One project though – the 1 Hotel Washington DC actually seems like it will be their flagship location – that is.. Once it finally gets off the ground.

Last week I came across a story which did some investigating the status of the 1 Hotel Washington DC – now currently an undeveloped plot of land surrounded by “1 Hotels Coming Soon” signs.

(Photo from Bisnow.com)

It seems as though they were able to get in touch with Neil Jacobs, Starwood Capital’s lead for the SH Group which is in charge of the 1 Hotel & Baccarat Hotel brands.

Neil stated

that the project has slowed due to the credit freeze, but that he’s hopeful it’ll resume by year end.

Unfortunately, that’s also the same time that Perseus Realty Group (the developer) has as their scheduled opening time frame.

Neil also stated that Starwood owns the land free and clear so there is no rush to finish the project due to a mortgage or bank commitment.

Sigh, so when will we see a 1 Hotel?! Hopefully during this time Starwood has had a chance to refine the brand even more, ensuring its success once it finally launches.

andrew@alconic-inc.com

I accidently came across this interview today – live – while looking for a picture of Barry Sternlicht & Steve Hanson ringing the opening bell at the NYSE this morning.

Wow. I’m glad I did. (Archived version of web cast should be available here)

Maria Bartiromo, interviewed Barry for about 15-20 minutes where he gave a lot of interesting insight into how he became successful and how he looks at the world and how he became who he is today.

• Sternlicht started Starwood Capital at 31, after losing his job in real estate, and being completely broke, very humble beginnings.
• He created Starwood Capital because he loved real estate and he loved finance, and he loved design and architecture “if you can make money doing something you love – that’s great”
• Says never give up and keep trying, failure is good. If he didn’t fail with his real estate job before Star Cap, he would not be where he is today.
• When he put together Starwood Hotels, he always dreamed of starting W, a contemporary, modern, hotel chain – the likes of which were not seen before at the time.. Getting Sheraton and Westin together were just a way to the means to be able to build W.
• Made a short comment that I’m still researching.. I thought he said “We launched a new hotel brand, Place Card Hotels..” (I think that’s what he said – then mentioned the city, which I can’t remember) “and just opened the first location on Saturday..” Cant find any information about it anywhere. Anyone have any information?
• Started the Westin Heavenly Bed after his wife fell in love with a mattress from 1-800 Mattress. Thought – why can’t hotels have a mattress this comfortable? They’d pay an extra 20 bucks a room for it. When it would only cost the hotel an extra $.50. Now almost everyone has followed suit.
• Created 1 Hotels as a way to be environmentally conscious. Side benefits – employees & guests would self select.. Employees would search out top work for 1 Hotels to “do good” Guests would go after the brand which actually does good, rather than go to a hotel “which doesn’t wash towels every day and calls themselves environmentally conscious.”
• Guests who go to a 1 Hotel will take the experience home with them – creating the ability to sell things to guests after they leave.
• Sternlicht made an interesting sidenote about 1 Hotels, which demonstrates his humility; while talking about 1 Hotels, he said “We have yet to create one yet.. But you just don’t quit..”
• Made an excellent mention about being passionate about something – and using social media, including blogs to talk about that.. Says.. If you’re passionate about something, talk about it online – social media, create a blog, the people who share your same passion will come to you..

Well said Barry. I’ll hopefully be hearing from you soon.

andrew@alconic-inc.com

The 1Hotels.com face lift isn’t much really, just removing the links for the original 1Hotel properties (Washington DC, New York, Seattle, Scottsdale) and replacing it with some beautiful images having to do with eco-consciousness and nature. Similar to the old site, there still is an area for “One” which seems to be a Concierge service similar to W Hotel’s Whatever/Whenever service that will be your One source for anything essentially.

Currently the only 1 Hotel location that’s known to be under development is the location in Washington DC. The website for the developer lists it as opening in late 2010, and says it will be the flagship property for the brand.

