Sheraton, the luxury global hotel brand owned by Starwood Hotels and Resorts, has undergone a $6bn (£3.8bn) renovation process over the past three-and-a-half years, culminating in the UK with the reopening of its flagship Edinburgh Grand hotel last month.
There are more than 400 Sheraton hotels worldwide and the brand sits within a portfolio of nine hotel brands, from the super-chic W Hotels, to Le Meridien, Aloft, and Westin. However, more than half of Starwood's lodging profits are derived from Sheraton.
What were the challenges you faced when embarking on the project to renovate the global Sheraton brand, and how did you differentiate it from the position of Starwood's other hotels?
We began working on the Sheraton revitalisation back in 2007, and it was fully implemented by 2008. It took us some time because our efforts to enhance the brand went beyond just renovating buildings – it was to define a unique brand positioning for Sheraton and to really understand the things that had a material impact on guest satisfaction and loyalty.
The whole revitalisation of Sheraton is based on our Starwood principles, which are focused on creating unique and compelling lifestyle brands. Each one of our brands is differentiated from each other and our competition – that way we can put multiple properties in the same city, and appeal to a different clientele.
With Sheraton being so global and being in so many different types of markets, it was difficult to find the common thread that brought them all these properties together. We focused on Sheraton’s core values: 'warm', 'connected', and 'community'. Our guiding principle is 'Life is better when shared' and that was based on an insight from our customers that they want to connect with other people, and when they do, they are more productive and they are happier.
What is the Sheraton consumer profile and how do you communicate to your customers?
We call them the social traveller – affluent guests that are optimistic and who comfortably mix business and leisure; they like luxury but without the pretence. Our customer might buy a BMW, but they are focused on the performance of the car rather than the label.
We are as focused on UK outbound travel as we are inbound, so we are actively promoting Sheraton Club. It has strong appeal to the high-end business traveller who wants the semi-private meeting space. We are actively promoting the Link@Sheraton, our social hub, which gives guests a sense of connection wherever they travel – those are our key advertising messages.
We invest heavily in our loyalty programme, Starwood Preferred Guest (SPG), and we communicate heavily to our customers through our own channels, as well as through our social media channels.
How have you invested the $6bn across the brand globally?
The hardest part of the revitalisation was convincing our board and our owners that all the activity we were undertaking would have a material impact on the satisfaction of our guests and provide a return on investment.
We calibrated every Sheraton Hotel in the world, we looked at market location and the conditions of the hotels, assessing which ones should be renovated and which ones should be removed. Over the course of the three-and-a-half years we removed 80 hotels, renovated 140 and brought in 80 new ones, which means that 70% of Sheraton properties are now new or newly renovated.
The majority of this happened during the economic downturn, but the mantra of Sheraton was "own the upswing", so that our fresh hotels would put us in a better position to compete with the other guys who just sat back and waited out the storm.
But we focused on the things that mattered most. For consumers, the most important part of the stay is still the guestroom, and the most important part of the guestroom is still the bed.
We invested in 140,000 new beds and higher quality mattresses, higher thread-count linens and plusher pillows and duvets, all of which have a material impact on customer experience and sets the tone for everything else.
How has the customer experience benefitted from this global investment? Have the hotels benefitted individually?
Our research told us that guests who have free time want to get out of their rooms, but don't necessarily want to leave the hotels. We found that some consumers want to work out, some want to hit the bar; others want to just socialise or dine.
We focused on creating social spaces that allowed people to gather and interact – 62% of our guests said they want to stay healthier when they travel, so we created Sheraton Fitness, making our fitness facilities larger with state of the art equipment.
But we didn't stop there: we created a partnership with Core Performance, a company that specialises in training elite athletes, including Olympic athletes, and they were applying their knowledge to the traveller. There are simple tips you can find at Sheraton.com that will make your 30-minute workout routine more efficient, or simple tips about eating that will just make you feel better, or on hydration and how to overcome jetlag – and all these things resonate with our customers.
The other major initiative was that we spent over $120m (£76m) renovating Sheraton Club lounges for our SPG platinum members, and other elite guests that were prepared to pay a little more for the upside of everything.
Combining all of those components helped us to create a new lobby experience, called the 'Link@Sheraton experience with Microsoft'. Like our sister brand W, we transformed how guests used our lobbies – they used to be something you walked through, and we made our lobbies destinations for people to come and hang out. They can meet as a group, connect with their colleagues and friends, or online.
We use technology as an enabler to enhance that stay experience – over 50% of our guests use the Link at some point during their stay, which is more than eat the breakfasts in our hotels.
The guests that use the Link have a higher sense of value for the price they pay and are more likely to come back. It's complimentary – that's why there is such a sense of value, but from our benefit, the guests are spending more on food and beverage.
For three straight years we've set record highs for guest satisfaction and loyalty, and we measure loyalty based on overall satisfaction, likelihood to return to the brand and to recommend – and when we start talking about marketing, the likelihood to recommend is critical.
Now that the UK renovation has been completed, what is next for Sheraton's global presence?
We're continuing to tell the story. We have moved past the $6bn revitalisation into two very exciting new stories – celebrating the completion of the dramatic renovations to Edinburgh and 13 other major market flagship hotels that are undergoing this renovation, including New York, Bangkok, Beijing, Mexico City, Cairo, Singapore, and our $5bn (£3bn) pipeline of new hotels.
Between now and 2013, we're investing this money in opening 104 new hotels, half of which are in China. India will replicate that same growth story, but is between four and five years behind China.
Sheraton has a strong presence in emerging markets and leads market growth in these areas.
There's a couple of reasons why. We have first-mover advantage – we were the first international hotel brand in China back in 1985, in India in the mid-1970s, in the Middle East in the mid-1970s, and in South America.
And because we need to be everywhere in which affluent travellers wish to stay. To put it into context: we have some 52 W Hotels, and there are people who absolutely love the W, but it is certainly a very niche brand, not designed to be everywhere. Whereas Sheraton has to generate the mass affluent appeal – we have great brand awareness and have built a loyal customer base with international travellers.
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