More details about Starwood 2.0

LOS ANGELES – Earlier this week, representatives for Starwood Capital Group confirmed that SH Hotels & Resorts in February will rebrand as Starwood Hotels, the brand created by Starwood Capital Founder Barry Sternlicht some 30 years ago.

Three brands will sit under Starwood Hotels: 1 Hotels, Baccarat and Treehouse, with Sternlicht suggesting the group is working on at least one more brand. At its inception, the new Starwood Hotels will have a combined 40 hotels open and in its pipeline.

SH Hotels & Resorts CEO Raul Leal

SH Hotels & Resorts CEO Raul Leal talked to Hotel Investment Today at ALIS this week and said they have been pacing at about three or four new deals a year, led by 1 Hotels. But he added that once they open Treehouse hotels in April in both Manchester, England, and Silicon Valley in California, it will move the needle on that brand. “I think it will become a beloved brand. It caters to a younger demographic. It’s fun and quirky, and a little cheeky,” he said.

Leal said that while a press release with broader plans for Starwood Hotels is set for February, the message is, “We’re going to be looking for opportunities to help grow the new Starwood platform all over the world… We have the capital to be able to do deals, and we’ll be out there looking to grow this thing. It may not be Starwood 1.0, but we certainly respect the legacy of Starwood 1.0 and want to build on that.”

Leal also said the new Starwood Hotels will not just have a one-prong strategy. “I think there’ll be a variety of factors for us to enter into certain segments of the market,” he said.

When asked if the announcement means dramatic growth for the hotel business, Leal said, “I think so… In the next 18-20, it should take what we are doing now and expound on that pretty significantly.”

We’re going to be looking for opportunities to help grow the new Starwood platform all over the world… We have the capital to be able to do deals, and we’ll be out there looking to grow this thing.

Raul Leal

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Leal said Marriott had the Starwood brand for a period of time after the $13 billion sale in 2016. Now it has reverted back to Starwood Capital, and they have been waiting for the appropriate time to rename SH Hotels. “We thought with all the growth that we have coming, now is the right time to reposition SH as Starwood,” Leal said. “It’s a company with such a brand legacy – it’s beloved. People still ask me about the points programs… We have a lot of plans and surprises for Starwood 2.0.”

He said Starwood Hotels is considering a variety of moves, but the first priority is to execute on the projects of the moment with hotels opening this year in Tokyo, Melbourne, the Silicon Valley, Copenhagen, Seattle and Manchester, England.

Among the notable projects: 1 Hotels in Austin and Seattle, as well as on the Island of Crete. Treehouse hotels are under development in Manchester, England, and Miami. Baccarat hotels are coming to Dubai, the Maldives and Rome. All three brands are expected to open in Riyadh, Saudi Arabia.

“But we are thinking about a couple of other brands and some other scenarios,” he said, adding they hope to launch a new brand this year.

As to some insight on brand direction, Leal said they are influenced by consumers’ continued interest in newer and different experiences. “I think that’s going to be the basis of what we’re going to do in the future – providing brands on the lifestyle side and growing that side of the business and catering to those consumers.”

How aggressive Starwood 2.0 becomes also could depend on how much the new administration in Washington, D.C., benefits the real estate business. “We think because it is influenced by real estate will help bring interest rates down and things will change,” Leal said. “But we’re still going to be looking for deals that are going to provide us and the owners with good returns. Does it make sense to do the deal? We’re not going to be acquiring anything that doesn’t make any sense with crazy interest rates attached to it. But there are deals out there to be had.”

One other certainty, Leal added, is that Sternlicht will become more active on the hotel side of the Starwood Capital business.

“He loves hotels. He loves design. It should be great for everybody,” Leal said. “We welcome it because we’re always telling him, ‘You’re too busy with those other guys. Come over here.’”