St. Regis Monarch Beach Leaving Starwood June 1, 2016

In a vast majority of cases, the major hotel chains simply have management contracts with “their” hotels, and don’t actually own them. Hotels are mostly owned by big investment firms, and then the major hotel chains get a few percent of the revenue for their work. These management contracts are usually pretty long term, though there are often clauses for individual hotels to get out of the contracts if things aren’t going as well as they had hoped.

In the grand scheme of things it’s fairly rare to see hotels rebrand, though it does happen occasionally. Sometimes the changes in branding surprise me, as it seems like hotels are frustrated by their lack of success and are trying to find a scapegoat, and they think rebranding is the solution.

To give a few examples of hotel rebrandings I’ve written about in the past few years, the InterContinental Berchtesgaden was rebranded as the Kempinski Berchtesgaden, the W San Diego was rebranded as the Renaissance San Diego, and the InterContinental Westminster London was rebranded as the Conrad St. James London. The Berchtesgaden rebranding I sort of get, since Kempinski is a brand which resonates more with German consumers than InterContinental. The other two have me scratching my head, though…

While all of the above rebrandings involved hotels switching from one brand to another, here’s an instance of a hotel leaving a brand and going independent. The St. Regis Monarch Beach will be leaving Starwood and going independent as of June 1, 2016.

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St. Regis Monarch Beach

Per an announcement on Starwood’s website:

Leaving Starwood on June 1, 2016

The St. Regis Monarch Beach will be leaving the Starwood system on June 1, 2016. Reservations are still being accepted for dates on or after June 1, 2016, however, they will not be eligible for Starwood Preferred Guest membership benefits, award redemption or accrual.

Ironically June 1, 2016, is the same date that the hotel is finishing their $40 million renovation. Once the hotel goes independent it will simply be called The Monarch Beach Resort. The hotel was purchased by KSL Capital Partners LLC in May 2014 for $316.9 million, so it looks like the hotel is leaving Starwood on the second anniversary of that happening.

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Renovated room at the St. Regis Monarch Beach

Per the Orange County Business Journal, the hotel wants to be one of the top 10 resorts in the country:

“This can be a top-10 resort in the country,” said General Manager Ian Pullan. “KSL … saw the potential.”

KSL and a predecessor company, KSL Recreation Corp., have owned or operated high-end resorts since 1992 that include California properties Squaw Valley, Rancho Las Palmas, La Quinta, La Costa, and the Hotel del Coronado.

The resort has been a St. Regis since it opened in 2001 and will be run through the end of May by Stamford, Conn.-based Starwood Hotels & Resorts Worldwide Inc., which owns the brand.

The reason I’m writing about this is twofold. First of all, the resort is really popular as a weekend getaway for people from LA, so I’m sure a lot of Starwood loyalists will be sad about this change. Second of all, it’s extremely rare for a hotel to leave a hotel group and go independent. We see independent hotels join hotel groups all the time, but not really the other way around.

I’m surprised to see this hotel leave Starwood. The hotel is huge, as it has about 400 rooms. I have a hard time imagining that an independent hotel can fill that many rooms at decent rates without the power of a major hotel group. I guess the hotel crunched the numbers and decided that the few percent in revenue they’re paying to Starwood exceeds the business they’re getting through them, though I can’t conceptualize how that could be the case.

I think the St. Regis Monarch Beach is a perfectly nice hotel, though has no chance in hell of being “top 10.” Hotel guests have access to a beautiful public beach, though you need to either walk about 15 minutes or take a trolley to get there, so it’s not like the hotel has direct and easy beach access. The hotel itself is quite nice, though frankly not especially memorable, in my opinion.

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Beach near the St. Regis Monarch Beach

Bottom line

I’m a bit sad and puzzled to see the St. Regis Monarch Beach leave Starwood. I can’t really conceptualize how they think they’ll be better off independent, given how huge the hotel is. Filling 400 rooms in an independent hotel is a real challenge. The hotel group business model works, and there’s a reason that a vast majority of large luxury hotels belong to some sort of hotel group.

I could see if they wanted to rebrand as a Four Seasons, given the upcoming merger between Marriott and Starwood, and that there’s a Ritz-Carlton down the street. But independent? Yow!

I’ll be curious to see how this plays out…

What do you make of the St. Regis Monarch Beach leaving Starwood and going independent?

(Tip of the hat to JDK40)

Comments

  1. Interesting that they think (or “may think”) they are not getting enough business from Starwood. I like the resort. I have stayed there several times. I may be the one-off … but the only reason I stayed there was because it was a Starwood property.

