2008 is shaping up to be a very eventful year for a number of reason – the Presidential elections in November, the war in Iraq, the price of oil, the possibility of a recession due to the sub-prime mortgage industry. 2008 could easily end up being a great year where everything ends up going right, or a horrible year where everything ends up going wrong..

I consider myself an optomist – so I’m expecting the year to turn out pretty well.
In any case, 2008 is also shaping up to be a defining year for the Hotel Industry – 2007 saw the launching of a number of hotel brands, and the beginnings of a number of changes to existing brands, and then the questions that’s probably in the back of everyones mind – how will the lodging industry be affected by America’s economic turmoil?

One thing that I have been very eager for is the opening of Starwood Hotel & Resort’s aloft and element brands. Their first locations should be opening in Spring ’08, and the remainder of the year could very well see another 20-30 locations open through out America. The aloft and element brands has been eager watched by the industry at large because of the considerable resources that is being put into it, as well as the promotion of the Starwood brand machine. Not only that, but those two concepts – while not “new” – do definitely have a twist that other extended stay or select-service hotel brands do not have. Please stay tuned because I’m also working on another post which will go into further detail about Starwood’s plans for 2008 and beyond.

2008 will be a test of the Blackstone Group’s purchase of Hilton. Blackstone consistently claims that they have purchased Hilton to grow and expand the brand and it’s sub-brands – not break them up as they have done in past purchases. Will we see any major changes? Will Hilton enter the boutique hotel field with a new brand? One thing that Blackstone will continue to do (as Hilton started before the purchase was even announced) is expand Hilton’s brands outside of America. Except for the Hilton brand itself, Doubletree, Hilton Garden Inn, Embassy Suites and Hampton Inn have very few locations throughout the world. I think 2008 will see that expansion quickly accelerate. The Waldorf=Astoria Collection should also expand in locations throughout the world. I’d like to see Blackstone combine their LXR Resorts Brand into the Waldorf=Astoria Collection, and I’d also like to see LaQuinta join the Hilton umbrella. If Blackstone is as serious as they claim about keeping the Hilton umbrella intact and expanding it, they should do all they can to combine their current assets (like LXR & LaQuinta) into Hilton.

Starwood Capital Group is sure to cause some more commotion in the industry with their three new brands – 1 Hotels, Crillon & Baccarat. While I don’t think we will see any openings from those brands this year except for the 1 Hotel in Seattle (everything else is still under construction), 2008 will surely see the official launch of Le Crillon Hotels which was supposed to happen in Mid-October of 07. Besides the expected first location of a Crillon hotel on 57th St in New York City, Starwood Capital will hopefully provide more details on what to expect from the brand. I’m also very interested to see how Starwood Capital’s purchase of Concorde Hotel Group will evolve – Concorde Hotel Group was part of the Louvre Hotel Group that was purchased by Starwood Capital in 2006, and with that purchase Starwood Capital became the second largest hotel operator in Europe with over 800 managed, owned or franchised hotels under the Premiere Classe, Campanile, Kyriad and Kyriad Prestige brands (as well as those in the Concord Hotel banner). In recent month’s Starwood has significantly redesigned the Louve Hotel Group Development website, as well as the individual brand’s websites – showing that the three brands in their portfolio are poised for expansion. Prior to Starwood’s ownership, those brands had pretty embarrassing websites. The European hotel sector is vastly different from that in America – the majority of hotels are hostels, or rented apartments and the condition and environment of those facilities leave alot to be desired. Starwood has intentions of doubling the number of European locations of the Louve brands over the next few years. I think the lodging environment in Europe will be substantially different in a few years – and I think Starwood Capital & Barry Sternlicht will once again lead the way. Lastly, I think we’ll see Baccarat’s official announcement of their Water Cay property, and more announced locations of the 1 Hotel brand in America as well as major cities throughout the world.

