Louvre Hotels is one of the pioneers of franchised hotels and has long experience, built over 150 years through its parent company Société du Louvre, in the hospitality business and franchise development.

Louvre Hotels dates back to 1855 when the Grand Hôtel du Louvre opened in Paris. In 1879 the owners of the next door clothing store, Les Galeries du Louvre, bought the hotel, expanded the store and moved the hotel operation to where the luxury Hôtel du Louvre stands today.

In 1889 the company opened a second hotel and adopted the name Société du Louvre. Twenty years later, the most famous Concorde property, the Hôtel de Crillon, opened after refurbishment. By 1930 the company was listed on the Paris Stock Exchange.

In 1970 the luxury hotel portfolio was grouped under the Concorde name and six years later Société du Louvre acquired its first budget hotel chain, Campanile. Campanile forms the basis of Louvre Hotels budget hotel offering. It is arguably Europe’s best-known hotel brand, benefiting from a 30 year history, and was joined by Première Classe in 1989 and the brand offer completed by the creation in 2000 of the Kyriad and Kyriad Prestige brands.

Read the article here in its entirety.

The excerpt above doesn’t mention how Golden Tulip was purchased by Starwood Capital earlier this year and has since been merged into the Louvre Hotel Group. They’ll spend the beginning part of next year integrating Golden Tulip’s systems, and I think we’ll see Golden Tulip and Tulip Inn’s become sister brands with the Concord, Kyriad, Kyriad Prestige, Campanile, and Premiere Classe brands which already make up the Societe Du Lovure portfolio..

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

Going back even a few months ago, Barry Sternlicht was interviewed on Bloomberg TV, and he stated how the Crillon was an important asset – one which really sets the tone for high end, luxury hotels – so its a surprise to see them placing the property on the market, not only that but real estate prices aren’t exactly booming right now – if the sale were to be put off a few years Starwood would probably see a significantly higher sale price. The sale almost speaks of desperation – but I don’t exactly think that Starwood Capital is dying for money – even in these trying times.

Could Starwood’s intentions be to just simply get the Crillon building and property of their balance sheet, while still owning the name and running the day-to-day operations of the hotel through their management firm? Or is Starwood really giving up on the Crillon name and history that they spoke so highly of when it was first purchased, and even intended to create a 6-Star hotel brand based on the Crillon. It’s also possible that this is some type of a ploy to see what the value of the Crillon would be – but since they apparently hired Eastdil Secured to market the property it would look bad if their intentions were to just make people run around looking to sell a property that they never had intentions to sell in the first place.

Starwood is still listing its intentions to open additional locations on their Groupe Du Louvre website, but they state (and this hasn’t changed since I initially saw it a few years ago) that Starwood “expects to capitalize on the name of Crillon”, not necessarily hold on to the original building.

We’ll see what happens with this property – it’s no secret that Starwood has been looking to sell some of their hotel assets to a Saudi investment group – but still, the Crillon? The creme-de-la-creme?

This is almost too difficult to believe.

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

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

Ah, gotta love good old fashioned investigations based on information that’s publicly available! It’s where alot of my scoops come from!

This is pretty big news because the site on 57th Street right next to Carnegie Hall has been vacant for awhile now, and Extell Development, the owner of the site has not given any indication as to what is going to be built on the site – besides saying a hotel and condos – sometimes it’s even been non-committal on that. W 57th Street is almost like a secondary 5th Ave, a wide street with a high-end feel. It’s also the street where Hilton is building their first timeshare property and Starwood Capital owns property that was expected to be the first Crillon Hotel built in America.

This would be only the second Hyatt in New York City, which is surprising since its such a high end brand that should have more exposure to the New York City market. Its due to have condos, as well as hotel rooms and be in the range of 60-80 stories. The hotel portion will take up less than 1/3rd of the entire tower, the largest part will be the condos. Since details on the entire project are so sketchy – it’s impossible to tell if the condos will be branded as Hyatt Residences, or if it will be a completely separate offering

So now the identity of what will be built on one site on W 57th has been discovered – the question in my mind is what will happen to Starwood Capital’s site a little further east?

andrew@alconic-inc.com

I just found out that Starwood Capital is in talks to sell some of their hotels under the Concorde Hotel brand. For those unfamiliar with Concorde Hotels, it is a group of 25 luxury hotels throughout the world, with 16 of them located in France. Most of the hotels do not include the “Concorde” name in their title, since they are historic and well-known hotels in their own right.

The purported buyer is a Saudi businessman who owns JJW Hotels and Resorts – and supposedly the purchase price for these hotels is 2 billion dollars. If that’s true, Starwood would have made almost all of their initial 1.27 billion in vestment (3.3 billion with today’s rates) in Groupe Taittinger by only selling small parts of the organization.