The new 1Hotels.com also shows the rendering of an unknown property at this time – ironically its also the same rendering which appeared in the background when Bloomberg TV interviewed Barry Sternlicht in May. Interview: Part 1 Part 2 (See picture below)

This is exciting to me because it demonstrates that Starwood Capital and Barry Sternlicht has not forgotten about the 1Hotel brand and even though they have slowed down development due to the economy and financing – they are still planning on making an impact in the lodging industry yet again as they did originally with the W.

The future is bright, I cant wait to see it.

andrew@alconic-inc.com

Now it looks as though Starwood is looking to sell each property individually – as that would provide a higher total sale price than a portfolio sale of 9 hotels would.

Unfortunately, Starwood’s sale of each individual hotel within the Societe Du Louvre portfolio goes against Starwoods original intentions of the hotels – keep them together and even expand the Crillon brand name with 6 star hotels throughout the world. In fact, in the press release when the deal was first announced the then-Chairwoman of Groupe Taittinger (which owned Societe Du Louvre) said:

It is of great importance to my family and myself that Barry and his team will bring a unique expertise and a full commitment to further developing the group our family has built over more than a half century,

Barry Sternlicht even chimed in by stating

We look forward to building on the company’s proud heritage by growing its economy hotel business in France and into new markets, particularly Eastern Europe, investing in the renovation and restoration of several of its existing jewel properties and working to extend their famous brands to new assets around the world.

It’s very possible that Starwood might only be selling the real estate and fully intend to keep the management contracts as well as ownership of the brands itself upon the close of the sales – but until that’s confirmed it’s anyone’s guess.

It’s a completely different economic environment now vs 2005 when the purchase of Groupe Taittinger was first announced and optimism was still abundant that the economic boom would continue unabated. That optimism called for Starwood to launch not only a Crillon hotel brand, but also a Baccarat (also purchased from Groupe Taittinger) and 1Hotels & Residences brand. As we know now – there is only one 1Hotel location actively being built (Washington DC) and two Baccarat Residences locations  – both overseas, and no expectation that a Crillon hotel brand may ever see the light of day.

The loss of income from those properties that have not been built/open yet is putting the pressure on Starwood to continue to pay their high returns to their investors – it’s commonly known that Starwood guarantees a 20% return on investment for the investors – making Starwood resort to selling the assets individually to ensure that those returns can be met, as well as ensure an ample supply of new investment money will be available.

I know we haven’t seen the end of Starwood Capital’s investment into the hotel/lodging industry – but the book may soon close on Starwood’s ownership of some of the most elite properties in the world – all in the name of saving face. Its an admirable move from an admirable company – instead of being so consumed with owning the best and having that title, they are showing their true colors by staying true to their reason for being – the clients who provide the money to invest.

andrew@alconic-inc.com

The article had a lot of conflicting information – perhaps due to the language translation, but it stated that the 1 Hotels projects will all be hotels, where as the Baccarat projects will primarily be residential – apparently the response to the Baccarat Residences, Shanghai has been great which gave Starwood the optimism they needed to expand that project.

Starwood is using $2 billion dollars it’s raised, evenly split between it’s non-hotel fund and it’s hotel fund to create these projects, each one is expected to cost between $10 and $200 million dollars, and they are expecting a 12-20 percent yearly return on investment – a pretty high number considering the state of the worldwide economy, but a very logical number for most developments. The timing just seems to be too soon for this to all work out.

The first project which will be under development is the Baccarat Residences Shanghai, which apparently Starwood “will sell” next week. It’s unclear if Starwood is selling the entire project to another developer while still being involved with the project via management and its use of the Baccarat name, or if its inferring that Starwood will start selling units to the public at that time. I tend to think next week will be when they start selling the units to the public since the Baccarat Residences, Shanghai website is still incomplete.

The article also goes on to mention how the first Baccarat project will open in Hawaii next year – but I’ve heard many rumors that the project hasn’t even broken ground and was indefinently delayed.. In fact the projects website has been down since at least the beginning of 2009 – redirecting to the main Baccarat Hotels website. It also states that the Baccarat Dubai project is on schedule for a 2011 opening – another fact that I find hard to agree with since almost all development has stopped or been considerably scaled back in Dubai due to the economic climate.

