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Lofty Ambitions, an interview with Starwood.
By Steve Shellum
Tuesday, 19th June 2007
 
Starwood has high aspirations for aloft with a target of 150 hotels in Asia Pacific by 2009; an interview with the brand's boss Brian McGuinness, and the man who is spearheading its development in the region, Tom Monahan.

Why does the industry need another brand?

Monahan: Starwood has always been strong in upper-upscale and luxury hotels where all our other brands are, but we didn't have anything in the upper-midscale category.

Globally, and certainly in Asia Pacific, we saw this as an opportunity to grow.

It will also help us attract a different guest than we normally get. Research among our Starwood Preferred Guest members showed they were spending one million room nights in other branded accommodation in North America alone.

So these are nights that are lost to you?

Monahan: Yes, that's right, pretty much, and if you look at the Asia Pacific landscape of hotels, I believe aloft will be the first pure select-serve product.

Aloft is really for the more self-sufficient type of traveller, and this enables us to put together a "box" that is very economical for developers to build. We're trying to attract a certain type of consumer and give them something they like, while making it much more economical for the developer.

McGuinness: Our brands were so focused in one tier that it didn't allow us to flow customers through their own life-cycles. A typical hotel customer has the ability to move up from the budget-hotel sector and upgrade as their careers progress until they eventually prefer one specific brand that fits their lifestyle. This gives us an opportunity to really attract and catch customers at an even earlier age – aloft, with its greater consciousness towards design and elements aimed at those new-age customers, will appeal to a younger demographic.

The brand's affiliation to W and Westin will allow us move them to a select-service brand where they will pay a higher rate but get far more for their money at a juncture in their life when they can afford it and really want that level of service.

When will the first alofts open?

Monahan: The first will open in 2008 in the US, and the first in Asia will open in Beijing in 2009. Our global footprint is 500 hotels by 2012. We're talking about 150 in Asia and we aim to sign 70 by the end of 2009.

What are these figures based on – wishful thinking or feedback from developers?

Monahan: It's feedback from the developers and our understanding of the growth for the markets. Our target of 500 hotels might sound a lot, but here's a spectacular fact: we now have more hotels under development in China than we currently operate.

If you look at China alone, every major city has the potential for at least one aloft hotel. In markets like Beijing and Shanghai, you can easily subdivide the cbd into six or seven locations than could accommodate an aloft hotel. So it won't take long to get to 120-150 hotels across the region. Also, we are working with developers who have the capability to build multiple properties.

There's not much point in a major blue-chip developer building one 150-room hotel – you have to be thinking five, 10 or 15 properties with major developers.

From our discussions with developers, there is a very strong interest and intent to start with three or four properties and then roll out 15, so there will be a wave of activity over the next few years.

One developer we met with recently has plans for 15-20, and he'll build five at a time.

So, to answer the question: we have very strong and ambitious leadership in White Plains [Starwood headquarters] and the confidence that 500 hotels worldwide and 120 in Asia Pacific is well achievable.

Where are you looking in Asia Pacific?

Monahan: The core focus of our efforts now is China, India, Thailand, Singapore and Australia. The rationale for that focus is that we have strong specific demand from developers and owners of existing Starwood properties, and we are ready to roll out.

There is also great market potential in Japan and Korea and other markets but, in terms of speed of access of getting properties open, those will take a little longer.  Hong Kong is certainly a market where aloft as a product would work well but, again, getting the right site in terms of cost of access is a little harder.

What revpar are you aiming for?

Monahan: The typical average rate will range from us$80 in core China markets to us$130-us$140 in strong locations in Australia, so the average will come in at around us$100 across the marketplace.

If you've got a lifestyle product with great flexibility on rates absolutely slap bang in the middle of a major city, you can compete with higher-end product. In a secondary location, we can still be profitable with a competitive local rate.

What is the aloft demographic?

McGuinness: We envision 20-30 years of age, maybe 20-40, with the sweet spot being about 36.

What's the essence of the brand?

