This is exciting because there will finally be some action on what is one of the few remaining wholly owned hotel properties by Starwood Hotels. (Starwood has been ridding themselves of owned properties and focusing on franchising and management). The original plans from 2007 called for an Element, Aloft and a Four Points hotel to be built on the property. It was thought that the Westin would be converted to an Element, the Clarion would be torn down and replaced with an Aloft and the Four Points. In that time frame we’ve seen the Westin stay as-is and the Clarion renew their franchise agreement. Starting on July 26th, 2011, the Clarion property will permanently close and construction will commence a few weeks later for a complete renovation and conversion into an Aloft hotel, without tearing down the building and starting from scratch.

And that’s only the first phase of the project:

I found a story in the San Mateo Daily Journal which details that the second phase will consist of a 160 room Element hotel on the property next to the aloft. The Daily Journal article also shed some light into Starwood’s original 2007 plans for the property; the Clarion was to be torn down and replaced by three hotels – an Element, Aloft and Four Points, leaving the Westin alone.

Not only that but in the Millbrae, CA Planning Commission’s Meeting Minutes are extensive discussions about the size of the signs for both an Aloft and Element.

So how will Starwood fit two hotels into a piece of land that currently holds one hotel? The Clarion included banquet hall space, and had a very large backyard/pool area. I can see the banquet space and perhaps even part of the existing hotel near the main entrance getting demolished and the pool/outside area to be shared by the Element and Aloft – much like Starwood’s Aloft & Element in Lexington, MA.

It’s good to see Starwood making an investment into this property. The Clarion has been needing some TLC for awhile now, and Starwood has been itching to make this another prime property of what their concepts are capable of.

andrew@alconic-inc.com

Today, according to a press release from Orient-Express, it isn’t Starwood Hotels – but Starwood Capital which is taking over development of the project into a “World-Class Hotel”. So it is still possible it may be a Starwood Hotels branded hotel, I’m crossing my fingers it may be something from Starwood Capital’s hotel portfolio instead.

The press release states that Starwood Capital & Tribeca Associates

..will assume all the terms and obligations of the original contract made between Orient-Express Hotels and the New York Public Library, including the reimbursement of all previous payments made by Orient-Express Hotels and the assumption of all future payments.

After some research into the original announcement and development proposal by Orient-Express back in 2007, the project was described as this:

The five-story building on West 53rd Street will be razed to make way for an 11-story hotel, but the library will own and occupy space on the first floor and underground under the terms of the deal, the two sides said. Five floors of the hotel will connect to the “21” Club on 52nd Street, also owned by Orient-Express.

With:

150 rooms costing $750 to $2,000 per night and a restaurant on the top floor.

The hotel was originally going to be called “21″ based on Orient-Express’s “21 Club” but with the new ownership group, its doubtful it will be a 21, although there still is a chance it may connect to the 21 Club.

I’m eager to see what Starwood Capital chooses to brand this site, as well as a their other recent purchase of 1414 Ave of the Americas only 5 blocks North.

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

New York Magazine scored a great interview with him, and ended up reminding me that it was Barnett’s Extell that sold the building that currently houses the W Times Square to Starwood Hotels in 2001.

This is the same building, located on 47th St, behind the Roxy Deli where Robert Earl originally planned to open the first Planet Hollywood Hotel (back in 1997) which was to be managed by Sheraton, at the time known as ITT-Sheraton before being purchased by Starwood Hotels. (And everyone thought that Sheraton managing the Planet Hollywood Las Vegas was out of left field).

The project languished without even getting off the ground for a number of years, with Gary Barnett finally taking ownership of the property, and building it out. Then right as it was about to open, the events of 9/11 occurred, the project was once again put on hold because travel essentially dropped. Gary Barnett ended up having Barry Sternlicht’s Starwood Hotels purchase the property and open it as one of W Hotel’s flagship properties.  The W Times Square is still owned by Starwood Hotels to this day.

I knew about this years ago and have been looking for information on it since then. Finally! My questions have been answered.

