34, 2010: 11.


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Bracher noted:

Its truly about creating an experience around a guests stay. What were selling is not just a clean room. Its an experience. So we make sure our staff knows what is needed to create a stronger voice based on the brand.

Performance was reviewed and feedback given where required. The consequences of not meeting agreed-upon standards were severe. Senior level managers could lose their jobs, while owners could lose their franchise. In Brachers words:

Without standards, we cant maintain our brands. Every single employee is held accountable. If you see litter and you leave it there, you create an impression of a dirty place.

In 2009 Starwood filed a lawsuit against Hilton Hotels, accusing two of its top executives of stealing trade secrets to speed its entry into the lifestyle market.

Sub-brands

Some Sheraton and Westin hotels and resorts were also branded as part of The Luxury Collection. For example, the London Sheraton Park Tower was also a Luxury Collection Hotel. Additionally, three of the value brands leveraged the higher-end brands: Aloft was a vision of W hotels, while Four Points by Sheraton leveraged the Sheraton brand and element was by Westin.

Pricing and Revenue Management

The process of understanding, anticipating and influencing consumer behavior in order to maximize revenue or profits from a fixed, perishable resource (such as hotel room reservations) was referred to as revenue management. Central to revenue management was the ability to set the right prices, to both stimulate demand and maximize occupancy, while maintaining profitability.

Pricing Strategies

In the past, it had been common practice in the hotel industry to set prices by looking at the competition. Hotel managers referred to the Smith Travel Research competitive set analysis to gauge what the competition was charging and then set their own prices either above or below. Another common practice was to undertake detailed historical analysis, to look at seasonal trends in occupancy or average daily rate and then adjust prices accordingly. As occupancy increased, rates increased. Conversely, when occupancy rates were low, many hotels offered deep discounts. An oft-heard argument was that maintaining rate discipline was critical, since discounting to maintain occupancy could damage the brand. Others argued that discounts attracted new customers and differentiated hotels in a crowded market.

In the 1990s, hotels began using automated yield management systems (along with the airline industry). These used algorithms (inspired by those used in the stock market) to maximize revenue per available room (RevPAR). These algorithms factored in historical considerations (taking into account page positioning on online sales channels, competitors rates, inventory availability and other variables) together with real-time information on market conditions to extrapolate trends, to allocate inventory at the appropriate price. Some


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revenue management systems incorporated commodity and option pricing principles to help predict what the market would bear in terms of rates.

Rates

Like most hotels, Starwood had different rate tiers for rooms (refer to Figure 1). Starwoods negotiated corporate rates had fallen 20% since 2008. In September 2010, Starwood sought to raise room rates by just under 10%. But many corporate clients continued to request (and obtain) services, such as free parking, breakfast, internet and gym access. With the greater transparency of rates due to the internet, corporate and consortium contracts had been pushed to become more competitive.

Figure 1: A Selection of Starwood Room Rate Types

Rack rate (RACK) Highest room rate charged, given to a walk-in

Corporate rate (COR) Room rates offered to business people

Best Available Rate (BAR) Rate available to the general public that does not require pre-payment, does not impose cancellation or change penalties and/or fees, other than those imposed as a result of a hotel propertys normal cancellation policy

Starwood Executive Travel (SET) Corporate discount codes arranged by a negotiated contract

Government Rates (GOV Government and military travelers on a per diem budget

Auto Club (AAA) Discounts for AAA members, of 5% to 15% below BAR

Senior Citizens (SNR) A 50% discount to people 60 and older (restrictions on room type and peak periods)

Source: FlyerTalk.com, Starwood.com and authors research

Distribution

Starwood distributed its hotel rooms in several ways. Individuals could book directly with the individual hotel (i.e. by phoning the Customer Contact Center or booking on the proprietary hotel website). Alternatively, they could book rooms through a travel agent (which acted as a retailer), a tour operator (which operated as a wholesaler, bulk buying rooms at a discount and then bundling and reselling) or an online reseller (such as Travelocity or Expedia) which respectively used the Global Distribution Systems (Sabre, Apollo/Galileo, Worldspan and Amadeus) to book hotel rooms. GDS was a network of computers which provided computer-based reservation services to travel agents, and was used long before the internet.

