Marriott boutique chain to stand alone

LOS ANGELES (Reuters) - Marriott International Inc (MAR.N) expects its Edition boutique hotel joint venture with designer Ian Schrager to stand on its own, with limited links to the hotel company's other brands.

"I'm not sure how visible the Marriott family will be (at Edition hotels)," Marriott Chief Financial Officer Arne Sorenson told the Reuters Travel and Leisure Summit in Los Angeles via teleconference on Tuesday.

"I suspect it will not have an aggressive affiliation between Edition and other Marriott brands," Sorenson said. "It's likely to be much more like Ritz-Carlton" -- Marriott's luxury chain, which operates without obvious connections to its parent.

The lack of links with Edition reflects Marriott's optimism that the new boutique chain, geared toward travelers weary of cookie-cutter accommodations, can be strong enough as a separate entity.

Marriott, which also operates the Courtyard and Fairfield chains, is the No. 2 U.S. hotel operator. The company typically uses the so-called "asset-light" model, which means it manages hotels rather than owning them.

Last month, Marriott said it had signed the first nine development deals for the new Edition chain.

Sorenson said the company's Edition deals have required less cash commitment from the company than typical long-term hotel management deals.

Marriott announced in June plans for an upscale boutique brand in cooperation with style icon Schrager, who helped define an era of New York night life with Studio 54 and went on to pioneer the boutique hotel concept.

The brand name and development deals were the first signs of progress on Marriott's bid to enter the boutique hotel space, where Starwood Hotels & Resorts Worldwide Inc's (HOT.N) W brand has set the pace.

Mike Depatie, CEO of boutique hotel operator Kimpton Hotels & Restaurants, said at the Reuters Summit that the Edition project only underlines the importance of the boutique concept. He expects the boutique hotel segment to grow from about 1 percent of the U.S. hotel market to 4 percent or 5 percent.

Marriott and Schrager expect the first hotels to open in 2010 and expect to sign as many as 30 agreements by the end of 2008. Marriott hopes to eventually open more than 100 Edition hotels, which will have an average of 150 to 200 rooms.

The current Edition projects are in Paris, Madrid, Costa Rica, Miami, Washington, Chicago, Scottsdale, Arizona, and Los Angeles, where two are planned.

Marriott, which is due to report its quarterly earnings on Thursday, has seen its shares rise about 5 percent this year. The stock closed up 1.3 percent at $35.72 on the New York Stock Exchange on Tuesday.

GREEN BUSINESS

Sorenson also said that environmental friendliness is becoming a deciding factor in attracting business.

"If we can deliver a palpably greener product, but one that's also equal for the customer in terms of comfort and luxury, we believe we are going to drive some incremental market share to our hotels," Sorenson said.

The customer attention on green factors is a decided change in the way hotels look at environmental initiatives. Previously, the use of energy-saving light bulbs and reducing the frequency of changing bed linens during a guest's stay was aimed at reducing costs, rather than winning business.

Marriott, which also sees greener operations as a way to attract staff, is now working on programs to offset the environmental impact of a hotel stay. "We want to make sure that what were doing is real," Sorenson said.

(For summit blog: summitnotebook.reuters.com/)

(Editing by Tim Dobbyn and Braden Reddall)