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

Starwood has leased 250,000 square feet at 333 Ludlow Street – in a development that seems to be still under construction – and will begin moving on January 2012. Apparently Starwood will do a major renovation to tune of $40 million but it’s unclear if the building has ever had a tenant before (reports are conflicting). It’s located in Stamfords up-and-coming Harbor Point section which used to be an industrial site.
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From what the press releases state – the building will be a brand showcase for Starwood and will be a LEED Certified building. We can only speculate as to what a brand showcase means – but I can picture demo rooms of each of their brands, as well as the office space for each hotel brand of Starwood being decorated similar to how the actual brand is decorated. Keep in mind – the Luxury Brand group which encompasses LeMeridian, St Regis, W Hotels & The Luxury Collection are still located in New York City and will be unaffected by this move. The Luxury Brand Group itself is just moving into a new building now too.

It’s really interesting to note the differences between Starwood’s move and Hilton’s move (remember, Hilton moved from Beverly Hills, CA to Tysons Corner, VA over the summer). Hilton announced in January, 2009 they were scouting for locations in the Virginia/Maryland/Washington DC area. Two months later, in March it announces it’s found a location – about 100,000 sq ft in the Park Place II development at Tysons Corner, move in date? August 2009. Investment? $17 million. LEED (or anything having to do with Green) being part of the building? None.

I was pretty shocked myself when I found out that Hilton was able to find a site so fast, then do a renovation and move in 6 months away, Starwood’s time frame is ALOT longer, but it sounds as though they are going to be building a very unique and one of a kind headquarters. There is something to be said for the amount of employees each headquarters will hold: Hilton: around 300, Starwood’s: 800, but it’s still interesting to see the differences between how the two companies are managing or have managed their headquarters moves.

It’s also interesting how Hilton didnt seem to give their employees much notice for a move on the complete other part of the country, whereas Starwood’s new headquarters is 20 minutes North East of White Plains, and is an even easier to get to if the employees takes public transportation.

I guess you could say I’m reading into it too much (time difference between Hiltons & Starwood’s move) but I think it just goes to show that Starwood is all about the brand experience – they are taking the time to build an environment that the employees will embrace and be able to feel part of the company, rather than just simple cubicles and nice paintings on the wall..

andrew@alconic-inc.com

Under Starwood’s ownership Bliss did create the “Remede Spa” line – a high end line of spa products, and a high end spa that are found in some St Regis Hotels, but oddly enough earlier this year Starwood announced a new brand “Necter” created along with a “spa branding and management company”. It begged the question – why not use your in-house spa brand to create and market a new product as they did with Remede?

Once I heard that, I had a feeling something was up for the Bliss brand in Starwood’s portfolio. Bliss was never really integrated into Starwood – almost like a red-headed stepchild – because it always had its own management team and was run as a separate division, separate even from W Hotels which was intended to be it’s “parent”.

About a year ago I wrote a story about the possibility that Starwood was beginning to increase the promotion of their Bliss Spa brand by including the logo in corporate materials, but that increased promotion never seemed to get beyond corporate documents – nothing seemed to be added to the Starwood Hotels site, and there were never any cross marketing campaigns except on WHotels.com

Fortunately for those Bliss lovers, the Bliss & Remede brands will stay exclusive to W Hotels & St Regis hotels exclusively (and probably aloft too), but whats interesting is how the brand will just become another commodity within Steiner Leisure.

Steiner Leisure is one of those companies that a lot of people have had an experience with – but dont even realize it. For example, Steiner operates the spas on 16 cruise lines, encompasing over 125 cruise ships, owns the Elemis line (found in local spas around the country) and operates many many resort spas around the world.

The divestiture of Bliss was a great move for Starwood, especially since it never made complete sense for Starwood to purchase the brand to start with. Starwood can now focus on the hospitality industry more and leave the associated businesses to companies that focus on that particular business – such as how Gerber Bars operates most of the bars at the W Hotels. The purchase of Bliss by Steiner will give them a high-profile brand, the ability to expand the brand by opening  shops and spas in stand-alone retail locations unaffiliated with hotels (something Starwood never seemed eager to do).

My only question is what will happen to the Bliss office/staff since they now share an office with Starwood’s Luxury Brand Group.

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

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