In September, a pedestrian walking on Central Park South in Manhattan might have noticed the name Jumeirah being stripped from the marquee of the Essex House, a luxury hotel. The property became a JW Marriott. Earlier, it was a Westin.
The Essex House is not alone changing its brand affiliation. As the recession has eased and hotel occupancy rates have improved, hotel owners have been increasingly changing their affiliations from one brand to a competitor's – what is known in the industry as reflagging.
According to statistics from Smith Travel Research, a research firm in Henderson, Tenn., nearly 2,500 hotels were reflagged in 2011. While that represents just a 5 percent sliver of all hotel properties in the United States, it was still a 39 percent increase from 2010.
"In the aftermath of the recession, travel patterns have changed," said Bjorn Hanson, divisional dean and clinical professor at the Preston Robert Tisch Center for Hospitality, Tourism and Sports Management at New York University. "Owners think about repositioning, with some trading up, others forced to trade down," he added.
Five-year leases on properties opened in 2006 and 2007 are expiring now. Typically hotel brands do not own the hotels. Hotels may have a contract with a management company or a hotel owner may have a franchise agreement.
"The new brand promises either lower fees or offers more flexible standards that provide the hotel with ways to be more efficient or greater reach in a market," said Henry Harteveldt, chief research officer and co-founder of the Atmosphere Research Group in San Francisco. Operators reflag, he said, to take advantage of benefits they are not getting from a current brand.
While experts say most conversions run smoothly, some may hit snags, at least initially. "The new personnel coming in are competent, trained and supervised," Mr. Hanson said, "but they may not be familiar with the technology or what's in the drawer at the front desk."
One brand, Holiday Inn of the InterContinental Hotels Group, began considering a reinvigoration of the brand in 2004. Changes began in late 2007 after guests complained about inconsistency among the properties.
"Guests were saying the lobbies and bathrooms weren't modern, the beds weren't comfortable," said Verchele Wiggins, vice president for global brand management for the Holiday Inn brands at InterContinental.
In the last eight years, more than 1,400 hotels were removed from the brand. About 1,800 were a combination of newly built Holiday Inns and conversions to Holiday Inn. And just over 1,600 existing Holiday Inns chose to remain with the brand. Each new or existing hotel spent about $150,000 to $250,000 to comply with modernization requirements.
J.D. Power and Associates now ranks Holiday Inn first in its midscale full-service hotel category, up from sixth place in 2009 and 2010.
One property that benefited from improvements is the Holiday Inn, Gwinnett Center in Duluth, Ga., northeast of Atlanta. When the hotel completed its transformation in 2009, plain white sheets were replaced with those using a white decorative stripe, the entryway was flanked with planters and a distinct scent identified with the brand permeated the lobby, according to Tracy Johnson, the general manager.
Rob Palleschi, global head of the DoubleTree by Hilton brand, a brand within Hilton Worldwide, said that "hotels have toughened up their requirements." That brand has been particularly active in converting properties. As of mid-December, it opened 43 hotels this year; 36 were conversions from others brands or independent hotels.
He said design preferences explain some decisions to change brands. Many major brands prefer interior corridors. Those with exterior corridors face a choice of reflagging or demolishing the building and starting over, a considerable expense.
Some hotel executives spend money to revitalize a hotel hoping to attract new customers. One is Stephen M. O'Loughlin, president of Lodging Hospitality Management. The firm owns 18 hotels and office buildings in metropolitan St. Louis, including St. Louis Union Station, which became a DoubleTree in October. The hotel was previously a Marriott.
Mr. O'Loughlin said he considered staying with that brand, but he encountered a difference of opinion over how to configure the hotel's grand hall.
He said he had previously worked with Hilton, transforming a Marriott across from Busch Stadium seven years ago into the Hilton St. Louis at the Ballpark. And he believed he could use the DoubleTree to absorb the overflow from the Ballpark's meetings and conferences. He chose DoubleTree because the brand is less stringent about room size and unusual configurations than others under the Hilton umbrella.
There's more… continue reading page 2 of "Dressing Up for Success: Hotels Preen and Change Brands" on the NYTimes website
