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As Starwood mulls its strategic and financial alternatives, interim CEO Adam Aron basically admitted to financial analysts that its Sheraton brand is a tired brand and that the service quality is subpar in some locations.
Aron didn’t put it that bluntly but that was the message during the chain’s first quarter earnings call April 29.
Noting that Sheraton accounts for more than 40 percent of Starwood’s global footprint, Aron said in North America “Sheraton needs to be significantly reinvigorated with a boost that can only come from top-notch marketing.”
That will be accomplished with already budgeted or reallocated funds, he said.
“We have some terrific Sheraton properties around the world and we have some hotels that need more focus on the fundamentals of delivering service quality to our guests,” Aron said.
Starwood plans to announce the specifics of its plan for Sheraton at the end of June, and would implement it during the second half of 2015.
Starwood also hopes to turn around its midscale brands, including Aloft, Element and Four Points. With 300 properties in these three brands, Aron said trio is “significantly subscale to our competitors.”
That beats “starting a new brand from scratch,” Aron said.
Starwood’s leadership has certainly been doing some soul-searching since the surprise departure of then-CEO Frits van Paasschen in February, and the circumstances surrounding his exit.
The chain commissioned a third-party researcher to survey 2,700 hotel owners, including Starwood owners and those from competitor properties, about what Starwood is doing right and where it needs to improve as far as stimulating growth.
“Being more communicative, more flexible and more responsive with current and prospective hotel owners and speeding up Starwood decision-making, all our actions that are now directly in our gun sites to enable us to continue to look for growth at an accelerated pace,” Aron said.
He pointed to the recent rollout of the Tribute Portfolio, Starwood’s second collection of independent properties, as an example of the chain hearing the message.
Aron said the rollout of the Tribute Portfolio was fast-tracked.
“Admittedly this is still a void for Starwood,” Aron said, referring to the collection. “The Tribute Portfolio allows us to address the four-star upper upscale independent hotel markets and now gives Starwood a credible horse” in the competition with Marriott’s Autograph Collection.