The Dealmakers’ Ballroom: Where the future is conceived

The seeds of economic recovery will be sewn in the travel industry. No, it will not be the hotels that pump new jobs out onto the market, and it certainly won’t be the airlines, which seem locked in perpetual battle against any positive influence the economy can have on them. Rather, the future will come from inside the hotels – specifically their lobbies. Historically, this venue has been the den of entrepreneurs with high hopes, small starts and an opportunity to pitch their wares. When lobby action heats up, you can forget about the unemployment rate or the value of the dollar against the euro – the economy will begin to come back.

As I mentioned yesterday, I spent most of the past decade not paying too much attention to hotel lobbies and the people in them … you know, like every other traveler does. Lobbies constituted a space between the present and the goal, whether you were entering the hotel or leaving it. To me, they were nothing more than a space to be traversed. My perspective changed this year, and I haven’t been able to get out of my head that every time I walk to my guestroom, I might be passing my next boss.

Hotel lobbies are an obvious choice for business professionals and startup jockeys. They tend to be large, have plenty of seating and afford a considerable degree of anonymity. People come and go all the time, and they generally mind their own business. Even the hotel staff will leave you alone, as long as you stay as unnoticeable as possible and don’t disrupt the guests (it also doesn’t hurt to buy a drink at the bar every now and then). The confluence of these factors means that the entrepreneur can flip open his laptop and walk a potential client or investor through his hopes and dreams, all crisply and clearly detailed in a PowerPoint presentation.I have been to my share of hotel lobbies. My most recent experience came only a few weeks ago, at the Union Square W Hotel. A friend of mine (no names, it’s still early in the proces), invited me to discuss with her and her partner a new business venture they were exploring. On the corner of E 17th St. and Park Avenue South, I dropped my cigar to the street and nudged it softly with my toe through the sewer grate underfoot. With that one fluid motion, my mind raced back to Boston, almost a decade earlier.

The carnage from the collapse of the dotcom economy was still visible back then. Two years after the NASDAQ took its initial plunge and a year after Enron hit the skids, the tech industry up there was in disarray. Networking events held by the Massachusetts eCommerce Association had become job-hunting dens, populated only with buyers – there were no sellers to be found. Of course, entrepreneurship is born of economic woe, as bright minds unable to find a paycheck from someone else are forced to turn to the dreams they’ve nurtured quietly for years – decades, even.

It was against this backdrop that I let my cigar butt fall to the ground where Dartmouth, St. James and Huntington converge and pushed through the revolving doors to the Westin Copley Place Hotel. I met a familiar face in the lobby at the top o f the escalator. No names, of course, even this far down the road – but, he was tall, a tad gaunt and had the obvious look of the academic he had once been. Doc, I’ll call him, had developed an unusual and interesting bit of software – the kind of thing that would have mattered only to a relatively small community of people with deep pockets – that he was trying to peddle in a market that didn’t favor anything with a price tag.

I joined Doc on the couch in the Westin lobby, which was buzzing with the activity of tourists and locals milling around the adjacent Grettacole salon and spa, and he began to discuss his appreciation for hotel lobbies. They offered plenty of space at the right price, and the comings and goings of people who aren’t permanent provided a sufficient screen behind which to hide from employees. He’d held meetings in countless lobbies, he explained, and had no plans to abandon the practice.

I was in no position to criticize. Having just started a consulting firm of my own, I’d done the same thing on a few occasions. My partners and I routinely met in public spaces, including the Amtrak/commuter rail station on Route 128, but none compared to hotel lobbies, which were closer to home, far more comfortable and within stumbling distance of an endless list of restaurants and bars. If the conversation went well in a hotel lobby, you could always go celebrate with a drink afterward.

Doc and I used the same hotel lobby regularly for more than a year, sometimes to meet with each other, and often to pursue our own separate agendas. I ran into other entrepreneurs there, as well. So, I wasn’t surprised when I was summoned to the W at Union Square this year – twice (by two different entrepreneurs).

When I strode into the lobby this year, in the comfortable position of being pitched rather than doing the pitching, I took a look around. The couches weren’t packed, but you certainly wouldn’t get one of your own if you wanted to sit for a moment. There were individuals working alone, fixated on computer screens and scribbling on notepads. I also saw a few groups, huddled around glowing screens, looking over each other’s shoulders and whispering ideas. They could have been business travelers and guests of the hotel, putting their heads together for a quick strategy session before dashing off to see a client, but I sensed otherwise. Memories don’t fade all that easily.

