When the doors to the iconic Rosewood Hotel Georgia reopened last month after an extensive renovation, many locals paid a visit, eager to see what had become of one of Vancouver’s most treasured downtown hotels.
Beginning in early 2007, the property was closed to allow for its ambitious $130 million reimagining, complete with a full restoration of heritage elements, as well as the addition of an adjacent 48-storey residential tower.
The reinvigorated 155-room hotel was almost entirely gutted and reconfigured with larger rooms, an increased number of suites and a five-star spa and restaurant among other luxurious amenities.
The renovation was long overdue. After years of decline, the grand hotel had long since lost its lustre, most recently being branded as a Crowne Plaza hotel. That middling market position was a far cry from its heyday in the mid-20th century.
Opened in 1927, the once-prestigious hotel played host to a who’s who of celebrities and dignitaries over the years, including Elvis Presley, the Rolling Stones, Frank Sinatra and members of the British royal family.
“Prior to shutdown, it had gotten down to a two-star level, had small rooms and a lot of mechanical issues,” explains Bruce Langereis, president of Vancouver-based Delta Land Development Ltd., the hotel’s owner. “Our rates were at or near $100 per night. Now we’ve revitalized it to what I would say is a five-star level.”
The linchpin of the Hotel Georgia’s revitalization would be its rebranding.
Delta’s plan to restore the Hotel Georgia’s prestige involved recruiting Dallas-based luxury hotel management firm Rosewood Hotels and Resorts to breathe new life into the exhausted property.
In the hotel industry, rebranding is less a hail-Mary-pass than it is a strategic move often dictated by economic circumstances or a hotel’s marketing needs. Rebranding occurs at all ranges of the market, and usually results in about 3% of the hotel’s room revenue being paid to the management firm, with fees sometimes ranging as high as 11% with incentives.
According to a recent report by hospitality and tourism consulting firm PKF Canada, the number of branded hotels in this country is on the rise, growing by more than 40,000 rooms over the past decade. That was nearly triple the rate of growth in independent hotel supply over the same period. Nationally, about 75% of mid- and upscale rooms and 40% of economy and boutique hotels are branded.
Why the trend towards increased branding in the Canadian hotel industry?
As Monique Rosszell, senior vice-president of Toronto-based hotel consulting firm HVS Canada points out, when established, efficiency-focused brands, ranging from Best Western to Four Seasons, add more properties to their portfolio, independent hoteliers – with the exception of centrally-located, high-end boutique hotels such as Toronto’s Hazelton Hotel or Montreal’s Hotel Nelligan – have greater difficulty competing for guests.
“Now you would never build a large, full-service hotel as an independent, it would have to be branded,” Ms. Rosszell explains. Her reasoning is simple: “When people are on the Internet choosing between the local, independent hotel and the branded Marriott, which one are they going to stay at?”
It’s no secret that property owners and their marketing managers are fully aware of the potential for luring new customers by partnering with a well-known management firm.
It’s the reason why property owners who decide to sell an asset – particularly during or after downturns in the economy –often opt for a fresh start with a new management firm and a new name, as in the case of the new Rosewood Hotel Georgia.
In other cases – particularly if the building’s structure allows for it –an owner may wish to renovate and re-position a tired, low- or mid-range hotel at the higher end of the market, often by recruiting a hotel management firm to upgrade the property’s image.
Such was the case in the mid-1990s when the dilapidated Inn On The Lake on Toronto’s western lake front was converted into a Four Points Sheraton. “That was a home run,” says David Larone, Toronto-based director of PKF Canada. “The hotel was horrific, but the structure was good and there wasn’t much real estate that had to be renovated.”
To ensure brand consistency and quality control, management agreements are typically comprehensive, allowing companies to seize full control of a hotel’s operations from room service to the sign that hangs on the door.
As Mr. Langereis points out, a major brand’s management expertise may come at a price, but is crucial to a property’s success, relieving developers of the pressures of trying to achieve similar results themselves.
“You can’t manage a hotel for free,” he says. “What you save (by self-managing) you may pay for in other ways.”
Indeed, hiring a major brand not only brings to a hotel invaluable name recognition and higher standards of service quality – as well as improved occupancies and average room rates – but also a range of valuable benefits such as staff and facility management efficiencies, access to global reservation systems and the patronage of fiercely loyal customers, according to Beth Walters, a director with PKF Canada in Vancouver.
They also provide another critically-important offering: loyalty rewards programs. “Accumulating brand loyalty points to trade for personal benefit has become a way of life and leads to a higher level of branding,” adds Ms. Walters.
For Mr. Langreis, the move to rebrand the Hotel Georgia made financial and marketing sense. So, too, did spending the time to find the right management partner.
“The most important thing is this hotel is a piece of history. Every operator wants to put their name on the building, but Rosewood respected the fact that this is a Vancouver tradition and didn’t brush that aside.”
Special to the Globe and Mail