News Article - August 08, 2008


By Suzette Parmley

Inquirer Staff Writer

  It's hardly the best of times for the travel industry, but that hasn't stopped Starwood Hotels & Resorts Worldwide Inc. from shelling out big bucks - to the tune of $30 million - for a brand-new upstart at Philadelphia International Airport. The new Aloft, described by its Starwood creator as "having the DNA of a W hotel" - a reference to Starwood's other upscale brand - makes its official debut today at the airport. It sits on a 16.2-acre, Starwood-owned parcel that also is home to a Four Points by Sheraton and a Sheraton Suites hotel, both owned and operated by Starwood.

   But the Aloft boasts its own lingo, an ultrathin staff (on average 32 full-time employees per hotel), and a unique look that sets it apart from the other Starwood hotels. For instance, its indoor pool is called "splash," its grab-and-go food and beverage counter is "re:fuel," and the hotel's fitness room is "re:charge." And, please, refer to those who remake your bed in the morning not as housekeeping, but as "re:fresh." The Aloft charges the most among the three Starwood airport hotels, about $20 more per room than the Sheraton Suites and $40 more than the Four Points. An average weeknight stay will run about $189 at Aloft, and $149 on weekends.

   The boutique hotel was going after the upscale, frequent individual traveler, who is tech-savvy and can appreciate its "in-touch" 24/7 computer terminals, and kiosks with touch-screen technology to check in. Aloft general manager Patrick Sanchez said the Aloft customer spends little time in his room and, instead, prefers socializing in the hotel's ultra-lounge-like lobby, called re:mix that features the trendy w xyz bar and a pool table.

   "If you look at it from a family point of view, it will be the good-looking, very popular, younger brother of the other Starwood Philly airport hotels," said Sanchez, 50, who also oversees the Four Points at the airport with 177 rooms, and Sheraton Suites with 251. The Aloft concept will be totally new in Philadelphia, which has no W hotels, said Sanchez, a 28-year Starwood employee, who opened the Sheraton Society Hill in 1986 as food and beverage director. But the Aloft debuts at a difficult time.

   Andrew Zarnett, a gaming and lodging analyst with Deutsche Bank AG in New York, said a soft economy was lowering domestic hotel occupancy. "Whether or not the softness continues, higher airfares will lead to reduced travel, translating into lower occupancy," he said. Starwood, Zarnett said, "like other hotel companies is experiencing pressure on its occupancy levels and also cash flows, but the company has an extremely strong balance sheet that provides it with great flexibility" to grow its business.

   Demand for the Philadelphia airport rooms was down 7.4 percent through the first six months of the year, according to PKF Consulting, of Center City, which tracks the regional hotel industry. This despite airline passenger traffic through Philadelphia being up 1.5 percent through the first four months of the year. For April, airport hotel-room demand was about even, according to PKF; May demand was down 5.6 percent; and June was off 8.7 percent.

   "Demand in hotel rooms has slid in May and June, which is probably a sign of the economy," said Peter Tyson, vice president of PKF Consulting. He said July numbers had not been released yet. "It's obviously not the best time for a new hotel to open at Philly airport," he said. But despite this, Tyson said, the airport-stadium market has historically rebounded well from downturns and additions to supply, compared with other areas in the city. "The market should quickly absorb the Aloft," he said, "and its overall occupancy should rebound relatively quickly to regain its usual top spot."

   Sanchez said his two existing properties, the Four Points and Sheraton Suites, even before their recent face-lifts, usually ran 85 percent occupancy year-round. "There is a demand, especially here at the airport," he said, "so we didn't feel bringing in and introducing the third of nine Starwood brands would cannibalize one of the two." Sanchez said there was another silver lining in an otherwise depressed travel sector: He is hoping the extended-stay, lower-airfare wars heating up among the major carriers could help make the intimate, five-floor Aloft a player in the local airport-stadium market. "We are seeing that, because of the prices by the airlines for tickets, there are people who are actually extending their stay" to save on airfares, he said. "That's actually to our benefit."

   Of the Aloft brand, Tyson described it as "very chic, almost a mid-market-type boutique hotel with a streamlined food-and-beverage element." The Philadelphia Aloft becomes the 21st hotel in the airport-stadium market, and its 136 rooms will push overall inventory there to 4,232 rooms, according to the Greater Philadelphia Hotel Association. Starwood is pouring $50 million into its three Philadelphia airport properties, including the $30 million price tag for the new Aloft. There has already been $20 million in renovations at the two existing properties, completed last month, including new guest rooms at both.

   The Philadelphia airport Aloft is the fifth to roll out this year and is among about 90 planned worldwide by Starwood. The first opened in Montreal in May, followed by Alofts in Rancho Cucamonga, Calif.; Chicago O'Hare Airport; and Lexington, Mass. One is being built in Beijing, he said. Mount Laurel is to get an Aloft along its famed Hotel Row in September 2009. Tyson confirmed that there was a certain buzz in the industry about Aloft. "People want to see it, touch it, and most importantly, see how it performs against the more-established older brands," he said. "That we won't know for another several months."

Source - Philadelphia Inquirer