How Does a Design-Led Boutique Hotel Become a Mass-Market Product? This Is the Story of W Hotels | Market Inventors

Take away either one — a taste for design, or a big group's global supply chain — and none of it happens.

Two months before it officially opens, the W Shanghai, on the North Bund in Hongkou District, let the media in for a preview of its unfinished public spaces and two of its guest rooms.

The hotel was designed by G.A Design, the studio behind the W Taipei, in a style it calls East-meets-West. Women in cheongsam are painted on the lobby walls; neon signs spelling out Shanghai street names hang in the atrium; even the floor of the terrace pool that looks over the Huangpu River is scattered with peonies.

In the rooms, the designers went at the walls with large panels of saturated color — bright red, orange, vivid blue acrylic — some of them used as dividers. Every bed carries a silver "xiaolongbao" dumpling cushion and a pair of soft "chopsticks"; on the wall beside the desk hang two Sonos speakers. Eighty-five percent of the rooms have a full wall of window looking out at the Huangpu.

Christian Humbert, who has just taken over as general manager of the W Shanghai, worked his way through the crowd, asking people every so often: "Can you tell me how it felt, now that you've seen it?"

"Very W." That was the answer he heard most.

W is easy enough to recognize. It has 50 hotels and resorts in nearly 40 of the world's busiest cities and island destinations, most of them on the liveliest stretch of town — a blue sail of a tower at the port in Barcelona; a glowing curved building in London where Chinatown, Leicester Square and Soho meet; and in New York, W's home base, early work by the designers Philippe Starck and David Rockwell.

Search #whotel on Instagram and the 380,000-odd results keep turning up the same things: a bold white letter W, fit young people in sportswear, beaches, cocktails at parties.

Outside many W hotels, once night falls, there is a line of girls in tight skirts and heels waiting to get in, and passing tourists take the place for a famous club. That may be the best gloss anyone has written on W's showy, high-volume hedonism.

W began in New York City. Barry Sternlicht, who founded both the Starwood real-estate investment firm and Starwood Hotels & Resorts, opened the first one in 1998. Where the name came from is still argued over. In An Oral History of Boutique Hotels, published this year by the travel site Skift, a former global development director at W Hotels who worked on the early planning of the first property tells it this way:

"It was a really fun time. We had no idea what was coming next or what we were doing. I don't know if people outside know this story, but there really are several versions of why W is called W. Some say Warm, Witty, Whimsical, or words like that; some say Barry's wife came up with it. But as I remember it, being in the room at the time, one reason for calling it W was that if the project failed, we could always turn it back into a Westin."

W Hotels was the first brand Sternlicht built himself. A shrewd Harvard Business School-trained property man, he had lived through the American subprime crisis of the late 1980s and early 1990s and lost his job in it. In 1991 he set up his own investment firm, Starwood Capital Group, and bought up cheap the apartment homes the government was unloading in its fiscal crisis. Those deals paid for what came next: Starwood Hotels & Resorts.

In 1995 Sternlicht pulled the company's hotel holdings together into Starwood Hotels & Resorts, and that same year, with Goldman Sachs, bought Westin for 570 million dollars. Before W opened, he paid 4.3 billion US dollars for ITT Sheraton, which brought him three more brands: Sheraton, Four Points by Sheraton and The Luxury Collection.

Frits van Paasschen, Starwood's former chief executive, said in an interview that when Sternlicht got his hands on the 1920s building at 541 Lexington Avenue in Manhattan, what he wanted was "a hotel in a great location that doesn't offer traditional luxury service" — a light-luxury property that would work for business travelers and holidaymakers alike.

The idea did not come out of nowhere. "Boutique hotel" was still a phrase most Americans had never heard, but the ground was already shifting.

Bill Kimpton, the man usually called the father of the boutique hotel, had opened the first one in the United States — the Kimpton Hotel — in San Francisco back in the 1970s, and had been spreading up the West Coast ever since. He bought small old buildings downtown, refitted them, and brought in well-known local chefs to run restaurants inside, so that guests got "the close, careful service of a European hotel."