  2. KSL properties are typical Omni hotels – Homestead, LaCosta, Barton Creek, etc. Watch them switch to Omni shortly.

  3. The hotel may not stay an independent. It could become an Omni as Mike suggests or something like a Curio by Hilton.

    Sometimes, the brand standard the hotel company is attempting to enforce may not fit with the economic potential of the hotel. Also, it could be a pure money saving exercise. If the hotel generates enough revenue, it may simply not need to be affiliated with any brand. Hotel owners make decisions market by market on what brands to choose, whether to brand at all, how to manage a property, etc. Perhaps KSL think it can make its numbers easier if is not paying Starwood a management fee.

  4. Is it possible that the contract they have with SPG prevents them from IMMEDIATLY switching over to another chain? Perhaps by end of the year/next year no longer be independent.

  5. Puzzling but perhaps they are in negotiations to join another chain and this was done temporary due to some legal requirements (a cool down period).

    From reading reviews this seems to have been a popular wedding and convention location with very sub-par staff so would be curious to see if they can keep up the business.

  6. Could this have anything to do with the Marriott merger allowing them to leave the group in the event of a management change?

  7. It’s quite common that hotels get branded as an independent hotels in between switching flags, while the hotel gets systems, upgrades, and programming associated with a new management company–that’d be my best guess of what happens here. The market for signing new hotel management contracts now is very hot and many management companies would pay (in the form of key money) to sign this property. It could be in bidding war now.

  8. Management owns the Hotel del Coronado, a remarkably successful independent property. I wouldn’t be surprised to see them try to turn The Del into a regional or national brand/affiliation, starting with Monarch Beach.

  9. I find it funny that they think they are a world class resort/hotel… The Montage or Pelican Hill is way better than this resort.

  10. This hotel is a conference hotel. The vast majority of their high-occupancy nights come from conference-goers.

    SPG devotees fill the hotel during low periods, but don’t generate much revenue.

    This hotel’s conference facilities are amongst the most spacious of the high end properties in Orange County, so it reasonable for them to expect they’ll continue to keep their spot on many/most conference circuits. If they keep getting the conferences, they’ll get the conference-goers to fill their rooms. They don’t need SPG for that.

    Golfingboy…indeed, Montage and Pelican Hill are superior options. The only reason to stay here is if they are giving away rooms or your conference is here.

    Of note…this is where AIG had their famous boondoggle in 2008.

  11. Could be they have repeat business, and not getting new business. So maybe they figure they are not gaining anything from paying the very high fees to Starwood.

  12. Quick question: what happens if you had made bookings for a stay in the period after St Regis Monarch secedes from SPG, but that it was part of SPG at the time of the booking (and you had no idea that they were about to exit SPG).

    Would you then be eligible for starpoints and stays/nights?

    Appreciate any insight on this. Thanks!

  13. As stated above, wouldn’t be surprised if this becomes another brand in a year. Although if they really want to be a “top 10” resort, only a few brands could support that (e.g. couldn’t see Curio or Autograph, as some have suggested).

    I stayed here once and honestly wasn’t that impressed. It was fine, but the rates they charge don’t really match the quality of the hotel. I guess it’s because it’s an easy weekend getaway from LA.

  14. I agree that it might sound a bit strange to go independent but I think there are quite a few reasons why it could be a good move.

    As already mentioned in these comments, the hotel is popular with event organizers. Weddings, conferences,… The people visiting these events don’t book their stays through SPG. They book it through the event organizers because most of the time they get preferential rates this way. If they are lucky, they get SPG points for their stay.

    As I was until recently doing myself (before crunching some numbers), a lot of people are booking their stays through online travel agents. Most of these stays are not eligible for points.

    For people booking their family holidays/breaks with points, the hotel probably gets even less than the rates on online travel agents.

    So all in all, I think it might be a reasonable decision to go independent in their particular case.

  15. What a shame. I’ve stayed at this property several times and chose to as I was usually upgraded to “butler service” as an SPG Platinum Ambassador guest.

    I guess when I’m back in the area, I’ll try the Ritz and collect Marriott points

  16. Starwood continues to DUMP some of it’s best properties…
    The Westin Diplomat in Hollywood, Florida
    now the St. Regis Monarch Beach?
    Having worked for Starwood managed and franchised properties,
    it comes as no surprise…. Take a look at the Park Central San Francisco..
    aka The Westin SF Market Street…. it dropped the brand, but still a Starwood Affiliate…
    not sure what exactly happened there.. Maybe Highgate could not get out of the franchise agreement….

  17. I’m a local resident living about two miles from the hotel. I don’t think it’s doing well without Starwood as they are pushing discounted rates and even for the holidays — Thanksgiving and Christmas when you think they would be sold out!

    As a local resident, nobody here talks about them. Ritz Carlton at least courts the local resident by offering us 20% off for F&B, spa treatments, etc. to get us to be loyal to them. Monarch Beach does nothing and I think they are really having a hard time now. And this is November!

  18. Would very much like to know what you think will happen to the hotel Del Coronado since its recent buy out.

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