A few months back Loews Hotels announced (and I wrote a post on it) they are giving the brand a significant change – revamping their website and changing the company from an asset management company to a brand. While it doesn’t say so exactly, this type of change would only occur if they intended on significantly expanding the Loews brand. 2008 should see some new development deals being announced, perhaps even management of the hotels rather than all company-owned hotels and I even have a feeling that they will create a new brand (probably a select-service brand rather than a full service like the Loews brand already is) or purchase an existing brand to add to their portfolio.

Holiday Inn will undergo a radical transformation of their brand this year – more so in signage and look rather than anything else. A few months back they announced their plan to put 1 billion dollars in the rebranding of Holiday Inn, Holiday Inn Express and Express by Holiday Inn (can anyone tell me what the difference is between the last two?)

Intercontinental which owns Holiday Inn as well as Crown Plaza, Candlewood Suites, Staybridge Suites and the Hotel Indigo brands is claiming to have the largest hotel pipeline in the world, although their pipeline in America not as large as some other competing brands. Intercontinental’s Hotel Indigo brand is finally starting to get some legs, and is growing rapidly, I think by the end of 2008 we’ll see a doubling of their locations and it will become a bit more mainstream. As it is, brand awareness of the Indigo brand is nill, which is a little surprising coming from the largest hotel company in the world.

And how can I forget Marriott? January is supposed to be the launch of the new boutique brand from Marriott and Ian Schrager – details such as the initial locations, the name of the brand as well as renderings and details about what the hotels will contain should all be released very very shortly. From Schrager’s interview in Portfolio.com last month, their is plenty of developer interest in the brand, but everyone (including me) still have many questions as to if Marriott and Schrager will be able to pull it off. While, yes, both companies want the venture to succeed, both sides know that it will not be a long term, exclusive relationship. With Marriott staking a lot of its “coolness” on how this venture turns out, I think Marriott will not come out on top..

The brands under the Wyndham Worldwide umbrella (Super 8, Days Inn, Wyndham, Ramada, Travel Lodge, Knights Inn, Wingate, Howard Johnson and Amerihost) will celebrate 2008 as their first full year after being spun off from Cendent, combined with assets sold from Blackstone and finally combined into one new, publicly traded company. Wyndham Worldwide has some very well known hotel brands, although, except for Wyndham and Ramda Inn (and some people may even debate about that) most of the brands are economy, low end, brands. If anything, those brands bring down the Wyndham name. Wyndham Worldwide is primarily a franchise company – the majority of their hotels are franchised, not owned or managed by Wyndham itself. It’s going to be interesting to see how the company operates as time goes on because in addition to the other brands in the Wyndham Worldwide umbrella, Wyndham is also starting to differentiate their hotels with the Wyndham name – Historic, Garden, Resort, Airport, and Grand Collection. It makes you wonder – what is their mission – expand the franchise portion of the business, leave the luxury category to Wyndham with managed/owned properties? 2008 should bring some clarity to these questions.

Donald Trump will begin to open his “Trump Hotel Collection” within his condo developments – the first being in Chicago which just opened a few days back and their SoHo location being close behind. Trump – king of self-promotion – is saying that these hotels will be high end and one of a kind, but I’m not impressed. He’s just using extra rooms that are not being occupied by the owners of the condos. If he really wanted to get into the hotel business he would build or buy existing historic buildings or hotels. That’s what would set him apart.

LodgeWorks, LP will also have a banner year in 2008. They have a few dozen hotels under development throughout America – primarily of the Hotel Sierra and Avia Suites brand, as well as other brands from Starwood, Hyatt and Hilton. I wouldn’t be surprised if LodgeWorks ends up selling off one of their new brands – Avia or Hotel Sierra – since thats what they do best, but I really like what I see with those two concepts. I hope that they are able to hold onto it and build it into something big. Since LodgeWorks, LP is made up of numerous partners, rather than a corporation, who knows what direction it will take, or will it just forge ahead on its current pathway?

