It’s a great move for Parkway Corp – the current owner of the land who operates a public parking lot on the site now. Previously the W Philadelphia was to be built by a company called Urban Residential (ironically, they still have the project listed on their website) “on land controlled by Parkway Corporation” in other words, Urban Residential was going to be operating the W on a land lease, with Parkway still owning the land. Now, with the Home2 Suites, Parkway Corporation will stand to make more money as they will be the owner of the hotel, instead of just a landlord.

Back in 2008 I spoke to Stephen Starr, owner of Starr Restaurants, who was supposed to open a restaurant in the W Philadelphia; at the time he told me he hadn’t heard from the W people in months and thought the project was dead – but no official word was ever made as to the status of the W Hotel project. Eventually it was assumed to be a cancelled project, but there was always hope that another developer may come along and build the W as planned.

Let’s do a comparison between the two projects:

W Hotel Philadelphia (2006)	vs	Home2 Suites (2011)
29	Stories	8
250	Rooms	246 (all suites w/ kitchens)
95	Residences	0
11,000 sq ft	Meeting Space	2,000 sq ft
Bliss Spa	Spa/Fitness Center	Pool/Fitness Center
?	Parking Garage	860 Spaces
$150,000,000	Estimated Construction Cost	$60,000,000

I have no doubt that this project will be built and will be opened as planned in summer 2013 – smaller projects, vs high end boutique projects are being built at a much faster rate in the current economy, plus its location – directly across from the Philadelphia Convention Center is a great location for an extended stay hotel.

andrew@alconic-inc.com

Here is Hilton’s Statement

In the lawsuit, originally filed in mid-2008, Starwood accused Hilton of stealing thousands of confidential documents and material which had information on how to create, brand and operate a boutique/lifestyle hotel brand. At the time, Hilton had wooed two Starwood Executives, and essentially their entire support staff and in a matter of months created the Denizen hotel brand. The support staff and executives had intimate knowledge of Starwood’s W hotel brand.

Starwood was sure to win this case from the beginning – starting with the drop shipment of thousands of propriary Starwood documents to Starwood’s corporate headquarters with a note from Hilton’s lawyers stating in essence “we found these in our possession, and thought they should be sent back to you”.

In the aftermath of the lawsuit, Hilton’s boutique/lifestyle brand – Denizen – was completely cancelled, and their entire luxury development team fired, it went right up to the top with Steve Goldman stepping down from Hilton.

The settlement between Starwood & Hilton has been detailed as containing the following three items

1. A moratorium on Hilton working on the development/planning/creation of any lifestyle brand until January 2013
2. A cash sum payment to Starwood, the amount of  which was not detailed
3. The supervision of Hilton by federally appointed monitors to ensure Hilton will be abiding by these rules.

In addition, it mentioned that the Federal Grand Jury investigation is still continuing and this settlement has nothing to do with that investigation. According to the Wall Street Journal, Hilton has been told it should not expect charges to be filed against it in the investigation; I think the settlement with Starwood should push that investigation to a close and will probably result in no action since Starwood seems to be satisfied with the results.

There was really no doubt in my mind that the case would end this way – it was just a matter of how long it would be until Hilton could develop a boutique/lifestyle brand, and how much Hilton would have to pay Starwood. I still wonder what it has done to the careers of Amar Lavlani and Ross Klein.. Are they ever to be employed by a major corporation again? It’s a sad story because I knew both of them, and have met them a few times, so I’m still a little suprised that they did what they did – but I think it comes down to this: money talks.

andrew@alconic-inc.com

Ever since that post went up, I hadn’t seen or heard anything about the new logo and everything has been status quo.

Today however, Hilton Worldwide just announced what is essentially a brand relaunch for DoubleTree. Not only is Hilton updating the logo but they are changing the brand name to ‘DoubleTree by Hilton’ – and with both changes I think they went too far.

Brand Name Change

The name change is similar to the naming scheme that Hilton uses for their brands outside of America. For example in Europe, Asia and Canada the DoubleTree, Hampton and Embassy Suites names are always followed with “By Hilton”. This may make sense for overseas customers who are more familiar with the Hilton brand name, yet do not easily associate Hilton Worldwide’s other brands as being a safe, clean hotel with similar quality standards as the Hilton name. At the least – it may raise the cachet of those other names by being associated with Hilton…

I don’t think that equates to the same feeling for hotel guests in America. Sure, the average hotel guest wouldn’t avoid DoubleTree because its now associated even more with the Hilton brand, I just think that in some cases it cheapens the already established brands of DoubleTree, Embassy Suites and Hampton Inn. A good brand is something that needs to resonate with the customer, make the customer feel good about frequenting the establishment; if they wanted to associate the brands closer to Hilton – why not just rebrand everything as a Hilton?

