Barry Sternlicht, Starwood Hotels and Resorts

Thanks to Barry Sternlicht, hotel kingpin J.W. Marriott Jr. has taken a keen interest in the threadcounts of cotton bed sheets. Sternlicht also explains why InterContinental Hotels tapped Back Lot Productions, the retail consultants behind the Hollywood Video stores, to design its New Age boutique brand, Indigo.

During his 10-year reign as chairman of Starwood Hotels & Resorts, Sternlicht transformed a real estate investment company worth less than $10 million into a $15 billion hotel empire. His two biggest innovations–the W boutique hotel chain and Westin Heavenly Bed–revived the hospitality industry by establishing the practice of branding amenities that were once considered mundane.

In stark contrast to major airlines, today’s hotels address consumer lifestyles and are no longer stuck padding margins with the cheapest mattress, furniture and food money can buy.

“When people go on the road, they want to be productive, they want a good night’s sleep and they want to eat well. There wasn’t any hotel product that was delivering that,” said Eric Sieb, president the Sieb Organization, a hospitality consulting firm based in Phoenix. “Barry has made being on the road bearable.”

To say nothing of profitable. Operating income from Starwood’s North American hotels jumped 49% to $664 million last year, with a 12.1% increase in revenue per available room among same-store units, versus the 7.8% industry average. If its forecast for 10-12% growth is correct, annual net income in 2005 will increase 39% to $484 million.

Sternlicht, 44, left the company in May to focus on running his real estate investment firm, Starwood Capital, and declined to be interviewed for this story (more on that later). His recognition as one of Brandweek’s Marketers of the Year, it should be noted, does not come from being first. Choice Hotels installed Serta Quality Sleepers four years before Westin Heavenly Bed’s 1999 debut, but failed to promote the product with distinct branding. Ian Schrager had been creating hotels around nightclubs for years with chic meeting places like Morgans in New York and Mondrian in Los Angeles.

Yet no other hotelier in recent memory has managed to create the same “wow” factor for new products and services. Far from cringing at the fake bathroom countertops or laughing at the immovable art above the bed, consumers are ordering W furniture from catalogs and purchasing the Heavenly Bed at Nordstrom.

Even industry rivals tip their hats to Sternlicht’s accomplishments.

“You really have to give Starwood their due with what they’ve done with Heavenly Bed,” said Mark Snyder, svp-brand management at Holiday Inn Hotels and Resorts. “Remembering when that was coming out, the category thought they were nuts. We thought they were nuts. But [they’ve taken] the basics of a hotel stay and done them very dramatically.”

Now, the industry is playing catch-up. Marriott’s new bed, part of a $190 million upgrade, won’t be completed until next year; the category leader also is contemplating a boutique brand. Radisson launched a recent ad blitz touting its new Sleep Number beds. Crowne Plaza rolled its Sleep Advantage program complete with hotel quiet zones, guaranteed wakeup calls, lavender spray and relaxation CD. Hilton Hotels is installing Hilton Suite Dreams bedding into its full family of brands. Mid-tier lodger Choice Hotels, meanwhile, entered the “lifestyle” boutique sector with Cambria Suites, and Hyatt intends to convert AmeriSuites into the stylish Hyatt Place.

that Sternlicht triggered a movement in hotel branding is especially impressive given that he is not a formally trained marketer. After earning his MB A at Harvard Business School (with a liberal arts degree from Brown University), he began closing real estate deals for JMB, Chicago. In 1991, he founded Starwood Capital Group, Greenwich, Conn., and in 1994, formed Starwood Hotels, White Plains, N.Y., after acquiring control of Hotel Investors Trust, a nearly bankrupt company. Three years later, he outbid Hilton to buy ITT Sheraton for $14.6 billion. Later in 1997, he acquired Westin Hotels for $1.8 billion.

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