Figure 2 summarizes the range of distribution channels available to guests seeking to reserve hotel rooms.


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Figure 2: Starwoods Distribution Channels

Starwood managed its room bookings through a centralized marketing system, which accounted for 45% of net room revenue globally in 2008. It also provided opportunities to cross-sell and up-sell hotel offerings. Franchised hotels could also transfer their reservation calls to a Customer Contact Center associate to ensure bookings.

The company viewed its online booking system as extremely important. The reservation system, called Valhalla, was used to monitor online bookings. If a booking had a problem, Valhalla indicated whether the problem lay in the booking itself, in one of the bookings back-end systems, or another issue. Starwood had also created business insight dashboards, which displayed metrics from the reservation system, such as booking volume, average daily, booking rates and daily revenue. If and when the Valhalla reservation system had a problem, the dashboard immediately displayed the top-line impact. This allowed IT staff to address whichever issues were most critical to the business.

Property Management Interface

Property management systems are the technology hotels use to manage inventory and guests. For owned hotels, Starwood used a property management system to manage guest bookings, online reservations, point of sale, telephone and other amenities. This system interfaced with the centralized marketing system, as well as yield management systems, front office, back office and point of sale systems. Property management systems could communicate with central reservations data systems, allowing information such as guest preferences to be transferred from hotel to hotel.

Hotel Reservations

Customer

Hotel

Phone: Customer Contact Center

Online: Proprietary

Website

Travel Agent Tour Operator Online Re-seller

Global Distribution Systems (GDS)Centralized Marketing

System

Hotel Reservations

Customer

Hotel

Phone: Customer Contact Center

Online: Proprietary

Website

Travel Agent Tour Operator Online Re-seller

Global Distribution Systems (GDS)Centralized Marketing

System


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In 2007 Starwood announced that it had centralized some of its property management systems, as well as other technology resources, for its hotels that shared a geographic location. Gustaf Burman, of Starwoods IT division, noted:

In New York, for example, we have about five or six hotels running on one property management system. We do that when we own our hotels. In a multiple management scenario, we sometimes do not, due to the issues of data security.5

Starwood was studying the possibility of greater centralization opportunities in Europe, but this was not always feasible. For example, when it acquired Le Mridien Hotels & Resorts, there were 12 hotels in a centralized environment, but it proved to be more cost efficient to put the systems back into the hotels.

Impact of the Internet

The internet had had a major impact on the hotel industry. In the pre-internet era, tour operators served as wholesalers, bulk buying discounted hotel rooms. They would then package these rooms, i.e. by bundling them with flights, to sell to travel agents. Travel agents acted as intermediaries, selling hotel rooms to customers. With the internet, hotels began to sell rooms directly to customers. In 2007, 40% of all leisure and 35% of business travel bookings were made online.

Third-party websites, such as Travelocity.com, Expedia.com and Priceline.com, also began acting as intermediaries, selling discounted hotel rooms. These third parties negotiated a discounted rate with the hotel, receiving commissions, reduced room rates or other contract concessions. Some of these third parties were commoditizing hotel rooms by emphasizing price and general quality indicators at the cost of brand identity. This potentially threatened both the profitability and brand identity of hotels.

In September 2010, an online reseller of hotel rooms, Skoosh.com, claimed that the hotels it bought room bookings from were pressuring it to maintain minimum prices, in a practice called rate parity. Its director filed a complaint with the UK Office of Fair Trading (OFT), which said it would conduct a formal investigation into suspected breaches of competition law in the hotel online booking sector and has written to a number of parties in the industry to request information.

Promotion

Advertising

In addition to the usual advertising campaigns, Starwood had some innovative experiential marketing campaigns. For example, in 2007, Westin launched an advertising campaign called This is How it Should Feel, in major cities across the US including New York, Chicago, Boston, Atlanta and San Francisco. Rather than showing the hotels, the intention was to convey what customers felt like when they were at a Westin hotel. In New York,

5 Baker, M. B. Hotel Chains Integrating PMS Data. Business Travel News, 2007. http://www.businesstravelnews.com/Business-Travel/Hotel-News/Articles/Hotel-Chains-Integrating-PMS-Data/#.


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three subway cars were completely wrapped to create a 360-degree immersive environment of a rainforest, a tropical scuba dive or a sauna leading to an icy lakeshore; the cars ran between Grand Central Station and Times Square for 30 days. It used 3-D and Bluetooth billboards, image-shifting lenticulars and sub-media ads. For example, using the motion of the trains, images lining the tunnel walls acted like a giant flipbook. Morning commuters saw a trademark Westin plant unfurl, with the words: Morning stretch. Evening commuters saw a crashing wave and the words: Rush hour.

Loyalty Scheme

Starwood Preferred Guest (SPG) was the hotel loyalty scheme for all Starwood hotels. SPG members earned points based on spending, which could then be redeemed at any of the companys owned, leased or franchised properties. There were also opportunities to redeem points with third parties, such as airlines. SPG was the first loyalty scheme to have no blackout periods restricting their use, for example over New Year and other holidays.

The SPG scheme was valuable in terms of driving profits and revenues. In The Luxury Collection hotels, SPG members stayed more often and spent more on food and beverages than non-members, and contributed 46% of global net room revenue. SPG also promoted brand trial, opportunities for cross-selling and up-selling. Finally, customers over time returned more often, and as such, it encouraged brand loyalty.

Partnerships

Starwood had partnerships with a range of consumer brands, whereby products would be available in guest rooms. Starwood felt that this would contribute to the overall guest experience. These brands included apparel and media companies. For example, Victorias Secret products were available in W guest rooms, and guests would receive discounts on merchandise as well as tickets to sneak peak fashion shows, held at the W Hotels and attended by celebrities.

In 2010 Sheraton partnered with Microsoft to create The Link@Sheraton experienced with Microsoft. This transformed underused lobby space into a social space and connectivity hub in the heart of the lobby, where guests could work, relax and connect with others when traveling alone. Associated food and beverage sales were expected to drive revenue. Also, it partnered with JWire (a location-based mobile media company) to enable advertising across the WiFi network. Advertisers could run location-targeted advertising on the WiFi. Hotel guests were an extremely desirable audience for advertisers. They spent an average of two hours connecting over WiFi and consuming content across multiple devices.

Future Growth

The Starwood board ousted CEO Steve Heyer in 2007 and replaced him with Frits van Paasschen (who ran Coors Brewing Company). Van Paasschen brought Starwood into untapped, lower-end markets in North America with two new hotel brands. Aloft was its first entry into the limited-service hotel business, dominated by Marriott Courtyard. Five hundred Aloft hotels were planned by 2013. Element, an extended-stay chain, was launched as a lower-priced alternative to Westin.

Van Paasschen looked to emerging markets as the major source of Starwoods future growth. In 2009 he announced his plan to open 70% of the companys new hotels outside the US.


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Half of the 600 hotels planned for construction between 2008 and 2012 were in countries such as China, India and Qatar. Starwood had opened the Great Wall Sheraton Hotel in Beijing in 1985 the first international branded hotel in the Peoples Republic of China. In 2010, with 31 hotels in China (and another 34 in the pipeline), Starwood was the four- and five-star hotel leader in China.

Simon Turner, president of global development for Starwood, highlighted the advantages of being the first-mover in China:

When we opened our first hotels in China, we were basically an outpost for Western travelers. Today, more than 50% of our guests in China are Chinese. The Chinese are beginning to become a major global travel force as well, and by 2015 China will have 100 million outbound travelers, the largest in the world. For some perspective, that is more people than visit France each year, which is the number one international tourist destination in the world. When they travel abroad, the Chinese will stay with the hotel brands they know from home, which underscores the significance of our growing footprint of flagship hotels in China and its halo effect on Starwood's hotels around the world.6

Looking to the future, industry observers wondered whether the Starwood brand portfolio was balanced. To grow, should some brands be added? If so, should the additions be acquired or developed in-house? And, were some brands in the portfolio surplus to requirements?

6 China Becomes Starwoods Second Largest Hotel Market behind U.S. with 60+ Hotels and 86 New Hotels in the Pipeline. Hotel Online, 27 October 2010. http://www.hotel-online.com/News/PR2010_4th/Oct10_ChinaStarwood.html [accessed 13 January 2010].