New Logo

Hilton’s choice of a brown color for a new logo absolutely floors me – (notwithstanding the fact that the new logo reminds me of the South Carolina symbol of a tree and moon). Why would a company whose name has the word tree in it portray a dead tree in their logo? Not only that, but green is the new black – green is the best subconscious reminder of eco-friendliness – brown on the other hand.. Well, that just makes me think of trees dying because of pollution and environmental waste.

Hilton Worldwide feels the new logo is “modern, and updated” and has “color palettes custom-designed for the brand”.

I say “blah”

Whats Next

This rebranding of DoubleTree is the first phase of a complete overhaul of the DoubleTree brand which apparently hasnt had any major changes since 1995. I think it’s also the first of some major changes that will appear thoughout Hilton Worldwide’s brands in America.. I can see Hampton Inn and Embassy Suites joining the rest of the Hilton Brands (Home2Suites, DoubleTree, Garden Inn, and Homewood Suites) joining in on the party and having “by Hilton” plastered all over the name.

It’s ashame, its almost as though Hilton doesn’t have enough faith that their individual brands can stand on their own without being closely associated with Hilton.

andrew@alconic-inc.com

One of the 2 towers that make up the Cosmopolitan Las Vegas

It’s been a very interesting journey for the Cosmopolitan – starting back in 2005 with the announcement that it would be managed by Hyatt Hotels, then after the original foreclosure and take over by Deutsche Bank, it was heavily rumored to be turned into a W Hotel.. Then after Ross Klein left Starwood to join Hilton Hotels – it was an open secret that the Cosmopolitan would end up being one of the first Denizen hotels, and well – we all know where that went.

It’s a huge win for Marriott, a big loss for Hilton – who was originally hoping to come into the marketplace swinging with the Cosmopolitan as a Flagship Denizen property, and Starwood still doesn’t have a presence in Vegas for its W Hotel brand, a location which would be perfect for the W.

This is a huge step for Marriott because it gives them a huge appearance front and center on the Vegas Strip – up until now Marriott had no boutique or architecturally significant properties in Vegas. It’s also going to assure that the property will be managed by an experienced group and will be frequented by many people who are just looking for a place to utilize their Marriott Rewards points.

I’m really curious to see how the Ritz-Carlton tie in will appear, I have a feeling that one of the two towers may be catered toward Ritz-Carlton guests, be a bit more high end, but we’ll see how that ends up playing out as time goes on.

andrew@alconic-inc.com

Hotel News Now reported:

Charles A. Gilman, an attorney for Starwood, said in a 16 November court memo that “the parties have been exploring the possibility of settlement.” A case management conference scheduled for 18 November has been pushed back to 17 December

Hopefully on December 17th we’ll have more information as to what the status of the Denizen brand will be (99.9999% sure it will be completely canceled) but I’m more interested in seeing what the repercussions will be for Hilton.. Will Starwood simply be happy with the cancellation of the Denizen brand and the firing of all former Starwood employees? Or will they want a monetary payment?

Even though the complete details about the settlement will not be released, Starwood & Hilton will most likely send out some type of a press release giving some details so as to close the book on what could have potentially been huge ramifications to Hilton’s business.

andrew@alconic-inc.com

Tomorrow’s Wall Street Journal is publishing an article detailing how a Federal Grand Jury is weighing whether to criminally charge Hilton and/or some of its executives in the trade theft case.

We’ve seen how Hilton all but canceled their Denizen brand (well – they haven’t publicly announced it, but its assumed), Ross Klein has been replaced by John Vanderslice, Amar Lalvani and a huge contingent of other employees who jumped from Starwood to Hilton are no longer with Hilton and Steve Goldman – formerly Hilton’s head of Global Development – has suddenly departed from the company as well.

Some have speculated that Hilton is close to reaching a settlement with Starwood, but unless I’m mistaken (I’m no lawyer), a Federal Grand Jury investigation would still continue even if Hilton & Starwood reached a settlement.

The part that makes me wonder – and I’m sure scares the Hilton leadership team is the possibility that Hilton Worldwide itself may get criminally charged with wrongdoing – in addition to it’s former accused executives. That could leave the company struggling to do business as normal in an already difficult time for the hotel industry, from the WSJ article:

Prosecutors have exercised particular caution in pursuing criminal charges against major companies since the 2002 indictment of Arthur Andersen LLP. Criminal charges against Arthur Andersen for allegedly destroying evidence in the massive fraud case against Enron Corp. are widely regarded as having led to the big accounting firm’s demise. The Supreme Court eventually reversed the firm’s conviction on those charges, but only after the firm was disbanded.

