W Hotels were once the hottest hangouts in town but two decades after its creation, it has been overshadowed by its younger competitors. Marriott inherited the W Hotel brand when it bought Starwood in 2016. Now it's up to Marriott to make the W brand shine again.
When the first W Hotel opened on Lexington Avenue in midtown Manhattan in 1998, it became as popular as a New York City nightclub. That’s because its lobby looked and felt like one, with people jostling each other to get past the velvet ropes and paparazzi.
W’s popularity grew so much that developers wanted in just as much as the party-goers. They too lined up, but in their case it was to open more W hotels, which was created by Starwood Hotels and Resorts. The brand grew exponentially in just a few years, first in the United States and then throughout the world. Over the years, other hoteliers created brands to rival them. Ian Schrager, famous for his celebrity magnet Studio 54 nightclub, created the Edition and Public hotels. Sam Nazarian, founder of SBE Entertainment Group, collaborated with French designer Philippe Starck to introduce the SLS brand. And so on and so on.
At 21 years old, the W brand is now considered dated, not even the grand dame of lifestyle hotels. Marriott International, which inherited the brand when it acquired Starwood in 2016, has now made it one of its priorities to re-invent the W hotel. One reason for buying Starwood was to complement its portfolio of brands. Marriott was known for its reliability and efficiency but wanted to become more prominent in the lifestyle space. Starwood had exactly what it needed.
Three years into its ownership of Starwood, can Marriott make the W brand cool again?
It’s certainly trying. The original hotel has been stripped of the neon W sign that was so visible to anyone walking down Lexington Avenue. It’s not the only W to be de-flagged. Marriott has dumped five W hotels in two years and has not ruled out dropping more. That represents 10 percent of the brand’s entire portfolio. Of the 26 W hotels in the U.S., about half are under renovation.
Indeed, a key financial metric for the hotel industry has been dropping at W. Marriott said revenue per available room at W hotels was $239.65 for the nine months of this year ending Sept. 30. That is a 3.2 percent decrease from the same time period in 2018.
Despite losing some of its luster, however, the brand is growing. There are now 57 W hotels globally and 32 more on the way. The goal is to reach 100 hotels by 2025. The company, known for its asset light strategy, recently bought the W Union Square in New York and plans to mold it into the next generation W Hotel.
It’s not the first time Marriott has bought properties in an effort to re-launch any of its 30 brands or create a new one. It purchased three properties in London, New York and Miami to launch Schrager’s Edition brand and started selling them off in 2014. The company bought the Sheraton Grand Phoenix last year to renovate it and show it off to potential buyers.
“When you actually buy a hotel and you have control over it, it gives us the ability to demonstrate to our customers and owners our commitment and vision,” said Marriott Chief Financial Officer Leeny Oberg. “We have for many years used strategic real estate investments to reinvent a brand or begin a brand.”
“We thought there was an opportunity to actually rethink the W because things have changed so much,” said W Hotels Global Brand Leader Anthony Ingham. “W Union Square will be our flagship that will showcase our design direction.”
Driven by Design
The W brand has gotten a lot of credit over the years for creating the social lobby, even insisting on calling it the living room at each of its hotels.
But Stephani Robson, senior lecturer at the Cornell University School of Hotel Administration, said that’s a misconception. Hotel lobbies were places to gather as far back as the 1800s. Wealthy people strutted up and down Peacock Alley, the lobby corridor of the now shuttered Waldorf Astoria New York, to show off their gowns and lavish jewelry. The InterContinental Willard hotel lobby has been packed with lobbyists for many a presidency.
“Humans are social animals. They go where other humans are,” Robson said. “To have a lively lobby was a sign that your hotel was en vogue.”
What made the W brand so different was its focus on design.
“They brought in an aspirational, stylish, modern, very strong design identity which nobody was doing in hotels,” Robson said. “Design was something off to the side. It wasn’t inherent in brands. What W said was design was the thing that was going to make the brand stand out.”
The goal was to make the hotels feel residential, and to achieve that, Barry Sternlicht, then CEO of Starwood, hired Hilary Billings, the former vice president of product development and design at Pottery Barn.
Gray Shealy, who became the global design director for W Hotels in 2008 and is now an executive at Royal Caribbean Cruises, calls the years between 1998 and 2004 “Pottery Barn” residential. After that, he said, the newer hotels became more minimalist and corporate. By the time he started, the brand was making an international push and had to change its aesthetic for those markets.
“We realized it was aging and was very American in the way it had been positioned,” he said. “All of our development projects were international so we had to evolve the brand to resonate with the global marketplace and global developers.”
A lot has happened in the last decade in terms of the competition W now has. Shealy said the brand runs the risk of “blending in too much with competitors.”
“W turned 20 years old last year, so it makes sense that it’s time for the brand to take yet another refresh,” he said. “The advantage that W now has is that it is widely recognized in a number of global urban markets.”
Ingham agrees that the brand had a difficult time adapting its design to international markets. He points to the “inconsistency of quality and up to date concepts between the U.S. and the world.”
Ws in the U.S. were conversions of existing hotels. Developers made clever renovations and added bars and restaurants that were not seen in hotels outside of New York and Los Angeles.
But once the concept spread outside those cities, other hoteliers and developers realized they could replicate it or tweak it to make it their own.
“The idea of a happening lobby — you can’t protect that,” Robson said.
The other problem: People are fickle.
“It’s what happens to any kind of restaurant and hotel bar that tries to be of the moment,” Robson said. “People who go to the latest hottest things by definition will move on to the latest hottest thing.”
Attracting the Young Traveler
One might assume that a younger traveler would enjoy being at the hottest bar or hotel.
Not true, Ingham said. Young, luxury consumers want to have a place where they can do it all: have meetings over coffee, co-work, hold panel discussions, have live music events, and more.
“The way in which consumers use space now has really evolved,” he said. “You see the living room still being a social nexus, still being a hub of the hotel that connects all the other spaces, but the living room is much more of a 24/7 type of experience. The blending of experiences has really evolved since the original living room concept.”
“The young luxury lifestyle consumer has an impact on design and they were not really a consideration 10 years ago,” he added.
Renovations on the W Union Square will begin next year with a scheduled re-opening in 2022. It will include a health food café, a destination bar and restaurant, a rooftop bar, a signature spa, and a large gym.
Bruce Ford, senior vice president and director of global business development for research firm Lodging Econometrics, said new guest rooms and lobbies and updates in technology could appeal to the younger demographic.
“Marriott recognizes it has to be polished and relaunched because it hasn’t been refreshed in a number of years,” Ford said. “I do believe we will see W be cool and hip for the younger jet set again.”
But equally as important is wooing the developers Marriott needs to buy properties that will carry the brand flag. Marriott will have to prove to them that they will get a return on their investment. With new brands being created and old ones being re-imagined all the time, the refreshed W brand will have to be as much or more of a trailblazer as it was in 1998.
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Photo credit: Marriott International plans to renovate the W Union Square in New York as part of its brand refresh of the once hip W Hotel brand. It will likely re-open in 2022. 364615