CORPORATE CASE STUDY: PR occupies penthouse in Starwood branding efforts

With a supportive CEO and an emphasis on media relations, Starwood continues to rely on PR as it opens several new hotels under numerous brand names around the world.

With a supportive CEO and an emphasis on media relations, Starwood continues to rely on PR as it opens several new hotels under numerous brand names around the world.

Early this year, Starwood's marketing department devised a summer-golf vacation package that would consolidate its 250 courses and bait business across brands. But the PR department felt that the promotion alone wouldn't draw enough media attention. The solution was to survey 401 executives about their golf games, and release the results in conjunction with the program. "We felt we needed a unique angle to attract media and get the name associated with golf," says KC Kavanagh, VP of PR. "We knew our demographic of golf customers was the same as our demographic of business travelers, so the collaboration was a great way to reach our target market." The survey examined, among other things, cheating habits of executive golfers. By fortuitous coincidence, the WorldCom story broke on the same day Starwood released its results, showing that 82% of executives cheat at golf. The media couldn't resist using the results as another brick in their wall of corporate-irresponsibility coverage, which rocketed Starwood CEO Barry Sternlicht onto CNN two days in a row. The campaign has generated 158 million print impressions to date. "If we'd had our druthers, we would have had them focus on the importance of golf," says Kavanagh, "but our goal was to get attention, and we certainly did that." Building a bigger brand Everyone in the US hotel industry needs to woo back business travelers, keep leisure travelers happy, and capture brand loyalty. Starwood, a $4 billion company that owns hotel chains Westin, W, Sheraton, Four Points by Sheraton, St. Regis, and The Luxury Collection, is no exception. All told, it holds more than 750 hotels in over 80 countries, making it one of the largest operators in the world. It serves the upscale market, and enjoys brand diversity within that segment. For instance, St. Regis, which the company developed from one hotel in New York City to nine hotels around the world, operates in a super high-end niche, while Sheraton is mid-range upscale. Starwood's overall revenue per available room (RevPAR) is down 2% from last year, but occupancy is holding at 65%. Industry RevPAR has declined almost 5% year to date, while Q3 2002 occupancy is 64.4%, according to Smith Travel Research. The company became a major industry player in 1998 when it acquired Westin Hotels and Resorts Worldwide, and won ITT Corporation (Sheraton) after a highly publicized bidding war with Hilton. Sternlicht is widely recognized as an innovator (he won the innovator of the year award last month at the 13th Annual Hotel Investment Conference Asia-Pacific), and his ideas have revolutionized several of the company's brands. One of Starwood's primary strategies is to build and extend brand strength as it seeks to further its presence by opening and/or managing new properties, and offering new products and services. It will open 47 new hotels - scaled-down Westin and Sheraton "prototypes" for suburban markets - and increase time-share holdings in the coming year. PR will remain an integral part of operations. "PR is an element of every initiative Starwood does," says Nadeen Ayala, director of PR. "Honestly, everybody is a little bit jealous because they just can't believe the CEO support we have." "To a company like ours, with limited advertising dollars, having a creative, seasoned, and results-oriented PR machine is critical," adds Sternlicht. Welcoming the media Starwood doesn't have an agency of record, though Dan Klores Communications has handled W since its inception. Golin/Harris in Chicago and Richmond PR in Seattle have also worked on various openings and promotions. The in-house team of seven, overseen by SVP of corporate affairs F. Daniel Gibson, focuses almost exclusively on media relations. "Media gives a brand credibility," Kavanagh says. "Starwood is a big company with a very entrepreneurial feel. Because Barry is such an innovator, we are constantly introducing new products and promotions that are really different, and the media likes new and different. It's a luxury just to be able to pitch stories and strategize play." The W brand was a Sternlicht concept that grew out of his dissatisfaction with many hotels - the rooms were uncomfortable and the service was inconsistent or too stuffy. Launched in 1998, W instantly became a media darling, and is considered the most innovative and successful new brand in recent hotel history. December marks the opening of W number 17 in San Diego, with Seoul and Mexico City openings scheduled for next year. "The first W launch really showed Barry the power of PR, and he's become a huge believer," Kavanagh says. "With everything we do, he asks, 'How are we going to PR this?'" Sternlicht is reportedly a "magazine junkie," and he reads his clip reports every morning. PR is seen as W's primary marketing vehicle and, as such, its ad budget is relatively low. DKC is considered an extension of that brand. "We didn't want an agency that specializes in travel or hotels, because we know how to do that," Kavanagh says. "Our target market reads fashion and lifestyle publications. Klores has such a strong fashion, lifestyle, and celebrity background, and that's exactly where we want W to be." DKC also helped with Westin's 1999 Heavenly Bed launch and the Sheraton Service Promise campaign, which kicked off in mid-September. Sheraton accounts for 396 hotels, and is the largest and most-franchised brand (40%) under Starwood. Unfortunately, it is also the brand with the most tarnished image, having been perceived as inconsistent and slightly shoddy. Sub-par franchises were booted from Starwood's orbit, and the company has spent $1 billion (including $80 million on beds) on rebranding. The service promise guarantees that if a guest is unhappy, the company will compensate equivalent to the infraction. For instance, a missing soap might get you a drink at the bar, but a long check-in line or forgotten wake-up call might get you a free room. While it's too early to measure occupancy impact, PR director Ellen Gallo says the program has gotten more than 46 million print impressions in about 10 weeks. "We knew it wouldn't have credibility if it wasn't offered in all our hotels," Kavanagh says. "It was quite a coup to have all franchises on board with a program that is considered fairly radical." Going back, moving ahead The 2001 Heavenly Crib and Heavenly Bath campaigns were a reprise of sorts of Westin's 1999 Heavenly Bed initiative. "Our management team has made its mark in reinventing this industry," says David Matheson, VP of IR. "The pundits of the industry questioned the [Heavenly Bed] investment, but it started a revolution." Starwood has also been praised for its Preferred Guest program, which boasts no blackout dates or capacity controls. It's a powerful tool, in addition to being a service product. For instance, it revealed that Starwood customers are looking for its brands in suburban areas, which led to the development of smaller-scale Westin and Sheraton prototypes to franchise in those markets. The department will launch 12 new hotels from North Carolina to Bora Bora before the end of this year, and is also busy planning next year's openings and rollouts of new Westin and Sheraton products and services. "You're lucky if you get to open four or five hotels, and we're looking at 47 by the end of 2003," says Kavanagh. "It's keeping us pretty busy. You can only open a hotel once, so if we don't get the press, we're sunk." But that doesn't seem to be a problem for Starwood. -------- Starwood SVP of corporate affairs F. Daniel Gibson VP of PR KC Kavanagh VP of investor relations David Matheson PR directors Nadeen Ayala, Ellen Gallo PR manager Mark Ricci Administrative assistants Christine Sarubbe, Jennifer Conrad Overall corporate PR budget $3 million

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