McGuinness: It's a fun, vibrant, energetic product. Wheth--er the guest is there on business or leisure, he can get things done in a comfortable and efficient manner, while feeling an energy in the building.

The W team really brought that fun, vibrant essence to the upscale market, making it a more affordable and reachable product, recognising those travellers are into iPods and designer goods. It doesn't have to be expensive, it just needs to be good – a lifestyle statement.

The same team that was behind W is also behind aloft and there are many connections, particularly in the service style, that will come across from W into aloft.

It's not just a physical product – it's something that comes through from the training and the attitude of the staff to the guests so they are able to really help and interact with the guests as they experience the product.

What about staffing levels?

McGuinness: We have 45 full time employees in a 155-unit prototype. So it's very efficient compared to a full-service operation. As mentioned before, the training of those 45 is very critical as a lot of them are actually facing guests.

What we see in our strongest properties worldwide across Starwood is that guests come back for the people more than anything else, so training is absolutely critical for the aloft brand.

We have extensive training manuals detailing everything from the hiring to the training of each position in a property so we can be sure when we open a new property that we are really delivering the experience to the guests rather than just giving them a box to check in and out of. The software, the people, are core to everything we do.

How much input did developers have when you were coming up with the concept?

McGuinness: The development board of advisers brought in premier, mid- and upscale developers from across North America and asked them what they actually wanted from a development, and we learned a lot from those experiences.

In Asia Pacific, we've talked on a one-to-one basis to developers in each market, many of whom are existing owners of Starwood hotels.

We've said, "Here's a concept, here's a product – how would you build it?"

The preferred construction method, for example, in Southeast Asia is a poured-concrete format, so obviously the construction and plans need to be geared to that, rather than the precasting format favoured in North America and Australia.

We've taken all that into account, plus the operating and staff requirements, so we are ready with a product in Asia Pacific which addresses the needs of the developers and the consumers in this market.

What is the cost of putting together an aloft room, compared to a room of comparable size in a standard hotel?

Monahan: We've gone through comprehensive costing of aloft models in Asia Pacific core markets, but I cannot give a direct comparison because we haven't done the same thing for a Westin or Sheraton hotel.

But the range of cost across the Southeast Asian market [excluding Australia] is from us$65,000 to us$80,000 per room for standard prototypes, ready to operate, including all ff&e and small operating equipment.

We've looked at this from a developer's viewpoint, and it's considerably more cost effective.

We are hearing from developers that this is one of the few concepts – if not the only concept – in new-build hotels that really can deliver a consistent profit that is comparable to other real-estate classes.

At the end of the day, they have to get return on their money, and we're confident we can deliver that.

Will development in the region be driven by new builds?

McGuinness: We've looked at the experience of some of our competitors in this market segment and, frankly, some of our own experiences with Starwood brands and found there's a history of brands being compromised by taking old hotels and trying to make them into something different.

While we haven't completely discounted the possibility of conversion if the right property comes up, from deals we've looked at so far, we've found it makes most sense to go for pure new build. It allows us to roll out with exactly the product we want.

By the time you've gone through renovation to an existing city hotel, the cost of doing that is very near that of a new build anyway – then you've got all the additional design costs, as well.

We've looked at three conversion opportunities in the region, and the key elements are the shape of the room and ceiling height.

These are core elements in aloft hotels, and we need to make sure we can re-create the room in a conversion. One of the challenges we see in a conversion is that there is often too much public space – what are you going to do if you don't want five restaurants, which a lot of these old hotels have?

The aloft economic model would not work in such cases.

What's the ideal number of keys for an aloft?

McGuinness: The standard prototype for a seven-storey model is 155, and that works very well for the public space we have.

Is the concept adaptable to changing technology and trends?

McGuinness: Everything is completely scalable to future technology, and we're dropping three data cables into every room. We don't need them today but, for example, the traditional coaxial cable for cable tv will eventually disappear as tvs become more dynamic, and we'll be prepared for that.

Is there flexibility for owners to inject some local flavour into their aloft hotels?

Monahan: There are core elements to the product that we want to make certain are there, but if a developer wanted to localise or regionalise his hotels, we could certainly work with him on that.

