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Winnipeg Free Press - PRINT EDITION

Hotel chain busy updating its Courtyards

By: Danielle Douglas

Posted: 04/23/2012 1:00 AM | Comments: 0

THIS May, Marriott International plans to celebrate the completion of the 500th renovation of its Courtyard by Marriott hotels across the country, marking a milestone for an undertaking the company hopes will allow it to grab a larger share of the market.

Select-service hotels such as Courtyard -- those that offer few frills and little to no food and beverage offerings -- are enjoying a surge in demand from investors and budget-conscious business travellers. The once vanilla niche has evolved into an increasingly competitive segment that has brand operators and hotel owners jockeying for a position out in front.

"The business traveller has evolved over the last 30 years. They're getting on their computer while they're also socializing (and) no longer just stay in their rooms," said Janis Milham, vice-president and global brand manager of Courtyard. "We've created space that's inviting and says, 'Come in, sit, have a cup of coffee and get your work done.' "

When Marriott introduced Courtyard in 1983, it was meant to compete with Holiday Inn, Howard Johnson and other lower-priced brands in the motel business. The spartan prototype was designed for quick mass production -- Marriott built 100 of the hotels in five years.

Other hotel operators, including Hilton Worldwide and Hyatt Hotels & Resorts, soon rolled out their own competing brands, turning the limited-service model into a more distinctive segment. As the sleek, modern look of boutique hotels began to steal customers, hotels across the service spectrum began sprucing up.

"Courtyard has been around for a while and had a certain staid look to them," said Arne Sorenson, chief executive of Marriott, who took the helm in March. "It is our biggest brand, was masonry built and had a real need and opportunity associated with this renovation."

The chief executive estimates the renovations cost an average of $650,000 per hotel. Marriott, which has an ownership stake in only a handful of the properties it operates, spent $50 million to $75 million of its own money on the project, Sorenson said. Hotel owners were on the hook for the majority of the renovation tab.

Thomas Baltimore, chief executive of RLJ Lodging Trust, said he had no qualms about renovating more than half the 33 Courtyard properties in the real estate investment trust's portfolio.

"We've seen improved guest satisfaction and believe it will yield attractive returns," he said.

RLJ Lodging is one of the most active investors in select-service hotels, but the company is starting to see competition from institutional investors clamoring for the assets. Jones Lang LaSalle Hotels predicts sales of these properties will double this year over 2011.

Revenue from limited-service hotels in the United States was up 8.9 per cent to $10.4 billion in the first quarter, while occupancy rates averaged 54.8 per cent, up four per cent from the same time a year ago, according to Smith Travel Research.

-- The Washington Post

Republished from the Winnipeg Free Press print edition April 23, 2012 B8

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