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d sc

ent p

rogr

ams,

W h

otel

s del

iver

an

expe

rienc

e un

mat

ched

in th

e ho

tel s

egm

ent.

Luxu

ry a

nd u

psca

le

full-

serv

ice

hote

ls,

reso

rts a

nd re

side

nces

A li

festy

le b

rand

com

petin

g in

the

uppe

r ups

cale

sect

or a

roun

d th

e gl

obe.

Eac

h ho

tel o

ffers

re

new

ing

expe

rienc

es th

at in

spire

gue

sts to

be

at th

eir b

est.

Firs

t im

pres

sions

at a

ny W

estin

ho

tel

are

fuel

ed b

y sig

natu

re s

enso

ry e

xper

ienc

es o

f lig

ht,

mus

ic,

whi

te t

ea s

cent

and

bo

tani

cals.

Wes

tin r

evol

utio

nize

d th

e in

dustr

y w

ith i

ts fa

mou

s H

eave

nly

Bed

a

nd

Hea

venl

y Ba

th

and

lau

nche

d a

mul

ti-m

illio

n do

llar

reta

il pr

ogra

m f

eatu

ring

thes

e pr

oduc

ts. W

estin

is th

e fir

st gl

obal

bra

nd to

offe

r in-

room

spa

treat

men

ts at

eve

ry h

otel

and

th

e fir

st to

go

smok

e-fre

e in

Nor

th A

mer

ica.

The

Wes

tin S

uper

food

s m

enu

is a

uniq

ue

way

we

brin

g re

new

al to

gue

sts, w

ith fo

ods

cons

ider

ed b

est f

or p

rovi

ding

dise

ase-

fight

ing

and

heal

th-e

nhan

cing

ben

efits

due

to th

eir h

igh

nutri

ent a

nd a

ntio

xida

nt c

onte

nt.

I N T

E R

N A

T I

O N

A L

- 1

4 -

IMD

-5-0

766

Exh

ibit

1 (c

ontin

ued)

Luxu

ry a

nd u

psca

le

full-

serv

ice

hote

ls,

reso

rts a

nd re

side

nces

A E

urop

ean-

insp

ired

bran

d w

ith a

Fre

nch

acce

nt. E

ach

of it

s ho

tels

, whe

ther

city

, airp

ort

or re

sort,

has

a d

istin

ctiv

e ch

arac

ter d

riven

by

its in

divi

dual

ity a

nd th

e Le

Mr

idie

n br

and

valu

es.

With

its

und

erly

ing

pass

ion

for

food

, ar

t an

d st

yle

and

its c

lass

ic y

et s

tylis

h de

sign

, Le

Mr

idie

n of

fers

a u

niqu

e ex

perie

nce

at s

ome

of t

he w

orld

s t

op t

rave

l de

stin

atio

ns.

Luxu

ry a

nd u

psca

le

full-

serv

ice

hote

ls,

reso

rts a

nd re

side

nces

Larg

est

bran

d se

rvin

g th

e ne

eds

of l

uxur

y an

d up

scal

e bu

sine

ss a

nd l

eisu

re t

rave

lers

w

orld

wid

e. W

e of

fer

the

entir

e sp

ectru

m o

f co

mfo

rt. F

rom

ful

l-ser

vice

hot

els

in m

ajor

ci

ties

to lu

xurio

us r

esor

ts b

y th

e w

ater

, She

rato

n ca

n be

fou

nd in

the

mos

t sou

ght-a

fter

citie

s and

reso

rt de

stin

atio

ns a

roun

d th

e w

orld

. Eve

ry g

uest

at S

hera

ton

hote

ls a

nd re

sorts

fe

els

a w

arm

and

wel

com

ing

conn

ectio

n, t

he f

eelin

g yo

u ha

ve w

hen

you

wal

k in

to a

pl

ace

and

your

fav

orite

son

g is

pla

ying

a

sen

se o

f co

mfo

rt an

d be

long

ing.

Our

in

nova

tion,

the

Link

@Sh

erat

on (

SM)

with

Mic

roso

ft, e

ncou

rage

s ho

tel g

uest

s to

com

e ou

t of t

heir

room

s to

enj

oy th

e en

ergy

and

soc

ial o

ppor

tuni

ties

of tr

avel

ing.