Hyatt will open another Andaz hotel in 2008 – the Andaz Wall Street – located at 75 Wall Street in New York City. This will be Andaz’s first location in America and will start to see the expansion of the brand in New York. Andaz is also scheduled to open a location on 5th Ave in New York and another one in Austin, Texas. I’m sure we’ll see more and more announcements of Andaz locations as the year goes on. 2008 will see the last AmeriSuites close and then re-open as Hyatt Place, they just recently announced the 100th Hyatt Place opening (99% of them being conversions from AmeriSuites). I’m curious to see what – if anything will occur with the Hawthorne Suites & MicroTel brands that Hyatt owns, yet hasn’t fully integrated into the Hyatt umbrella. Hawthorne & MicroTel’s parent company USFS Franchise Systems was acquired by Hyatt in 2000 and since then, those two brands have continued to grow, yet slowly. Hawthorne has been integrated with Hyatt’s frequent guest program and added the Hyatt name to it’s logo, but that’s all. It has not been completely integrated into Hyatt such as Amerisuites/Hyatt Place & Summerfield Suites have. MicroTel on the other hand has received even less attention, besides a website upgrade and a refreshed logo not much has happened with MicroTel. If you visit MicroTel’s website, you have to do a little searching to figure out that it’s even owned by Hyatt. It almost seems as though Hyatt is fixing up the brands so they can divest the USFS Franchise systems to concentrate on their primary brands – Hyatt, Hyatt Place, Summerfield Suites & Andaz. Hawthorne & especially MicroTel Inns do not really fit in Hyatt’s picture.

Well that’s it, those are the developments and changes that I can see or would like to see in the hotel industry in 2008. There are so many other things I could add, but I wanted to get this post finished before 2009. I haven’t even scratched the surface of companies like Choice Hotels, or NYLO, eSuites, Rosewood, Thompson Hotel Group, Andre Balazas, or Morgans Hotel Group. If anyone thinks I left out anything major – let me know.

Becides what the actual brands are going to be doing, 2008 will see an increased attention being paid to the design of a hotel. More and more hotels will feel like works of art – rather than the same drab and boring hallways, doors and rooms. If 2007 saw the beginnings of this move, 2008 will see it on an even greater scale.

Have a great 2008! I know this is going to be a great year for me – and I hope the best for everyone who reads my blog.

andrew@alconic-inc.com

Here is a list of their current hotels

First, let me give you a quick background on LodgeWorks, then I’ll delve into why I think Avia & Hotel Sierra has the potential to be hugely popular (but won’t), and then probably be bought out by a big hotel chain (hey- it’s happened to them three times already, why should they stop now?). Before LodgeWorks, LP was formed in 2000, Ruhfus & Isaac were partners who pretty much created the Extended Stay hotel category with Residence Inn – Residence Inn was the first extended stay hotel brand, with multiple locations; they realized that business travelers would like a hotel which reminds them somewhat of home – kitchen facilities, including silverware dishes and a few cooking utensils, and those who would utilize those hotels would pay a premium, as well as stay longer than the usual few nights, thus, extended stay hotels could have less employees on staff (since there wasn’t as much turn over of guests) as well as make more per night with the higher room rates.

Residence Inn was sold to Marriott Corporation in 1987 and Residence Inn is now is the largest Extended Stay brand in America. Soon after Residence Inn was sold, in 1988m, Ruhfus & Isaac created another hotel brand – Summerfield Suites, whose claim to fame at the time was having two-bedroom, two-bath suites (apparently unheard of at the time).

In 1996, LodgeWorks created the Sierra Suites (Gen 1) brand, and in 1997 sold both the Summerfield Suites & Sierra Suites brands to Wyndham International. Wyndham renamed Summerfield Suites as “Summerfield Suites by Wyndham” and kept the Sierra Suites name seperate from the Wyndham name. LodgeWorks continued to build and operate a number of Summerfield Suites by Wyndham hotels as well as build another 15 Sierra Suites throughout America, while simultaneously developing Gen 2 of Sierra Suites, which was a more upscale extended stay hotel.

