EDITION's Istanbul hotel, which opened in early May
FORTUNE -- Marriott Hotels is finally getting its groove on. After years of riding a solid-if-not-stodgy corporate reputation, the chain founded by a former Mormon missionary and still run by his 79-year-old CEO son, Bill Marriott, is going after the chic boutique hotel market in an attempt to lure younger, hipper customers.
Marriott (MAR, Fortune 500) has linked with hot hotelier Ian Schrager to launch a new chain called EDITION hotels -- aiming squarely at the segment currently dominated by W Hotels owned by Starwood. In May, an EDITION hotel officially debuted in its first corporate location in a business district of Istanbul, the East-meets-West city where W launched its European push. The next several EDITIONs are scheduled to launch next year and beyond in locales where W Hotels are present: Barcelona, Mexico City, South Beach, and London -- where a W opened in Leicester Square in February.
"It means being able to tap into a market that we weren't present in until now," says Sedat Nemli, general manager at the Istanbul EDITION, where the lobby and amenities are scented of black tea. Mosaic tile floors in the elevator bank, domed ceiling lobby, and hanging bronze lamps in the rooms evoke a sleek, modernist interpretation of Byzantium. "We have a challenge and opportunity to present a new brand in a new setting," he says.
In order to keep growth moving forward, Marriott has been keen to lure a younger clientele and to make up for the losses it took during the recession when business travelers turned away from the high-end Ritz-Carlton chain, which it also owns. Marriott's stock price remains roughly 35% below its 2007 peak, though it has largely recovered from its depths in early 2009.
A first EDITION hotel had opened on Waikiki Beach in Hawaii last fall, but that foray isn't going so well. The Waikiki EDITION's owner and developer filed a lawsuit against Marriott and Schrager in late May alleging that they were to blame for "outrageously low occupancy levels and average daily room rates." (The hotels are franchise operations.) The suit said that occupancy was less than 30% with average daily room rates of $220. (Rooms at the Istanbul EDITION start at $425 to $600.) Schrager, in a statement, called the suit "frivolous" and blamed decreased tourism from the important market of Japan, which was hit by an earthquake and tsunami earlier this year. He also pointed to glowing design reviews the Waikiki EDITION received when it opened, including one in Travel + Leisure magazine.
It's too early to tell how the EDITION in Istanbul is doing, but initial traveler reviews on TripAdvisor have raved about the chic décor, attentive service, and ESPA spa. Interest is high among Istanbul locals as well, in part because the hotel took over and restored a famous site -- the former HSBC bank headquarters in Turkey, which was heavily damaged by a suicide bomber in 2003. Three bank employees were killed, and Al-Qaeda claimed responsibility.
But all that is ancient history now. The opening ceremony of the EDITION Istanbul, attended by Turkish celebrities and government officials, came on May 2, the day after the surprise announcement that U.S. Navy Seals had killed Osama bin Laden.
At the W Istanbul, meanwhile, occupancy remains high, and instead of the understated tones at the EDITION, the décor trends toward the Ottoman opulent. "We have been able to get the first-mover advantage," says Starwood CEO Frits van Paasschen, who noted in a recent conversation with Fortune editors that W Hotels have such a strong following that the competition is welcome: "That's the beauty of capitalism." 