Over all, this article seemed to be too optimistic – since I’ve heard many stories that just don’t add up to what this story states. Additionally, I find it a little hard to believe that the only place that Starwood is focusing the development of its hotel brands is within China.

Something the article didn’t really touch on – except for a simple sentence stating Starwood would see to own or manage the projects, is the status of Starwood’s newly created SH Group. SH Group was created earlier this year with a very small initial investment of $100 million, with the purpose of opening and managing new 1 Hotel, Baccarat and Crillon locations (more on that here). It’s not very clear what the status of SH Group is, and $100 million is a very small investment – compared to the $2 billion that Starwood is apparently spending in China.

So whats going on here? Anyone have any insight?

andrew@alconic-inc.com

If you didn’t watch it already – Bloomberg TV did probably one of the greatest interviews of Barry Sternlicht I have ever seen. In it he took time to explain the 1 Hotel brand and showed the design board where the designers figure out colors, textures and materials to use in the hotels. In fact, there was even a rendering of a 1 Hotel that i have never seen prior to the interview, so its apparent that the 1 Hotel brand is in progress.. In it he also claimed that the first 1 Hotel will be opening when the economy comes out of the recession.. A bit vague – yet decidedly assuring that it will happen. From all indications Ive seen it sounds like the 1 Hotel Washington DC will be the first 1 Hotel to come online toward the end of 2010.

The biggest hint that the brand is still is in development is a new flash animation at 1Hotel.com. Unfortunately after the animation is finished it brings you to the site that hasn’t really changed since the addition of the “One” page, but still its progress in an otherwise dismal economic environment!

The flash animation doesn’t really provide further insight into the brand – its merely nice music, nice pictures of environmentally friendly materials, concepts, and places, but it also has alot of text which shows what the brand is about.

1 Hotel Logos in Flash Animation

One quote from the animation:

“We don’t want to tell anyone what to believe,
We just want to show them what we believe.”

It’s going to be fascinating to watch Starwood create this brand – from the information contained in this animation, to what Starwood has been promoting all along, it has the capability  to change what is expected in the hotel industry forever – and that expectation isnt just a bar in the lobby, or a room with a really comfortable bed – its the expectation that staying at that hotel will help the environment, make our natural habitats last longer, and bring its natural beauty in to the fabric of a hotel.

andrew@alconic-inc.com

One project seems to still be on the drawing board though – the 1 Hotel Washington DC. The last I’ve heard about it was in December of 08, when a local DC blog posted pictures of the demolition of the existing building that was on site, add to that the banners surrounding the site still advertising the 1 Hotel, the developer (Perseus Realty) still having the project on their website and the architect, Chad Oppenheim posting more and more pictures of the project on its website - I thought it was a very good indication that out of all the 1 Hotel projects, this one was going to be built.

There is an article in today’s NY Times talking about the hotel boom and bust in Washington DC, and I quickly scanned it for any mention of the 1 Hotel (while noticing that the W Washington DC had the main story picture), sure enough, it was mentioned in one of the last paragraphs:

And the site of the 1 Hotel, a planned “eco hotel” from the Starwood Capital Group, remains an empty lot, a year after construction was scheduled to begin. A Starwood spokeswoman said the hotel is expected to open in 2011

Perseus Realty’s site still claims a 2010 opening, which, if the site hasn’t even broken ground yet, i find close to impossible, but I’m really pleased to see that some activity is still occurring with Starwood’s 1 Hotel brand.

For anyone who is watching the news about hotel occupancy, tourism and business travel – this story in the NYTimes also sheds light on some interesting facts. Washington DC is the only major city in America where occupancy, daily room rate and revenue per available room is up vs the same period in 2008. Obviously since Washington DC is the center of US Government – travel to and from Washington shouldn’t exactly decline – in fact, it would increase due to both the new presidency as well as those needing to do business with the government in their attempt to turn the economy right side up.