Finally, I saw a hand wave and quickly made my way to the meeting I was about to attend. In a strange way, it felt like home. Within seconds, I was tete-a-tete-a-tete with two people ready to change the world. I felt 30 pounds lighter, nine years younger and almost like I had a full head of hair again.

If you feel down about the current state of our economy, stroll through a big city’s hotel lobby. It might be hard to feel better, but you can be sure a few people in there are working on the cure for what ails you.

This is a week-long series from the writer of White Collar Travel about the role hotels will play not only in the recovery of our economy, but in giving an early home to the businesses that will define tomorrow.

The W Hollywood won’t let guests use its pool

In what must be a first for a big hotel, the W Hollywood is telling guests they are not permitted to use the rooftop pool.

It seems ludicrous, but it’s true. That’s because Starwood, which owns the combination hotel/residence property at Hollywood and Vine, contracted a slew of hotel services out to third parties. Drai’s, a Las Vegas nightspot promotion outfit, opened on March 17, and was charged with nightlife at the W, too, presumably because the hotel wanted to purchase some off-the-shelf cachet with hipsters rather than earning it through the merits of the product.

I found this out, of course, the worst way a guest can: By staying there, and being denied access to a swim. On a recent 85-degree Sunday, I tried taking the elevator to the rooftop pool (called WET) for some of those famous California rays. After all, my room on the 11th floor was literally thumping with the beats coming through the ceiling, and I wanted to enjoy a little of this party that I had to put up with despite paying $230 a night.

But the 12th-floor button wouldn’t light up. Down in the lobby, I was directed to a line of early 20s hipsters who were waiting to be admitted to the pool deck themselves. I was informed by a doorman that although “the general public” (that would be me: a paying hotel guest) was not permitted upstairs today, I was welcome to join everyone in the line if I wished, or he would “introduce” me to someone inside who “might be able” to get me on the guest list. As I walked away, he called after me, eyeing my clothes. “Don’t forget, sir. Appropriate pool attire.”The hotel’s statement about the arrangement, which amounts to a recap and doesn’t defend its wisdom, follows at the end of this post.

I’m a reporter at heart, though, and undeterred, I skulked up a service elevator with a friend. I paid $10 to bribe a staff member to let us into what Drai’s publicizes as a “sexy poolside affair with House music and Hollywood’s elite.”

Drai’s is dreadful. There wasn’t a spare inch. A DJ blasted beats, pneumatic girls danced laconically as they stood on the cushioned lounge chairs, and shirtless boys in fedoras smoked cigarettes in the pool while they scoped the girls’ bikini bottoms from shin level. My friend glanced around and proclaimed it “a douche-tacular.” Nearby was a big empty table marked “reserved.” We were told we couldn’t be seated there because “it’s the owner’s table.” It was like this all day, from 10am to 10pm, exclusive of guests unless they greased the right palm.

A luxe L.A. hotel without a pool is like a wedding without a cake. A banquet without forks. A pretentious product without a shred of class.

Am I willing to praise a hotel when it does something right? Only too willing. The W has a lively lobby bar, supremely comfortable beds, and the Sanctuary, an octopus-like device that can charge almost anything you have, is a lifesaver. The views of the Capitol Records building and downtown L.A. are unobstructed, and the staff, although saddled with defending a misguided policy, is accommodating and professional.

That same hotel staff, by the way, is generally mortified by the arrangement with Drai’s. One member told me, confidentially, she was sick of having to be “on the front lines” for Starwood’s greedy scheme. She said half her weekend was spent soothing the fury of rebuffed guests. She also complained about one drunk girl who, just the day before, had vomited in the designstudio-created lobby. “This isn’t Vegas,” the staffer astutely pointed out. “A lot of dedicated business travelers stay with us. They don’t want this.”

I have a sinking feeling this trend won’t be unusual in the future. People are making a lot of money off the W’s cynical elitism. It’s a short-sighted victory for Starwood, though, because such Vegas shenanigans will only turn off regular customers, and when the hotel’s It Factor goes off the boil, its alienated customer base won’t be likely to return.

Thanks to the travel industry’s ever-escalating addiction to extra fees and thirst for found money, greed is elbowing aside even the inclination to provide the simplest amenities.