I’ll explain a little more in a minute – but first I want to mention that some hotels are not going to be sold, such as the Hotel de Crillon, and the Hotel de Louvre, nor are any of the hotels within the Louvre Hotel Group brands – Premiere Classe, Kyriad and Campanille, it’s also not very clear at this point if any of the Concorde Hotels outside of France are included.

If this deal does end up closing, and the price is anywhere near the 2 billion dollar range – Starwood Capital has once again proved itself by being adept of purchasing under utilized assets, turning them around, putting a branding push on them and just running with it.

When Starwood purchased Groupe Taittinger in 2005 it purchased a lot of assets in one transaction, the Concorde Group, Taittinger Champagne, Baccarat Crystal, Envergure Group which was Europe’s largest budget hotel company with 805 hotels at the time (now its second), and Annick Goutal perfumes. After the purchase was completed – Starwood quickly sold the Taittinger Champagne for almost 1 billion – by selling Concorde Hotels for 2 billion, Starwood has made back almost all of its initial investment in three years which is great.

In those three short years, Starwood has done a lot with Groupe Taittinger. It renamed the firm Groupe Du Louvre. It has reinvigorated its economy hotel brands, making new prototypes for Campanille, and giving the brands a decent internet presence which previously was almost non-existent. It also put the economy and Concorde hotel groups under the “Louvre Hotel Group” banner. It has taken Baccarat Crystal which was already a well-known worldwide brand and made a luxury hotel chain from it, and has proposed (although now it’s on the back burner due to the economy) to make the Hotel de Crillon the first of a 6-star chain of hotels throughout the world.

Lastly, the Annick Goutal perfume brand, almost unknown in America, is considered the most exclusive brand in perfume in the world. Starwood can potentially turn the brand into a line of high end spas within Baccarat or Crillon hotels, stock Annick Goutal amenities in the hotel rooms, but since it doesnt completely fit into the rest of the Groupe du Louvre umbrella, it can probably be sold for some ridiculous amount, further increasing the return on investment for Starwood Capital.

Starwood Capital’s ability to make a purchase and reinvent that purchase by almost turning it inside out, and then growing it into something amazing is always interesting to watch. Whenever Starwood announces a move, I always consider how that purchase will evolve beyond what is said and what is assumed.

andrew@alconic-inc.com

Click here to view Starwood Capital’s Site on W 57th Street

A New York Post articlefrom last week does a quick write up of four hotel sites in New York City which have not seen any action in quite a while. Starwood’s 57th Street property makes the list.

The article makes it clear that the Steinway purchase did not go through – and Starwood at this point only owns the Ritz Cleaners site, which has since been torn down and has a temporary plywood wall up preventing anyone from looking into or getting into the site. The article also mentions how Starwood might possibly sell the property.

That would be a turn of events since this site was highly expected to be the site of America’s first Crillon branded hotel (a 6-Star hotel, based on the Crillon in Paris). Since the credit crunch started in late 2007, Starwood has drastically reduced it’s hotel plans. Instead of doing a full scale simultaneous launch of 1 Hotel, Crillon and Baccarat Hotels, it now looks as though Starwood is only going through with the launch of the Baccarat Brand (locations in Wailea, Hawaii, Dubai UAE, and Anguillia seem to be going full speed ahead), with the 1 Hotel brand being significantly scaled back for the time being.

Although I cannot verify the accuracy of the following: 1 Hotel’s only active project seems to be the 1 Hotel & Residences in Vancouver, all others seem to have been put on the back burner for the time being.

If Starwood would sell the W 57th Street property in NYC, it only means one thing – they cannot and do not see the ability to purchase the adjoining parcels coming to fruition anytime soon, as just building from the Ritz site they currently own is just not conducive to a viable operation.

While the credit markets seem to have put dampers on a lot of their other projects – I don’t think the markets are entirely to blame for this property. Starwood has a reputation and history of holding onto a property for years before they finally break ground or make some major changes. Additionally, I don’t see Starwood letting go of a great location in a high-end location of New York City unless they really cannot build a project that would make financial sense – even if it’s in the long term.

andrew@alconic-inc.com

Well, in all seriousness, I purposly waited this long to write this post because whenever there is a major industry conference, unless there is a major announcement – the public only seems to hear bits and pieces of what industry leaders have said, so it takes awhile to put their quotes and everything together to be able to form valid conclusions.

Unfortunately I did not attend this year’s NYU Hospitality Investment Conference, and now that I realize that you didnt have to buy a ticket to network – I’m more upset!! Alot of people stood and networked in the lobby – which didnt require a pass. Ah! The contacts I could have made!