I’ve had these pictures on my desktop for months now – never got around to posting them, but here are the new images that have been posted for the project from Oppenheim’s website, showing some interesting details about the project. For example – even though it looks like a square from the outside, the hotel is actually an “L” shape. There is a lot being done to make the outdoors look indoors – greenery and shrubs, and the hotel is has “three 11-story volumes, connected by glass enclosed verticlal gardens”.

Since Oppenheim was supposed to be the developer of the 1 Hotel prototype – I wonder if this is the design that the majority of 1 Hotels will take?

All of those pictures were from Oppenheim’s website, unfortunately the 1 Hotel website still has no renderings and very little information about the project.

andrew@alconic-inc.com

Last week, Starwood Capital andBarry Sternlichtannounced the formation of SH Group, a luxury hotel management company, and is looking to raise $100 million to start the company – quite an amount to start a management company if you ask me. But this isn’t going to be just any management company, this looks as though it really is Starwood Hotels II. In fact, the name HAS to stand for “Starwood Hotel Group” although I’ve never seen or heard anything to back that up, but c’mon…

In addition to managing the brands, the SH Group will also own some properties and some properties will be owned by third-party developers. I have a feeling that a lot of that $100 million they are raising will be going toward some equity investments for the construction of a number of properties to get the company off the ground. Once the company gets off the ground, developers will become more interested in the brands, and at that point income from fees generated by management contracts and franchise agreements will start to make up a lot of the revenue.

Ever since Barry resigned from his position at Starwood Hotels a few years back and then announced plans for 1 Hotels, then the purchase of the Louvre Group- I knew that his intentions were always to start another hotel company that may or may not ever be as large as Starwood Hotels – but will definitely have the cachet of being a very well known and sought after luxury hotel group. Not only that but he left Starwood at the top of its game – right prior to their launching Aloft and Element - I found it hard to believe that he was going to be painting in his studio in Nantucket as was reported at the time..

Since that time Sternlicht has launched 1 Hotels, Baccarat and Crillon hotels – although each of the three brands have been scaled back significantly due to the economy, and one – Crillon is being put on hiatus for awhile – probably due to the cost the brand would require when building or converting a hotel into a six-star brand.

With the launch of SH Group Sternlicht and Co are putting into motion a number of things, #1 SH Group will be a vehicle to franchise and manage their newly created hotel brands (1 Hotel, Baccarat and Crillon), #2 Further separating their hotel brands from the Starwood Capital umbrella. Starwood Hotels began its major growth period after it became a separate company from Starwood Capital, and I think having two (or more – depending on what happens with Crillon, Concorde Hotels and the Louvre Group) potentially large hotel brands have their own identity away from Starwood Capital helps int he market place.

Having the brands under the same umbrella as Starwood Capital is very confusing for both hotel investors, and developers and even Starwood Capital’s main investment customers who invest in Starwood’s other funds. Plus if you look at the other viable businesses which Starwood has – Starwood Land, Starwood Energy, and Starwood Infrastructure Finance, you’ll notice that they are somewhat separate from the main Starwood Capital umbrella. If it wasn’t for the publicly traded Starwood Hotels, the SH Group would probably be called Starwood Hotels.

The creation of SH Group is more proof that Starwood Capital is back in the game and very serious once again about hotels. Even though the economy is in the doldrums now and their brands aren’t really making any headway, there is a light at the end of the tunnel – and when the end of the tunnel is reached, Starwood will have some great hotels up its sleeve.

I haven’t been able to find any websites or any information on the SH Group except for the initial press release, Starwood seems to be keeping information very close to their vest, but since they have been pretty fast in setting up websites for their other companies – perhaps we’ll see something soon.

andrew@alconic-inc.com

I started reading the story because the title attempted to argue that due to the economy – green issues in the travel and hospitality industries will be forgotten after all that was gained in 2007-2008 because of tightening bottom lines and overall declining travel.

I don’t agree one bit.