An alternative approach that has become more common in recent years is for prosecutors to seek what is known as a deferred prosecution or nonprosecution agreement. That typically requires that a company be supervised by a federally appointed monitor and commit to reforms over a period of years.

I think it will come down to how many within Hilton – including the top members of Hilton’s executive team were aware of the actions of the Denizen development team.

I wonder if we’ll ever find out.

One thing is definite though, no matter what the outcome of this Grand Jury investigation ends up being – Hilton will be years behind Starwood and Marriott in creating a boutique hotel brand, and that’s exactly what Starwood was trying to achieve.

andrew@alconic-inc.com

Amazing what 8 months can do in this economy. In January, Hilton Hotels looked to be the next darling of the hotel industry – not only was it owned by a cash rich parent – The Blackstone Group – who seemed to be willing to do whatever it would take to invest in the brand and make it #1, and was just about to launch two new brands – Home2Suites and Denizen. Hilton’s re-invigoration was going smoothly, Blackstone really seemed to be making an effort to ensure the viability of the company into a long term asset.

Then suddenly a few months later Hilton was essentially forced to cancel Denizen – due to the lawsuit from Starwood hotels. Putting Hilton even further back on their ability to compete with Starwood’s W Hotels, and now, today, come reports from the Financial Times & the London Independent that Blackstone is looking to divest of the Hilton Corporation. (Interesting to note that two UK based newspapers reported this prior to any US based news outlets).

From those reports any divestiture is in very early stages and will probably not be carried out until next year or so, but the options on the table are a public offering of some of the company assets along geographic lines, or sale of some of the company assets to competing companies.

Details haven’t really been spelled out – but any of those options can be extremely detrimental to the future viability of the Hilton brand. If Blackstone is intending to split the company by geographic lines – that would be the equivalent of putting Hilton into the past when it was two companies Hilton Corporation and Hilton International, which would limit Hilton’s ability to keep the brand experience the same throughout the world. If you recall, the main reason that both companies were merged was to ensure just that. Why would Blackstone want to go back to something that never worked that great in the past even.

The other option of selling assets to competing companies can also spell major trouble for the Hilton brands future if they are referring to selling what is now a Hilton hotel to a company like Starwood or Marriott, but it also could be selling those hotels to  hotel management firm – such as Host, or Interstate, etc.

Maybe I’m going about this all wrong, but it sounds like Blackstone is willing to completely destroy the Hilton brand – all in the name of cash; you gotta do what you gotta do, but Blackstone was originally planning on the Hilton purchase to be a long term holding, now it seems as though they may do to Hilton what they’ve done to all the other hotel brands and some private companies they’ve bought – break them up and sell them separately to the highest purchaser.

One thing that makes Hotel brands so valuable is having quantity – quantity in the number of rooms, locations and brands, with the goal of having something for everyone – every price point, ever amenity required at every location that person would want to visit.

I hate to say it, but I hope that this doesn’t spell the beginning of the demise of the Hilton brand.

andrew@alconic-inc.com

Here’s why:

The reason I don’t see the Cosmopolitan being branded as any Hilton Family hotel is quite simply because of Hilton’s current lawsuit with Starwood Hotels. One of the main points of the Starwood/Hilton lawsuit was the accusation that in the beginning of 2008, two newly hired Hilton employees, (Ross Klein & Amar Lalvani – formerly of Starwood Hotels) stole confidential documents and knowledge of projects that Starwood was actively developing (among other things).

Around that same time Starwood Hotels was apparently working on a deal to put a W Hotel & St Regis hotel in the Cosmopolitan; but once Klein & Lalvani moved to Hilton, there was complete silence on any possible deal with Starwood and the Cosmopolitan.

It wasn’t until earlier this year that Deutsche Bank was said to be working on a deal in which the Cosmopolitan would be managed by Hilton; although it wasnt ever officially announced, it was pretty common knowledge in the industry that the Cosmopolitan would end up being one of Hilton’s first Denizen Hotels.

I can’t see how Starwood would enable the courts to let Hilton even come near the Cosmopolitan – especially since the individuals who were privy to the W & Cosmopolitan deal went to Hilton and suddenly, the Cosmopolitan was going with Hilton.

I could be wrong – but I think its safe to assume that the news bit that the LVRJ is relying on is old information which may have been correct back in March of this year, but is no longer correct since the Starwood/Hilton lawsuit. I still firmly believe that if one of the major lodging companies are to brand and manage the Cosmopolitan – it will be Starwood with the W Hotel, and perhaps even a St Regis or Le Meridien.

