Monday, September 12, 2011

Marriott Struggles with Edition ‘Lifestyle’ Hotel Brand

Washington Post: It was supposed to be the brand that would catapult Marriott International into “lifestyle” hotels — the edgy, modern take on luxury — but Edition, some say, has fallen short of expectations.

The brand, now at the center of a lawsuit, has struggled to gain traction, with only two hotels donning the flag in the four years since it was announced. Without a collection of properties under the banner and allegations of mismanagement flying about, some industry experts wonder whether Edition has staying power.

Two weeks ago, the brand made headlines after the owners of the Waikiki Edition, M Waikiki LLC, stormed into the hotel, installed Aqua Hotels & Resorts as management and renamed the property: the Modern Honolulu.

M Waikiki, which filed a lawsuit against Marriott in May, is accusing the company of poor marketing, expense overruns and operating the property at a loss of $6 million since it opened in October 2010. Marriott vehemently denies the allegations.

A judged ordered Marriott, which has 30-year contract to run the 353-room hotel, back onto the premises days after the seizure, but the owners filed for bankruptcy protection before the company could do so. The case remains in limbo as the reorganization proceeds.

One of M Waikiki’s many complaints is that the dearth of Edition hotels made brand recognition impossible and hurt occupancy. While there are five Edition hotelsin the pipeline, hotels in Hawaii and Istanbul are the only in operation.

“Critical mass is important,” said Chekitan Dev, professor of strategic marketing and brand management at Cornell University’s School of Hotel Administration. “Hotels that are open serve as living billboards for feeding other hotels in the system.”

When Marriott introduced the concept in 2007, it said there would be 100 Edition hotels in 10 years. That, of course, was before the economy took a nose dive and financing dried up. Marriott is investing roughly $400 million in Edition locations in Miami and London, an unusual move for a company that has few hard assets on its books.

“There is an element of control that we thought was necessary to be able to launch the brand the way we wanted,” said Tim Miller, senior vice president and managing director of Edition. The company, he said, is not ruling out investment in future properties.

Marriott originally teamed with boutique hotelier Ian Schrager to create Edition, and compete with tony rivals such as W Hotels & Resorts.

Analysts say the design of Edition, with its rich jewel-toned colors and modern lines, is alluring. Yet in an age where all sorts of hotels are getting contemporary facelifts, that may not matter much to consumers, said Ted Mandigo, director of TR Mandigo & Co., a Chicago-based hotel consulting firm.

Miller argues that Edition is “aiming to compete in the luxury market with a lifestyle feel, where most other brands in the segment are trying to out-lifestyle each other.” He continued, “the brand was designed for people looking for individualized experiences.”

Will those people even give the brand a chance given the controversy over the M Waikiki?

David Loeb, a hotel analyst at Robert W. Baird, said while it’s too soon to tell how the lawsuit will impact Edition, Marriott likely will make the brand successful.

“It’s an unproven brand, it’s high design and that can increase costs for the developers, but Marriott is very good at this,” he said. “They know how to create brands and build them out; it’s just hard to do that in an environment that is hostile to development.”

No comments: