'Expensive OTAs' prompt first London hotel sign-up to Starwood franchise

'Expensive OTAs' prompt first London hotel sign-up to Starwood franchise

Starwood Hotels’ latest independent hotel brand, Tribute Portfolio, has signed up its first property in London.

The Great North Hotel in London’s King’s Cross will become a Tribute hotel.

The new franchise will see independent hotel owners pay between 4% to 6% of their room revenues to Starwood in return for access to the group’s booking system, marketing and its Starwood Preferred Guest loyalty scheme.

The Tribute model, which was launched in Miami in April, allows Starwood to rapidly expand at minimal marginal cost. It hopes to have 100 hotels signed up within the next five years.

Great Northern Hotel owner, Jeremy Robson, said the Tribute franchise was attractive to him because it is a far cheaper way to sell rooms than by generating online buzz or selling through online travel agents, such as Expedia and Booking.com, which charge high commissions.

“We spend £300,000 a year on search engine optimisation and pay-per-click,” he told the Financial Times.

“Around 45% of my room sales are through the online travel agents and they take 20-21% commission. We like them, but they are expensive.”

Robson said the deal would see his gross cost of sales per room drop from 18% to 12.5%.

“Even if we do not achieve a higher room rate, I am nearly 6 percentage points up on half my income.”

“The Great Northern Hotel has been established for two years,” added Robson. “We are trading well. But if Tribute had been available earlier I would have done a deal then.”

The UK hotel will be the second property in Starwood’s Tribute chain following the Royal Palm Beach in Miami.

The group plans that between a third and half of Starwood’s Tribute hotels will open in Europe, where the proportion of independent hotels is higher.

Starwood already has 10 other hotels in the UK.

Michael Wale, head of Starwood in Europe, said: “We have a loyalty programme that is highly desirable.

“We know that 50% of our bookings come through SPG members and they pay a 20% premium. They also spend more when they stay with us.

“You can go through the online travel agents but you cannot know the customers in the same way.”


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