The other man who gave Sternlicht ideas was Ian Schrager, who opened New York's first "lifestyle" hotel. Schrager had founded Studio 54, the nightclub that owned Manhattan for a while, and he served three and a half years for evading an enormous tax bill. Out of prison, he and his business partner Steve Rubell decided to run hotels the way they had run clubs.

On November 1, 1983, the two opened Morgans, a boutique hotel in an old building at 38 Madison Avenue. Schrager hired a group of European product designers rather than the usual hotel designers, and introduced the idea of the "lobby social" — the hotel lobby as disco and nightlife venue. That is why he is credited with inventing the "lifestyle" boutique hotel.

While he was putting W together, Sternlicht approached Schrager and his partners about working on it. Schrager, in the end, did not stay. The bar operator he had brought along, the Gerber Group, did — and it runs the W Lounge at W hotels to this day.

In November 1998 the world's first W opened in the middle of Manhattan with a big celebrity party, "like the opening of a high-end design store, or one of those fashion-week nights," recalled K.C. Kavanagh, Starwood's former global communications director.

The tired old Doral Inn was gutted and redone. David Rockwell, who had worked with Schrager, built the interiors around four elements — wind, water, earth, fire — and filled the rooms with warm colors: deep red sofas and armchairs, pale green bedspreads, cream carpets.

Sternlicht took what Schrager had invented and improved on it. One improvement: he gave the W lobby a new name, the "Living Room." It remains central to what W is — the lobby is no longer where you check in and check out, but a room where guests are received, with all the restaurants and bars gathered in it, a social space that does everything.

Built out of a handful of ingredients — celebrities, Manhattan, design, nightclubs — W had a label you could read at a glance, and it quickly found its first believers.

Sternlicht turned out to be not just sharp but quick. When W arrived in front of New Yorkers and the world's travelers in the late 1990s looking like nothing else, New York had only the big traditional luxury houses, the Park Hyatt and the Waldorf Astoria; Marriott had not yet thought of asking Ian Schrager to design Edition, Hyatt had not started Andaz, and Hilton was still rolling out conventional five-star hotels around the world.

Sternlicht had timed it exactly right. He found a hole in the market, and W became the first boutique hotel opened by a large hotel group.

"Barry Sternlicht admits he was always watching what Ian Schrager and André Balazs [founder of the New York boutique hotel Sunset Beach] were doing, and then doing it in a more comfortable, more democratic way," said Amar Lavani. "If you compare Ian Schrager's Paramount or Royalton, those were 'hard' — nightclubs and a lot of metal, and I remember the rooms weren't comfortable. W wasn't like that. It borrowed more from Pottery Barn [an American furniture brand out of California] — more comfortable, more feminine."

"I still remember the first time I walked into the W next to Times Square, around 2000," said Gray Shealy, W's design director from 2006 to 2013, in an interview. "It was like stepping through a door: on one side the crowds and the energy of Times Square going mad, on the other the sunken lobby of the W. There was a glass cube full of water, and it released the pressure immediately — you felt a calm that ran exactly counter to what was outside. It moved you into another world, the world of the hotel."

Unlike Schrager's nightclub hotels, Sternlicht's plan from the start was to put the odd, specific design of a boutique hotel together with the standardized, dependable service of a business hotel.

In W's first years, Sternlicht hired good industrial, architectural and interior designers to press the brand's design identity, and he also built a set of signature services: the all-white Heavenly Bed, adapted from Westin; Whenever/Whatever, delivered by staff who behave like friends; and, from 2004, the Bliss 49 Spa, run with the New York skincare brand Bliss. The spa and the Bliss products became another of W's unmistakable marks.

What finally made W a global boutique brand, though, was the group behind it — its operating machinery and its resources. No hotel positioned this way had managed it before.

Within a few years W had reached Washington, Seattle, San Francisco, Boston and Dallas. After the first overseas W opened in Istanbul in 2008, the bold white letter went up on more and more skylines: Barcelona, Paris, London, Singapore, Taipei, Guangzhou.

It was W, arriving in the late 1990s, together with the Ace Hotel on the West Coast in the same years — two boutique brands with outsized influence — that turned "boutique hotel" into the phrase that has reorganized the hotel business over the past two decades.

By 2016, according to a report from the digital marketing firm Highland Group, the 100 largest cities in the United States held 63,000 boutique hotel rooms of every size and standard. Meanwhile the big chains were buying or building boutique lines of their own: besides Andaz and Edition, InterContinental Hotels Group started Hotel Indigo in 2004 and bought the Kimpton Hotel chain in 2012 for 43 million US dollars.

With more competitors every year, and guests who now know exactly what a boutique hotel is supposed to be, keeping W fresh has become the job that matters most.

The first thing W did was keep hammering on design. Each time it enters a new city, it asks its design studio to localize the hotel through its design. But to keep the brand looking and feeling like one thing, that localizing work runs inside and outside the company at once.

"At W we have a design team, and it isn't a design team that handles building structure — the way most hotels on the market do now," Gray Shealy explained. "They don't just coordinate the mechanical or engineering side; they're responsible for the interiors, for specifying the furniture. We keep a small group on nothing but researching and solving that. It was a first for Starwood — taking the experience and the resources we already had and dealing them out again, so the team could make something particular in places that look nothing alike."

W also went looking for young designers, not just experienced studios. In 2012 it set up the Designers of the Future Award with Design Miami/Basel. Each year it goes to three studios doing outstanding work in interiors, product design and other fields, and in its first few years it turned up several new names — among them the young British designer Bethan Laura Wood, whose work has since made it into Milan's Nilufar Gallery.

Then there is SPG, Starwood's loyalty program, which still delivers W a steady supply of guests every year out of nearly 21 million members. Anthony Ingram, now global brand president of W Hotels & Resorts, told the television program Behind the Brand: "Those members fill 70 percent of the rooms at a W."

"The other thing, next to an independent boutique hotel, is that W is on good terms with the big multinationals," Ingram added. "McKinsey, PwC, Facebook, Amazon — every year those companies take in another intake of excellent graduates, 23, 24 years old, and each of them will spend 10 to 15 years there traveling the world on business. Those guests love W, and they are the main pipe feeding us new ones."

That is the customer Sternlicht picked out for the brand at the beginning: young people willing to pay for design. While most luxury hotels were still chasing the middle class and rich, settled consumers, W got there first and built a measure of loyalty among the young.

W has also kept marketing to that high-earning, well-educated generation as it grew. In 2014 Ingram launched a campaign called TURN IT UP FOR CHANGE, backing the LGBT community's fight for equal marriage rights and funding its equality work. W brought in the Hollywood star Jennifer Hudson to throw a large launch party at the W Union Square.

In 2015 W became the first hotel brand to work with Snapchat, releasing three filters watermarked with its logo to catch millennials.

"The young consumers W cares about are in a frame of mind that values the experience, not just the purchase, and that shift is happening everywhere. By 2020, luxury travel and the spending around it will be driven largely by people under 45," Ingram said at the W Shanghai preview.

That optimism has now been carried to China, on the grounds that "China will have 500 million middle-class consumers with money to spend." The W Shanghai was followed by the W Suzhou in August, and four more are under construction — in Hainan, Changsha, Chengdu and Shenyang.

Against W's worldwide bloom, the people who taught it what to do — Ian Schrager and Morgans — are still names only a small crowd recognizes. Starwood turned the boutique hotel into light luxury, and in the process fell in with the pattern that has run through the whole business world for two decades: get the broad middle class to pay for design once design has been mass-produced.

The cover image and all images without a credit were provided by W Hotels.