Starwood Announces Big Changes in the Works At Sheraton

Starwood Hotels & Resorts Worldwide, Inc. (NYSE:HOT) announced last week ambitious plans to further upgrade the Sheraton Hotel brand, the company`s largest and most global brand.
Since 1998, Starwood has invested more than $450 million renovating its Sheraton properties, and the latest series of improvements are designed to make the brand consistent, and more family and business traveler-friendly.


“When Starwood acquired Sheraton in the 1998 ITT merger, it inherited one of the oldest, most revered and global hotel brands in the world.” said Robert F. Cotter, Starwood`s Chief Operating Officer and a 30-year Sheraton veteran. “However, while Sheraton`s reputation overseas was one of superior quality and service, the brand`s image had eroded somewhat in the United States in large part due to variability in its extensive franchise system. Quite simply, travelers couldn`t count on a consistent Sheraton product from one U.S. city to the next. Starwood has invested heavily in our owned hotels, as have many of our owners and franchisees, and now we`ve developed a comprehensive program designed to firmly position the brand as the industry leader in its upscale segment.”


According to Cotter, while Sheraton`s occupancy and rate performance as well as customer rankings have improved significantly over the last three years, this new plan for Sheraton is designed to make the brand even more competitive with rivals Marriott and Hilton.


Starwood`s plan to upgrade the Sheraton brand includes the following elements:
— Better Beds: Building off the success of the Westin Heavenly Bed introduced by Starwood two years ago, the company has designed a new Sheraton bed. The new bed features a Sealy(R) Posturepedic Plush Top mattress, down pillows, crisp sheets, and several handsome duvets in rich, solid colors with simple patterns. Designed to resemble a bed one might find in an upscale home, the new bed is a far cry from traditional chain beds` outdated polyester bedspreads, foam mattresses and cheap pillows. Starwood and the entire Sheraton brand system will invest up to $80 million installing the new beds which begin rolling out this summer. The beds will be installed in 34 owned Sheraton hotels and 15,000 rooms by the end of the year and nationwide by the end of 2003.

— New Room Design: Starwood has assembled an elite team of designers from outside the industry to revamp Sheraton`s room design and offer multiple alternatives to owners and franchisees which respect the architectural characteristic and geographic location of each hotel. Recruited from Ralph Lauren, Holly Hunt, Banana Republic and Williams-Sonoma, the team has spent a year researching, sourcing and developing a new prototype Sheraton guestroom. Dubbed The Westchester Room, the room`s traditional design is a nod to Ralph Lauren with rich jewel-tone colors; new wall coverings; mahogany desks; and of course, the new Sheraton bed. The room is accessorized with attractive chrome hooks for luggage and toiletry bags; stylish sconce lighting to address poor lighting complaints that plague the hotel industry; and laptop-size safes - little touches that tell the Road Warrior that Sheraton understands their particular needs. The Sheraton design team has also developed a new suite of ideas including a new bathroom, a bright inviting option with a retro flair that includes a white marble vanity, chrome legs and subway tile. The new Sheraton room package will be available to managed and franchised hotels in multiple color palettes at attractive and competitive costs.

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— Significant Renovation of Flagship Sheraton: Putting its money where its mouth is, Starwood will invest more than $50 million to upgrade its most profitable hotel, the 2,400-room Sheraton New York Hotel and Towers, the largest hotel in the Sheraton brand system. The hotel will soon feature The Westchester Room and the public space will feature a warm, club-like aesthetic inspired by both Grand Central Station and the New York Public Library. The lobby will offer a coffee cafe as well as a new, exciting restaurant concept under development.

— New Build Sheraton Prototype: Later this year, Starwood will unveil a new prototype for new build Sheraton properties. This particular concept is designed primarily for suburban markets, and is flexible in size and configurations while being attractively priced for the development community.

— Tougher Standards and Brand Clean-Up: Since acquiring Sheraton almost four years ago, Starwood has steadily increased the minimum Guest Satisfaction Index (GSI) score (as calculated by a third-party vendor) each Sheraton hotel must achieve annually to maintain its flag. On a 1-10 scale, the minimum Sheraton GSI score was 7.22 in 2000, and in 2002 that score has been raised to 8.0. In addition, Starwood is strictly enforcing its minimum GSI standards and as a result, 15 Sheraton franchise properties that chose not to meet these requirements have left the brand.

“A brand is nothing if it is not consistent in its product and service,” said Barry S. Sternlicht, Chairman and CEO of Starwood. “While much progress has already been made, we are serious in our effort to narrow Sheraton`s band of quality domestically to drive customer loyalty and enhance system growth worldwide.”
Sternlicht continued, “Over the past three years, Starwood has built credibility with owners and customers with our product enhancements and innovations by attacking the relatively easier projects first, W hotels and Westin hotels. Today, all Westin hotels feature the Heavenly Bed, and by year-end each hotel will feature the Heavenly Bath and all additional Westin brand standards. Sheraton enjoys the largest franchise system by far, but therefore as a brand, we exercise the least control over aesthetics, standards and the timing of capital programs. We trust that with the demonstrable progress and market share premiums our innovations for W and Westin have achieved, Sheraton owners and franchisees will rapidly embrace these initiatives. And though we expect these improvements to materially enhance Sheraton`s competitiveness, there will be further innovations for the Sheraton system both in product and service that are under intensive development and testing.”


Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with more than 80 countries and 110,000 employees at its owned and managed properties. With internationally renowned brands, Starwoods is a fully integrated owner, operator and franchiser of hotels and resorts including: St. Regis, The Luxury Collection, Sheraton, Westin, Four Points by Sheraton, W brands, as well as Starwood Vacation Ownership, Inc., one of the premier developers and operators of high quality vacation interval ownership resorts. For more information, please visit www.starwood.com.


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