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Brands Born in the Recession: Where Are They Now?

June 22, 2009 at 1:16 PM | by Jenna | 4 Comments

It's no secret that the economy has had a massive impact on the hotel industry. Hotel openings have been delayed; construction has been halted on properties in development; jobs have been lost; room rates have been slashed — but the last several years also saw a boom in the introduction of new brands and a handful of entirely new, supposedly game-changing segments (the "budget chic" pack, for example).

Naturally, with the introduction of each new brand came a wave of hype and some big, big expansion plans — and then came the recession. Needless to say, those big plans changed.

Here's a look at the current state of some of those newer brands — a progress report, if you will — that outlines how many properties each brand had planned on when the concept was introduced, how many properties they've actually opened as of mid-2009, and, of course, how they're faring out there in the cold, brutal world.

ALOFT
A reinvention of the roadside inn and motel from W Hotels.
Predicted: In March 2006, Starwood expected to have the first Aloft hotel open in early 2007 with 500 Aloft hotels expected to open by 2012.
Actual: After two years of incessant hype, the first Aloft hotel actually opened in June 2008. Currently, there are 30 Aloft Hotels open worldwide. The brand plans to have 63 more open by the end of December 2011. We're not sure about the other 407 hotels.
Impact: When Starwood execs (including ex-employee Ross Klein) first announced Aloft it was to be their game-changing budget boutique brand. But since Alofts can only be found in tertiary markets, next to airports and in the 'burbs, we can count on one hand the people we know who have stayed at an Aloft.

ELEMENT
A new type of extended stay lodging with emphasis on eco-friendly accommodations from Westin Hotels.
Predicted: In 2006, Element hoped to have 25 hotels within five years with a larger plan for hotels in 150 domestic markets.
Actual: There are five Element hotels open in Lexington, Mass.; Summerlin, Nev.; Arundel Mills, Maryland; and Houston and Irving, Texas. Element has 20 hotels slated to open through July 2012, putting them only a year behind their goal.
Impact: We love Element's green philosophy but as with Aloft, Element can only be found in tertiary markets and in suburbs. There are high hopes, however, with the opening of the Element Manhattan in May 2010.

INDIGO
The "fashion-forward" boutiquey child of the old-school Intercontinental Hotels.
Predicted: As of December '07, there were 11 locations open and "more than 60 under development."
Actual: 27 open worldwide; again, "more than 60 hotels under development"
Impact: This is IHG's answer to a chain geared toward younger travelers, and the brand is all about incorporating local flavor into each hotel — but we can't help but wonder how much harder that's going to be as the chain gets bigger and bigger.

NYLO
Founded by former Starwood folks, these budget-conscious loft accommodations were set for secondary-market cities across the US.
Predicted: 50 properties open by 2010.
Actual: Two open currently, with a third set for July 27.
Impact: NYLO has been expanding slowly (very slowly), but perhaps it's working out for them: reviews of the first couple properties have been fairly stellar, and this brand emerged as the best of the budget-chic pack. They have plans for another brand, XP Hotels but those won't be opening for quite some time.

ANDAZ
Hyatt's "unpretentious upscale alternative focusing on casual elegance and "local identity" positioned itself snugly between the Park Hyatt and Hyatt brands.
Predicted: Five properties by 2010 (including two NYC properties by the end of 2009)
Actual: Two open currently; Andaz Wall Street does not appear to be making its scheduled "mid-2009" debut.
Impact: Both the Andaz London and the Andaz West Hollywood properties made big splashes when they opened — and though two new hotels have been promised in NYC and one is going to be happenin' in Austin in 2010 (supposedly), we're not so sure we're going to be seeing those one-of-a-kind services and amenities like the Reader in Residence on time, as scheduled. Beyond that? We haven't heard anything.

STARWOOD CAPITAL HOTELS
Former Starwood-er Barry Sternlicht, who was responsible for the success of W Hotels but went off to form his own hotel group, Starwood Capital, announced three different luxury hotel brands Crillon Hotels, Baccarat Hotels, and 1 Hotels.
Predicted: 1 Hotels never had a timeline for its pipeline but the 1 Seattle was expected to open in 2008 followed by four more hotels. Crillon was to be a spin-off of the legendary Hotel Crillon in Paris and would open in every chic city in the world. Baccarat was to open first in the posh Buckhead district of Atlanta followed by hotels in Wailea, Anguilla, and Water Cay.
Actual: The 1 Hotel Seattle is still a hole in the ground but there are plans to open 1 Hotels in Asia. The Baccarat hotel and residences has turned into just residences, at least at the Baccarat Shanghai. Sternlicht is currently seeking to raise capital for a new hotel management company, SH Group, which would operate these luxury properties. And from what we can see, Crillon is not going anywhere outside of Paris.
Impact: "What happens to a dream deferred? Does it dry up like a raisin in the sun?" Or does it look towards Asia, which is what Sternlicht seems to be doing here. Until then, we don't expect any impact from Sternlicht until several years into the future.

EDITION
The upscale, supposedly game-changing lovechild of Bill Marriott and Ian Schrager.
Predicted:
Locations of the initial nine were announced in January '08, with the first to open in Paris in 2010.
Actual: South Beach, DC, and Honolulu were also rumored to be home to the first Edition over the last year or so #151; but it's looking like the first one is going to open in Istanbul in December of 2009.
Impact: We dunno. We're waiting.

DENIZEN
Hilton's in-the-works brand of luxury lifestyle hotels that looked promising — until Starwood sued the Denizen godfathers for alleged corporate espionage.
Predicted: The brand was announced amid a flurry of hype, and "negotiations were underway" for properties in almost 20 cities.
Actual: Time of Death: Summer 2009.
Impact: We can all learn a lesson from this, kids.

Got any updates on these brands that we may have missed? Put 'em in comments below.

Juliana Shallcross also contributed to this report.

4 Comments

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  1. derekgale

    HotelChatter Member

    Recession-born brands: Where are they now?

    Marriott Prez/COO Arne Sorenson on Edition: "We have 5 definitive signed management contracts. They are in Istanbul, Barcelona, Mexico City, Bangkok and Waikiki. They will begin to open in the first part of [2010]. And in the kind of environment we are in, there will be some good opportunities in the United States and around the globe to add more.
    June 22, 2009 at 3:39 PM
  1. juliana

    HotelChatter Editor

    Interesting

    So Edition Istanbul won't be opening in December? I'm still disappointed that one of the first hotels is not going to be in the mainland U.S. anywhere.
    June 22, 2009 at 3:56 PM
  1. mytwocents

    HotelChatter Member

    Brands Born in Recession

    Like Death to Smoochy, recession to hotel travel is a killer.
    June 22, 2009 at 4:15 PM
  1. bbphx

    HotelChatter Member

    What to learn...

    It used to be all about affiliation, but travelers are getting wiser and wiser these days, knowing that they're paying in the end run for loyalty programs.  Not only with the room rate, but with their happiness, staying in boring beige hotel cubicle rooms just to get more points, and then paying for everything on top:  parking, internet, international phone calls, fitness center access, resort charges, energy surcharges, etc., etc.

    Independent hotels have almost-equal playing fields in marketing, but much lower costs associated with practically every category of operations.... so an independent property with a revPAR 25-35% lower than a franchise property is probably faring about the same when all is said and done at the end of the day, and probably has a lot less headaches to deal with!

    Support local, support independent.  Live uniquely.

    Ben Bethel Owner/GM
    The Clarendon Hotel
    www.GoClarendon.com

    July 4, 2009 at 5:21 PM

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