Finally in 2005, LodgeWorks sold 15 Gen 1 Sierra Suites to Extended Stay Hotels, which renamed them Extended Stay Deluxe, and continued to develop their Gen 2 Sierra Suites.

In the meantime, the brands that LodgeWorks originally created – Summerfield Suites, was purchased by the Blackstone Group with Blackstone’s purchase of Wyndham, and then sold to Hyatt in 2005. The Sierra Suites Gen 1 hotels were rebranded as Extended Stay Deluxe hotels, and integrated into the Extended Stay Hotel company, which was also owned by Blackstone Group – earlier this year Blackstone sold the Extended Stay Brand to the Lightstone Group; and Residence Inn continued to grow into the largest extended stay brand in the country under Marriott’s leadership.

Lodgeworks didn’t stop there – they then started the next generation of Sierra Suites (Gen 3?) – called Hotel Sierra, the first one which is scheduled to open this month in Washington DC, with another 8 Hotel Sierra’s in development. Not being one to rest on their laurels, LodgeWorks created ANOTHER hotel brand – Avia Boutique Collection, a luxury boutique brand which they have 6 hotels in the pipeline for.

Whew.. Did you follow all of that?

Hotel Sierra is an all suites hotel which is offering a more luxury, and sophisticated hotel stay. They are providing complimentary breakfasts, business centers, “luxury SUV shuttle service”, as well as free wired and wireless internet. What differentiates Hotel Sierra from other Suite hotels is the contemporary, modern design which can be found everywhere from the table top to the bed linens – its the type of differentiation that element will also offer.

Hotel Sierra Rendering

Avia Boutique Collection is being marketed as a boutique hotel brand, and it seems to be following the same type of design look and feel that Hotel Sierra is based upon – except for the fact that Avia is not a suites hotel. Avia does not include a kitchen nor multiple rooms like Hotel Sierra does; but once again – it will differentiate itself by some rooms having working fireplaces, soaking tubs, and olive wood floors. Wow! Each hotel is also supposed to have local touches, an important facet that should be part of every boutique brand – but I think the industry is losing that and instead calling any hotel that is modern, classy, or contemporary a boutique brand.

Avia Boutique Collection Rendering

Avia Room Rendering

There is no word yet on the projected price point of either hotel, nor the development forecast of either hotel. It is interesting to point out that the Hotel Sierra properties all seem to be located within mixed use projects and are being constructed under a license (and I would assume partially owned by) by a developer – yet both brands do not seem to be franchised, only licensed.

It’s very surprising that LodgeWorks isn’t focusing only on their own brands – they are also building two alofts, three Hyatt Places, and currently own a Hilton Garden Inn and nine Hyatt Summerfield Suites.

The question is Why?

Why is a company which has had so much success launching (and then selling off) hotel brands both establishing an additional two brands from the ground up – as well as actively building and developing hotels under competitive flags? Why has LodgeWorks, LP not promoted the Hotel Sierra & Avia brands like Starwood promotes element and aloft, or Hyatt Place and Hyatt Summerfield Suites is promoted? I think it is due to LodgeWorks, LP not being a public company, nor does it have the major backing of either an extremely wealthy family, or private investment firm they are severely limited in how quickly their concept it can be replicated by the developer community. But the bigger question I have is why is LodgeWorks not franchising their brands to ease further growth and increase developer interest?

The fact that LodgeWorks has two great concepts, yet are still developing brands from other flags is confusing because its almost as though they do not have the confidence in their own brands, or don’t feel as though the brands will be successful.

In LodgeWork’s Development Brochure they state the following:

LodgeWorks, LP is a seasoned hotel management and development company in the midst of exciting growth. Our portfolio encompasses a soon-to-launch luxury boutique collection – Avia; a strategic refresh of Sierra Suites Hotel to a boutique-inspired (upscale suite brand) Hotel Sierra; and a growing portfolio of other branded product.

It explains perfectly what LodgeWorks is up too – but it doesn’t answer the question – why are they developing their own brands, while simultaneously building and operating brands from the competition

andrew@alconic-inc.com