Jim McPartlin, W Hollywood’s general manager, gave this non-apology for excluding guests from its pool:

“We have been absolutely overwhelmed by the response we have received from guests since we opened our doors 2 months ago. With the opening of Drai’s Hollywood on 17th March, the interest in the hotel has increased beyond our wildest dreams, and as such we are having to limit guest access to the WET Deck and Drai’s…..we simply cannot keep up with the demand! We are aware that operationally this is causing problems for some of our guests and we are working very closely with our partners to come up with a solution that works for everyone.”

Update: The furor caused by our exposé caused the hotel to revise its policy. Click here for the story behind that, including an apology by McPartlin.


Feds Try to Halt Starwood Suit of Hilton to Chase Criminal Charges

Usually, it’s what goes on inside the hotels that is mysterious. Illicit trysts, quiet business deals and the occasional rendez-vous of spies (very occasional, I suspect) are what we’d love to believe happens in behind the closed doors of hotels up-market and down. The reality, however, is far more interesting. There is plenty of espionage going on in the hotel world, but it’s the hotels themselves – not he guests – who are getting in on the action … and now the feds are involved.

A lawsuit filed by Starwood Hotels against competitor Hilton may have to wait for a bit. Federal prosecutors believe that the civil litigation could impede the criminal investigation. The U.S. Attorney’s Office is pursuing charges that could include conspiracy, computer fraud, theft of trade secrets and interstate transportation of stolen goods against Hilton, as well as two executives that that the company hired from Starwood.

According to the filing by the U.S. Attorney’s Office, “The government seeks a stay of discovery pending resolution of the criminal investigation.”

Starwood alleges that Hilton swiped confidential documents in an attempt to develop an offer that would compete with Starwood’s W Hotels brand. Before the civil effort can be put on hold in favor of the criminal investigation, a judge will have to sign off on the motion.

Hilton’s response to the filing, according to USA Today is: “Hilton Worldwide continues to fully cooperate with the Government’s investigation and supports the Government’s motion to stay discovery in the Starwood civil litigation matter.”

Not exactly earth-shattering.


Starwood bets on Hollywood allure

What do you do when lenders take over two of your hotels, as your coping with the worst recession in seven decades? Well, if you’re Starwood Hotels, you make a $350 million bet with a single property from your W line. The hotel opened on January 15, 2010, and it’s banking on the reputation of Los Angeles as the center of the entertainment world. Located on Hollywood Boulevard and Vine Street, the new W Hotel hopes to attract star-struck tourists who want to get up close and personal with the movie industry.

The only problem is that fewer and fewer people are heading out to Los Angeles, which is putting a bit of a squeeze on the new property. There’s an opportunity hidden in the situation, however. Carlos Becil, W’s North American vice president, says, “When we come out of this down cycle we’ll own the upswing with all these newer hotels,” Becil said to Bloomberg News.

The financial crisis has been particularly hard on the W chain. The W San Diego was taken back by its lenders after Sunstone Hotel Investors, which had owned the property, couldn’t get the terms of its $65 million securitized mortgage changed. The W New York Union Square was bought by Dubai World in 2006. Well, it missed a payment, which wound up pushing the property onto the auction block back in December. Dubai World also has an interest in the W Washington, D.C., a loan on which is 30 days delinquent. The debt servicer and borrower are working on a solution.

Starwood accuses Hilton of corporate espionage

Two of the largest hotel chains in the world are locked in battle — legal battle. Starwood Hotels has accused 44 of Hilton‘s top executives of stealing trade secrets. Christopher Nassetta, the CEO of Hilton, is alleged to have known about this activity, according to an amended complaint that Starwood filed with the Manhattan federal court. The object of affection thievery was the luxury category of Starwood’s portfolio, including the St. Regis, W and The Luxury Collection.

According to Starwood’s complaint, Nassetta is said to be under “intense pressure” to deliver the financial returns expected by the Blackstone Group, the private equity firm that paid $26 billion for Hilton in 2007. The complaint further states, “Intense pressure — whether from Blackstone or otherwise — is no excuse for corporate espionage, and it is no excuse for the massive theft and widescale use of confidential and proprietary Starwood information.”

According to a USA Today report, Hitlton’s spokesman, Aaron Radelet, declined to comment, because the company doesn’t discuss pending litigation.

Starwood is looking to appoint monitors to make sure that Hilton complies with all injunctions, and it’s also seeking a court-imposed “time out” period during which Hilton wouldn’t be able to move forward with its luxury brands.

[Photo by p c w via Flickr]