At S

hera

ton,

w

e he

lp o

ur g

uest

s co

nnec

t to

wha

t mat

ters

mos

t to

them

, the

off

ice,

hom

e an

d th

e be

st

spot

s in

tow

n.

Sele

ct-s

ervi

ce h

otel

s D

elig

hts

the

self-

suff

icie

nt tr

avel

er w

ith a

new

kin

d of

com

fort,

app

roac

habl

e st

yle

and

spiri

ted,

can

-do

serv

ice

al

l at t

he h

ones

t val

ue o

ur g

uest

s des

erve

. Our

gue

sts

star

t the

ir da

y fe

elin

g en

ergi

zed

and

finis

h up

rela

xed

and

free

to e

njoy

littl

e in

dulg

ence

s tha

t mak

e th

eir t

ime

away

from

hom

e sp

ecia

l.

Sele

ct-s

ervi

ce h

otel

s Pr

ovid

es n

ew h

eigh

ts,

an o

asis

whe

re y

ou l

east

exp

ect

it, a

spi

rited

nei

ghbo

rhoo

d ou

tpos

t, a

have

n at

the

side

of t

he ro

ad. B

ringi

ng a

cos

y ha

rmon

y of

mod

ern

elem

ents

to

the

clas

sic

Am

eric

an o

n-th

e-ro

ad t

radi

tion,

Alo

ft of

fers

a s

assy

, re

fres

hing

, ul

tra

effo

rtles

s al

tern

ativ

e fo

r bot

h th

e bu

sine

ss a

nd le

isur

e tra

vele

r. Fr

esh,

fun

and

fulfi

lling

, A

loft

is a

n ex

perie

nce

to b

e di

scov

ered

and

redi

scov

ered

, des

tinat

ion

afte

r des

tinat

ion,

as

you

ease

on

dow

n th

e ro

ad.

Exte

nded

stay

hot

els

A m

oder

n, u

psca

le a

nd in

tuiti

vely

des

igne

d ho

tel e

xper

ienc

e th

at a

llow

s gu

ests

to li

ve

wel

l and

feel

in c

ontro

l. In

spire

d by

Wes

tin, E

lem

ent h

otel

s pr

omot

e ba

lanc

e th

roug

h a

thou

ghtfu

l, up

scal

e en

viro

nmen

t. D

ecid

edly

mod

ern

with

an

emph

asis

on

natu

re,

Elem

ent i

s int

uitiv

ely

cons

truct

ed w

ith a

n ef

ficie

nt u

se o

f spa

ce th

at e

ncou

rage

s gue

sts t

o st

ay c

onne

cted

, fee

l aliv

e, a

nd th

rive

whi

le th

ey a

re a

way

. Prim

arily

all

Elem

ent h

otel

s ar

e LE

ED c

ertif

ied,

dep

ictin

g th

e im

porta

nce

of th

e en

viro

nmen

t in

toda

ys w

orld

.

Sour

ce: C

ompa

ny w

ebsi

te

I N T

E R

N A

T I

O N

A L

- 1

5 -

IMD

-5-0

766

Exh

ibit

2 T

he S

hera

ton

Bra

nd

Cus

tom

er A

ssoc

iate

Lan

guag

e A

rriv

al

Arr

ival

shou

ld fe

el li

ke y

ou ju

st w

alke

d in

to a

room

and

a fa

mili

ar so

ng is

pla

ying

. It s

houl

d be

war

m, w

elco

min

g an

d co

mfo

rtabl

e.

App

ropr

iate

Arr

ival

Gre

etin

gs:

Hel

lo. W

ere

hap

py y

our

e he

re. H

ow w

as y

our t

rip?

W

elco

me

back

! Its

gre

at to

see

you

agai

n.

Inap

prop

riate

Arr

ival

Gre

etin

gs:

Che

ckin

g in

?

Dep

artu

re

Dep

artin

g is

like

fini

shin

g a

good

boo

k th

at y

ou w

ant t

o re

ad a

gain

. It s

houl

d be

hop

eful

and

app

reci

ativ

e.