So I’ve been waiting patiently for some information from Barry Sternlicht and his Starwood Capital Group about their new hotel brands and the direction that they are taking them, or maybe at the least some updates – as everyone knows, Starwood Capital is notoriously quiet about their plans which only seems to add to the interest.

Here’s what I have:

Baccarat Hotels & Resorts

No major news was reported on the Baccarat brand – except that it is very very popular with developers and I believe they are working on 25 projects right now – a huge number! Of course, not all of them will see the light of day, especially in this market, but it still is a very impressive number from a new hotel brand. One thing working for the Baccarat Hotel & Resorts brand is it’s affiliation with Baccarat Crystal. Baccarat Crystal has more brand awareness outside of America, so thus is instantly recognizable to affluent persons worldwide.

The great reputation that Baccarat Crystal has made over the last two or three centuries (yes, centuries!) makes it very appealing and comforting, thus not much work has to be done creating a brand – it’s already been created. Barry Sternlicht & Starwood Capital did a great thing when they bought the Baccarat Brand a few years back – they bought a brand that has been very well developed, is very well known and respected, something that is very expensive, difficult and time consuming to start from scratch, then using that built up brand capital to create a world class hotel brand. Genius! As long as Starwood doesn’t fall over themselves (which they are too smart to do) it will be a great success.

Baccarat locations will mostly be located outside of America – only due to the fact that there is more brand awareness to the Baccarat brand outside of America. That is not to rule out that Baccarat will not expand in America, (they are working on a location in Atlanta), and I’m sure more are on the drawing board.

1 Hotels

Once again, not much was said, but it was emphasized that it is growing and they still are actively at work developing new locations. The 1 Hotel did garner alot of interest due to its green/LEED Certification. It’s amazing to me how other hotel firms have not yet gone the way of 1 Hotels and insisted on their new locations to be LEED Certified – alot of companies are all about being green and conserving electricity, but in my opinion, LEED Certification is really the only way to go if you really mean it. Sternlicht reiterated that 1 Hotels will be primarily located in the United States in the short term – down the road it will probably be expanded worldwide.

Crillon Hotels & Resorts

Finally! Something about Crillon! (Even though it’s minor) Starwood Capital is working on expanding the Crillon brand – but they are taking their time. Crillon is a brand which cannot really be opened in a few hundred locations like a Sheraton or Ritz-Carlton can, due to it being a 6-star brand. There are very very few places in the world which can pull in the constant clientele to support that type of hotel. My guesses? (And these ARE guesses) London, New York City, Monte Carlo, Havana (Give it a few years! I guarantee it.), Moscow, Buenos Aires, Dubai, and Rome. I think that Crillon’s slow growth at this point is partially due to the economic climate being as it is – it just doesnt make sense to put so much money into developing a hotel unless everything the dollars work out perfectly.

I’m still waiting to see more information about the brand though – website, initial location info, etc.

Whats next for Starwood Capital?

Ooo this is the type of stuff that I love, just thinking about the possibilities and what I would do if I were Barry Sternlicht and Starwood Capital. And I’m sure that PR people hate me for it too – since I’m making a fuss about what could end up being nothing. Sorry guys!

But nonetheless – I will talk about what I think Starwood Capital is up to next in my next post.

andrew@alconic-inc.com

As I think we’ve all discovered if you read my blog often – I started this blog as a means to get hired at Starwood Capital (or Starwood Hotels), but primarily – Starwood Capital. Last week was the NYU Hotel Investment Conference and Barry Sternlicht was part of a round-table discussion, and was interviewed in a number of financial & hotel industry press.

I came across one interview that an Editor at Smith Travel Research wrote about which perfectly explained:

1. Why I think Starwood Capital is a force not to be discounted
2. Why I want to work with Barry Sternlicht & Starwood Capital
3. How my passions can be set free (so to speak)

For those wondering where Starwood Hotels comes in – it is based on alot of the same premises that Starwood Capital is based on – has the same bones I believe..

But back to Starwood Capital -

Here’s what excited me the most about Starwood, and in one sentence summed up everything, Barry Sternlicht was asked “Who is waiting for your new hotel brands” (Meaning what type of people are waiting for Baccarat, 1 Hotel, Crillon to open). His response?

“Nobody is. There is no need for new hotels. But there is a need for new experiences.”

Barry hit that right on target – new experiences is something that will always keep people coming back, it will keep your brand(s) fresh, and always keep the hotels busy. New experiences can be anything – from something that your senses pick up as you walk into the hotel or your hotel room, from the interactions that you receive from the staff – each and every time you set foot in the hotel, or a new way of doing business.

New experiences excite me, they make me want to wake up in the morning – because what experience will I have today? I want to be a part of creating those experiences, and for a company that believes it and actually walks the talk that’s admirable.

And thats what makes me want to work at Starwood Capital.

andrew@alconic-inc.com