Sheraton has designs on fresh look

— -- Sheraton, one of the largest hotel chains with more than 400 properties worldwide, is getting an extensive makeover after years of losing customers to competitors.

The $1.7 billion project is aimed at renovating nearly half the hotels in North America by next year with fresher decor, brighter colors and lobbies that beckon guests with new restaurants and cafes.

Starwood Hotels, which owns the Sheraton brand, began the project in early 2007 and hopes to complete renovating 86 hotels — out of 204 in North America — in 2009. It's also removing 38 underperforming properties from the chain.

The project is about "halfway done," says Hoyt Harper II, a Starwood executive in charge of the brand-reinvigoration project.

"In North America, we lacked consistency and quality. When we decided to elevate (Sheraton), we wanted a brand that can compete with Hilton or Marriott," he says.

Sheraton hot as been around since 1937. It was the first hotel chain to be traded publicly on the New York Stock Exchange and became the first Western brand to operate in China when it opened the Great Wall Sheraton in 1985.

"There was a time when Sheraton was one of the leading brands," says Bjorn Hanson, a hospitality industry professor at New York University. "But it lagged in introducing new design and service concepts, and developed a level of inconsistency."

In 1998, Starwood bought the chain from conglomerate ITT to target business travelers who seek upscale, full-service comfort. Starwood has always wanted to reinvigorate Sheraton, but it had other investment priorities — especially the launching of W, the chic chain that opened in 1998 and ushered in a new era of hotels that also aspire to be see-and-be-seen hot spots.

Size matters

Sheraton's sheer size also posed challenges, as it took time to negotiate with owners and franchisees. Starwood owns the brand, but other investors mostly own the real estate. "It took time to come up with a comprehensive plan to apply to so many properties," Harper says.

Harper says many Sheraton properties were "outdated." Room furnishings at these hotels appeared to be little changed from the 1980s in scheme, color and layout — marked by nondescript armchairs, faux-antique writing desk, maroon comforters, bland draperies and beige carpet. The lobby was similarly uninspiring.

In its 2008 North America Hotel Guest Satisfaction study, JD Power rated Sheraton as a laggard in the "upscale hotel" category, giving it only two points out of a possible five.

Paul Wischermann, president of Wischermann Partners, which manages a Sheraton in Minneapolis that was an early prototype for the new design, says some Sheratons were like "a condo that hadn't been renovated in 15 years."

Frequent Starwood customer Alan Intrator, president of a merchant services firm in Great Neck, N.Y., agrees the renovations are long overdue.

"I find the Sheraton brand to be old, dull and totally run over," he says.

Starwood is betting that an enhanced reputation will result in more dollars. Sheraton's revenue per available room is less than at upscale competitors. Sheraton generates about $100 in per-room revenue, compared with about $120 for Marriott, according to company figures.

Specialization on design

Many of the ideas used to launch and modernize the company's other brands — W and Westin — were reworked for Sheraton, Harper says. The head of design for Westin, D.B. Kim, led the redesigning team, emphasizing brighter colors and a minimalist scheme.

Among the specific changes taking place:

•Rooms. From bedding to furniture, dark colors — such as maroon and navy blue — overwhelmed the rooms. The new rooms will feature more primary and less masculine colors. New beds will feature pillow tops and white duvets and sheets. Desks, chairs and beds will be smaller and more modern in style.

"We found that Sheraton has a higher percentage of women customers than any other Starwood brand," Harper says.

•Lobby. Taking a chapter from W, Sheraton seeks to create a lobby that feels like a public park, Harper says. New features include more plants, game tables, alcoves for working and small group meetings, a new cafe called Link and individual computer stations.

"We wanted a natural gathering place. Women travelers who wouldn't sit in the bar alone will be comfortable sitting in the Link," Harper says.

•Food. All Sheratons have a full-service restaurant, but Starwood wants more consistency. A majority of the renovated Sheratons will feature a casual dining restaurant, called Relish. A new steakhouse concept developed by Shula's, a chain owned by former Miami Dolphins coach Don Shula, will also be part of some new Sheratons.

•Other. Flat-panel TVs, increased ventilation and new equipment in the fitness center, in-room Starbucks coffee, and a new club lounge with breakfast and afternoon snacks will be required at all hotels. A trial with Microsoft's Surface, a tabletop computer that can be used to search for local information, is also being tried at several properties.

It remains to be seen how the recent credit crunch and the slowdown in the hotel business will affect the ambitious plan. But Harper says none of the owners have pulled the plug. "We haven't seen any change in direction yet."