In other good Cosmopolitan news: the joint finally has a General Manager, and has reiterated their planned opening date of late 2010 – still a year away, but since the project has been under continaul construction throuhgout hte past few years, I see that as a realistic date.

I wouldn’t be surprised to see the Cosmopolitan making a big announcement either right before MGM CityCenter opens, or in the beginning of 2010 – after the CityCenter hoopla dies down, because the end of this year will be totally dominated by CityCenter news/announcements/reviews, etc.

andrew@alconic-inc.com

Back in April, Starwood Hotels sued Hilton Hotels, and two of their employees – Ross Klein and Amar Lalvani for taking trade secrets and confidential information to build the Denizen hotel brand. At the time Hilton came back with their standard boiler plate response to a lawsuit “we feel this suit has no merit and will vigorously defend it” – but I think it was clear that they really had no leg to stand on.

Since that lawsuit was filed Hilton was ordered to stop all further development or marketing of the Denizen brand and they put alot of the employees within Hilton’s Prestige Portfolio’s development team on paid administrative leave – the same employees who had worked at Starwood’s Luxury Brands Group under Ross Klein.

Hilton has pretty much removed all references to Denizen from their websites and press releases and taken down the Denizen Hotels website – but no official word from Hilton or Starwood has come out about Denizens actual fate.

For a comparison – Hilton’s other recently announced brand – Home2Suites has already been integrated into the brand bar at the bottom of all Hilton Family web pages.

Most likely Starwood & Hilton will do an out-of-court settlement which will force Hilton to scrap anything having to do with the Denizen brand, start from scratch on a new boutique brand, and fire the employees who used to work at Starwood then moved over to Hilton. The alternative is a long and protracted legal battle that Starwood is almost definitely going to win.

Hilton was dumb, they put themselves in a precarious position and because of that will end up having a black-eye within the industry and end up even further behind in creating a boutique hotel brand. At this point Marriott’s Edition is looking better than Denizen, even though Denizen apparently had more contracts under negotiation and more work done Edition did in less time. Then again – Denizen’s development was sped up by the use of Starwood’s confidential documents.

It also leaves to question the status of the projects which were expected to include a Denizen – first and foremost, the Cosmopolitan Resort & Casino in Vegas. That project has seen more high-profile problems and issues than anything I’ve ever seen before. I suspect yet another delay in the project and yet another hotel brand (perhaps W?!).

My friends over at HotelChatter have also been following the Denizen saga, so you might want to read up on it over there as well.

andrew@alconic-inc.com

Not much has been said about these new positions – the information was gleaned from an interview that Derek Gale, a writer from Hotels Magazine had with W’s Vice President of Brand Management.

W’s marketing focus will move even further toward events, with more fashion programming (like W’s backstage lounge at New York’s Fashion Week) and music release parties in cities across the globe.

The fact that they are willing to hire someone to be a music curator and a fashion director – for a hotel brand – speaks volumes about the direction Starwood sees W going in. It’s similar to what Starwood did with the LeMeridien brand when they started LM100, and its no coincidence that W’s new boss is Eva Ziegler, whose previous position was brand director at LeMeridien.

Alot of people may ridicule the W brand because of their attempt to be trendy and as well as their “commercialization” of the boutique hotel concept, but no matter what anyone says – they are very successful at it. Unlike some hotel brands that attempt to open hundreds of hotels a year, W sticks to opening just enough hotels that its still able to capture the feeling and the essence of W.

Some boutique hotel companies may do the boutique feel a little better – Thompson Hotels is the first that comes to mind, but their individual hotels are not part of one name-brand. Indigo Hotels is another brand that claims it’s a boutique and tries to give the boutique look and feel – but the segment the brand is in, and the acceptable standards that the hotel has would never reflect a true boutique brand. Not to say that Hotel Indigo is not a quality brand – it is, but it doesnt have the amenities that W would have.

For the majors, Starwood, Marriott, Hilton, Choice, Intercontinental, Wyndham - Starwood is still the only hotel company that has a real boutique hotel product in the market today. Hilton’s Denizen seems DOA, Marriott’s Edition is taking so long to get off the ground I’m wondering if it’s going through some major modifications, Wyndham & Choice don’t even look to be interested in a high-end brand, and Intercontinental has Hotel Indigo.

It’s going to take a lot of catching up to do for any new or existing hotel brand to eclipse the W as hotel brand that’s easy to replicate (relatively speaking of course) and has so many tie ins and marketing kicks that one-up W in the marketplace. The experience and the knowledge that Starwood has on W is tremendous – and a perfect example of that is the value placed on it in the pending Starwood/Hilton lawsuit.

andrew@alconic-inc.com