You appear to have a niche product just waiting to be developed. What comments have you received from developers?

McGuinness: Developers have come to us saying: "This is exactly what we've been looking for".

They've had experience with luxury hotels and they don't want to do anymore of that as their sites, land and mixed-use developments simply don't support a luxury hotel.

They also appreciate, based on past experience, Starwood can put up to half the business into their properties. They're saying: "If you say you can deliver to this level, we'll trust you on it."q

The first aloft in the region is scheduled to open in 2009 in Beijing. The aloft Beijing, Haidian, owned by Beijing Yongtai Hotel Management, will include 200 guestrooms, 3,900 square feet of meeting space, and three restaurants including re:fuel by aloft, a one-stop f&b area, offering sweet, savoury and healthy food, snacks and beverages to grab-and-go 24-hours a day.

"We have worked closely with key developers and guests across Asia Pacific to customise our prototype and signature features specifically for this market, to create an efficient product that guests will love," says Ross Klein, President, W Hotels Worldwide and the aloft brand.

"We are excited to be introducing aloft to Beijing and are looking forward to introducing more aloft hotels to other cities in the Asia Pacific region."

The hotel will be part of an integrated mixed-use complex, including offices, residential buildings and the recently signed Four Points by Sheraton Beijing, Haidian.

"The team in North America spent a lot of time talking to developers and consumers to get a product spec that really meets our requirements," says Starwood vp Brian McGuinness, who is responsible for driving the aloft concept.

"For the consumers, it does what they need it to do, and no more.

"So when we looked at the design, rather than looking at it from the traditional hotel mentality, we looked at it from a developer's perspective and actually talked to people who build a broad range of types of property across North America, and now in Asia Pacific.

"We said, ‘Well, how do we build this guestroom; what makes it expensive to build this room?'

"The bed backboard, for example, is made up of eight pieces that can fit into a standard elevator. The hard wall for the bathroom is actually only a small section, the rest of it is actually the back side of the headboard. A modestly skilled team can come in, very quickly screw together the eight pieces of the bed and then move onto the next one. You get away from the time and expense of all the carpentry and cabinetry that usually goes on.

"Everything comes in pre-wired, and is very simple. The electricity and dataport connections are right next to the bed and in the work area. Windows face a particular way so that the bed faces the light, and the flat-panel screen goes between the oversized windows.

"The carpet is 12 feet across, single roll – you just roll it out, and there's no wastage.

"The technology in the room is designed so that when things are updated and upgraded you don't have to pull out all the cabling.

"One telephone is cordless and positioned next to the bed, so you don't have to put in additional wiring, and the plug-and-play system features a docking station for guests to plug in their mp3 players or laptops.

"It's smart technology, but it doesn't have to be very expensive in terms of the installation or upgrade."

"Our mission with aloft is to bring style, convenience and a social environment to an otherwise tired, lonely experience, all at a great price," says Ross Klein, president of W Hotels Worldwide and the aloft brand.

Tagged a Vision of W Hotels, the aloft brand aims to shake up the lodging industry with urban-influenced design, accessible technology, style and a social atmosphere.

aloft is claimed to offer a "total sensory experience", with guestrooms featuring loft-like nine-foot ceilings and oversized windows to create a bright, airy environment.

The centrepiece of the aloft room is a signature bed, together with large stylish bathrooms with oversized walk-in showers and amenities created by bliss spa.

Each guestroom is also a combination high-tech office and entertainment centre, featuring wireless internet access, plug-and-play, and one-stop connectivity for multiple electronic gadgetry such as pdas, cell phones, mp3 players and laptops – all linked to a large flat panel hdtv-ready tv.

Following its W heritage, aloft hotels will feature "atmospheric public spaces" designed to draw guests from their rooms to socialise and make friends.

Other facilities include the re:mix communal lobby area, bar w xyz, re:charge fitness centre and splash, an indoor pool.

Copyright: HOTEL Asia Pacific magazine - www.hotelasiapacific.com
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