That Name on the Hotel May Not Be the Real Thing

Ever wake up in a strange hotel room and find yourself facing troubling questions?

On Aug. 1, hundreds of travelers fell asleep in Ritz-Carlton accommodations in Aspen, Houston, New York and Washington, D.C., then woke to a strange and sudden anonymity Aug. 2. In an outbreak of hostilities between the hotels’ owner and their management company, officials of Ritz-Carlton snuck in overnight to slip letters under guest-room doors announcing that Ritz-Carlton was stripping its respected name from the four properties, and explaining why.

The hotels remain open--after a hastily arranged deal with ITT, parent company of Sheraton, they have been re-dubbed New ITT Sheraton Luxury Collection hotels instead of Ritz-Carltons--and a court battle is likely. But on that strange morning, even though many of the affected guests were high-powered business travelers, many of them probably couldn’t completely answer the question of the moment:

What does it mean for travelers when their hotel suddenly loses--or gains--a familiar brand name? And why does this seem to be happening more and more often?

Industry veterans agree that “re-branding” is far more common now than in decades past. By one estimate from Smith Travel Research, 22% of all U.S. hotels have changed brands in the last six years. (Usually, the pricier the hotel, the less likely a name change.) This, experts say, is because hotel chains are buying each other up, and many investors who formerly built new hotels are these days buying existing properties. Also, after sustaining heavy losses in the early 1990s, hotel owners now are holding management companies to contracts with shorter durations and stiffer financial performance requirements--thus giving themselves more freedom to switch.

These moves can frustrate travelers, especially if frequent-guest programs are affected. But many hotel-trade veterans say that a name change often means little immediate difference for a guest. In fact, a new chain name is often accompanied by cosmetic improvements and heightened service, thanks to a newly arrived management’s eagerness to show quick results.

The key to these name games is this: The name on the sign above your hotel is probably not the name of the company that owns it. Most hotel names come from the management companies hired by the owners--the four hotels mentioned above were owned by a Saudi businessman but managed by Ritz-Carlton. Or the hotel names come from franchise operations that sell use of their names to owners and management who pledge to meet certain standards. Of the 250 hotels in the U.S. bearing the Hilton name, for instance, 44 are owned or part-owned by Hilton, 28 are managed but not owned by the company, and 178 are run by franchisees.

If you’re concerned about a name change, ask your travel agent for the reason; or, if you make your own bookings, call the hotel and ask if the change stems from new owners, new management or something else. If the circumstances are less than flattering, says hotel analyst Bruce Baltin of PKF Consulting, the hotel representative may not be immediately forthcoming, “but they’re not going to lie to you, either.”

The Ritz-Carlton blowup followed at least two years of internal dispute. The hotels’ principal owner, Saudi businessman Sheik Abdul Aziz al Ibrahim, has accused the management company of profligate spending that violated its contract. Ritz-Carlton has accused the owner of failing to pay more than $4 million in debts. Longtime hoteliers say they can’t recall another case of such a public dispute at a high-end hotel, nor can they remember any such case entangling multiple hotels at once.

Most name changes are the decision of hotel owners. Some signal a move to raise standards, perhaps pushing a hotel from three-star to four-star status. Sometimes, especially in older properties whose owners don’t have deep pockets, standards slip the other way. But most changes usually boil down to one of these scenarios:

* Either through a straight sale or a predecessor’s business failure, a new owner takes over a hotel and brings in new management. In February, for instance, the Hotel Nikko Atlanta became the Grand Hyatt Atlanta and Hyatt assumed part-ownership of the property.

* An owner decides that a new management company will be able to handle the job more profitably than the one in place. For example: On Aug. 1, Hyatt took over management (but not ownership) of the historic Whitney Hotel in Minneapolis, which became the Hyatt Whitney.

* An independently owned and managed hotel decides to dump a franchise affiliation in order to strike a new affiliation or stand on its own, flying no franchiser’s “flag” or brand name. Conversely, a franchise chain may decide that a hotel isn’t meeting standards and withdraw its permission to use the name. In a campaign to weed out “substandard” franchises, Hilton spokeswoman Kendra Walker reports, that company has lifted its name from 100 hotels nationwide, mostly Hilton Inns, since 1992.

* A management company wants an owner to sink more money into a hotel than the principal owner wants to spend, and the two agree to part ways. Trade veterans say this is the non-adversarial alternative to the sort of dispute that Ritz-Carlton became embroiled in, and it’s relatively rare. But another example, industry veterans say, came two years ago, when the name of Four Seasons Regent disappeared from the Clift Hotel in San Francisco. Soon the hotel’s Mobil rating dipped from five stars to the current three. (That hotel’s ownership and management, but not its name, have changed again since then.)

Reynolds travels anonymously at the newspaper’s expense, accepting no special discounts or subsidized trips. To reach him, write Travel Insider, Los Angeles Times, Times Mirror Square, Los Angeles 90053.