While some things may go by the wayside – a hotel purchasing carbon credits with your room, or encouraging you to travel by bicycle instead of hailing a cab outside the hotel – the overall industry is still heading in the direction of being more green, and more energy efficient.

In order for a theory or a new movement to take hold is for structured improvements to be made to the underlying infrastructure. Meaning, in order for the hotel and travel industry to embrace being green, is for the everyday work environment and methods to change, instead of just putting fresh icing on a stale cake.

I feel that most important parts of becoming green start from the building, its construction and how its outfitted – the same goes for airplanes or cars. If the building is built with LEED Certification in mind, and sustainable methods to recycle water, air, cutdown on electric usage and use building materials which are healthy for the environment only then will it “stick”. There has been many concerns about the cost of this type of outfitting – and for an existing building, it may be more expensive than would be a building just under construction – but living and working in an environment that you want guests to embrace is the only way to proceed.

Look at Starwood Capital’s 1 Hotels. Even though no 1 Hotel’s have opened yet (I don’t care what anyone says – the concept is not the issue the brand hasn’t been able to get off the ground – the credit markets and declining travel is the real issue) I really feel that Barry Sternlicht has grasped the future of the hotel industry, and once again is light eyars ahead of the competition. Just like everyone followed him with W Hotels, and the Westin Heavenly Bed – the industry will soon follow and build or convert hotel chains into the type of Green hotel that 1 Hotels is. The first brand out of the gate is Starwood Hotel’s Element – which has mandated that every Element hotel meets LEED certification. That’s powerful. That’s what will change the environment.

Frills – such as fair trade food purchasing or purchasing carbon credits are important, please dont get me wrong – but I don’t feel that they are going to be embraced as fully and completely unless its done from the bottom up. Plus, if you attempt to compare costs between a fair trade purchase vs a regular purchase you’ll see a difference, which most customers wont really care to notice except for the price increase.

Embracing technology such as flourescent or LED lights, or recycling rain water, or smart flush toilets may cost more upfront, and the customers may not immediately notice the change – but the bottom line of the hotel will notice the difference – and so will our future generations.

Real “Green” is here to stay, economy be damned. But the frills to make you “look” green, they are nothing more than the latest craze and will go the way of Pogs and Beanie Babies.

andrew@alconic-inc.com

Through many sources, (and the fact that no construction has occurred) it seems as though Starwood Capital has held back any further development of all of their Baccarat & 1 Hotel properties, while putting on indefinte hold the development of the Crillon Hotel brand due to the difficulty in getting credit in todays economy. Because of this, it was expected that no activity would occur until 2009 at the earliest for any of the four 1 Hotel sites listed on their website (NYC, Washington DC, Scottsdale, Seattle).

I came across a post from a blog called DC Metrocentric which showed demolition activity (photos below) on the 1 Hotel Washington site occurring in late November. The building which was on the site housed the Nigerian Embassy was being torn down to make room for the 1 Hotel. Proof that the site was still to be a 1 Hotel can be seen by the signs which wrap the fence along the property as well as used to hang down from the top of the building.

Just tearing down a building isn’t a sure sign of the beginning of construction – the building might have been unsafe in its current condition, it may save Starwood Capital taxes if they remove the building from the site (so they only pay taxes on the land, not the land + improvements), or since the building is to be torn down anyway, it may have been to provide jobs (even if temporarily) to construciton workers in the area who are hurting because of the economic slowdown.

But then I took a look at Perseus Realty’s website  – www.perseusrealty.com – which showed the 1 Hotel as one of their “Current Projects”, where previously it had been categorized as a development project, and they also updated the image of the hotel. For the first time that I have seen, an image of the entire hotel building was posted on their site, compared to only one visible corner in the previous image which was sent out with press materials.

1 Hotel Washington DC

So does this mean that construction will start soon on the 1 Hotel Washington DC? That still remains to be seen, but its obvious that the development of this project - along with other 1 Hotels is continuing, perhaps sooner than we expected.

Like always – I’ll keep an eye on the project and report back here anytime I find out more.

andrew@alconic-inc.com