App

ropr

iate

Dep

artu

re F

arew

ells

: T

hank

s for

stay

ing

with

us.

It w

as n

ice

to h

ave

you.

W

e lo

ok fo

rwar

d to

seei

ng y

ou a

gain

.

Inap

prop

riate

Dep

artu

re F

arew

ells

: G

ood-

bye.

D

inin

g Li

ke a

shar

ed se

cret

, a m

eal c

an se

rve

you

with

the

feel

ing

of b

eing

incl

uded

in so

met

hing

spec

ial.

It sh

ould

be

fulfi

lling

, nou

rishi

ng, a

nd e

njoy

able

. A

ppro

pria

te D

inin

g In

form

atio

n:

By

the

way

, if y

ou h

aven

t ea

ten,

you

mig

ht e

njoy

ord

erin

g ou

r roo

m se

rvic

e. Y

oull

find

the

men

u on

you

r des

k.

If y

ou h

aven

t ea

ten,

you

mig

ht w

ant t

o vi

sit o

ur X

XX

X re

stau

rant

.

May

we

reco

mm

end

loca

l res

taur

ant X

X. I

ts a

favo

rite

with

gue

sts.

In

appr

opria

te D

inin

g In

form

atio

n:

A ro

om se

rvic

e m

enu

is in

you

r roo

m.

O

ur re

stau

rant

is a

roun

d th

e co

rner

.

I N T

E R

N A

T I

O N

A L

- 1

6 -

IMD

-5-0

766

Exh

ibit

2 (c

ontin

ued)

W

ake-

up C

all

The

wak

e-up

cal

l is t

he fi

rst w

arm

con

nect

ion

of th

e da

y. It

shou

ld b

e co

nsid

erat

e, fa

mili

ar a

nd h

elpf

ul.

App

ropr

iate

Wak

e-up

Cal

l Mes

sage

s:

Goo

d m

orni

ng. T

his i

s you

r wak

e-up

cal

l. Pl

ease

let u

s kno

w if

ther

e is

any

thin

g w

e ca

n do

to h

elp

you

star

t you

r day

.

Inap

prop

riate

Wak

e-up

Cal

l Mes

sage

s:

Thi

s is y

our w

ake-

up c

all.

E

veni

ng G

reet

ings

W

hen

you

are

in to

uch

with

the

wor

ld a

roun

d yo

u, y

ou c

an d

rift o

ff re

assu

red

that

the

new

day

will

star

t off

righ

t. Th

e m

essa

ge a

t the

end

of t

he n

ight

shou

ld b

e pe

acef

ul a

nd

genu

ine.

A

ppro

pria

te E

veni

ng G

reet

ings

: I

hop

e yo

u ha

ve a

ple

asan

t nig

ht.

P

leas

e le

t us k

now

if y

ou n

eed

anyt

hing

as y

ou se

ttle

into

you

r roo

m. G

ood

nigh

t.

Inap

prop

riate

Eve

ning

Gre

etin

gs:

Goo

d ni

ght.

Fr

ee ti

me

Whe

ther

goi

ng o

ut, l

oggi

ng o

n, o

r ju

st k

icki

ng b

ack,

fre

e tim

e al

low

s yo

u to

alte

r yo

ur s

tate

of

min

d an

d ke

ep in

tune

with

wha

t is

impo

rtant

to y

ou. I

t sho

uld

mak

e th

e gu

ests

feel

reas

sure

d, c

onte

nt, a

nd a

t eas

e in

thei

r sur

roun

ding

s.

App

ropr

iate

Enc

oura

gem

ent:

I h

ope

you

have

tim

e fo

r som

e of

the

loca

l site

s. Y

our

e w

elco

me

to lo

ok o

ver t

he p

amph

lets

in th

e st

and

next

to th

e C

onci

erge

Des

k.

Inap

prop

riate

Enc

oura

gem

ent:

Pam

phle

ts a

re in

the

stan

d ne

xt to

the

Con

cier

ge D

esk.

Sour

ce: S

tarw

ood

web

site

: http

://de

velo

pmen

t.sta

rwoo

dhot

els.c

om/b

rand

s/sh

erat

on

Documents

Case Study 4b