Sheraton, one of the largest hotel chains with more than 400 properties worldwide, is getting an extensive makeover after years of losing customers to competitors.

The $1.7 billion project is aimed at renovating nearly half the chain's hotels in North America by next year with fresher decor, brighter colors and lobbies with new restaurants and cafes.

Starwood Hotels, which owns the Sheraton brand, began the project in early 2007 and hopes to complete renovating 86 hotels — out of 204 in North America — in 2009. It's also removing 38 underperforming properties from the chain.

The project is about "halfway done," says Hoyt Harper II, a Starwood executive in charge of the brand-reinvigoration project.

"In North America, we lacked consistency and quality. When we decided to elevate (Sheraton) ... we wanted a brand that can compete with Hilton or Marriott," he says.

Sheraton has been around since 1937. It was the first hotel chain to be traded publicly on the New York Stock Exchange and became the first Western brand to operate in communist China when it opened the Great Wall Sheraton in 1985.

"There was a time when Sheraton was one of the leading brands," says Bjorn Hanson, a hospitality industry professor at New York University. "But it lagged in introducing new design and service concepts, and developed a level of inconsistency."

In 1998, Starwood bought the chain from conglomerate ITT to target business travelers who seek upscale, full-service comfort. Starwood has always wanted to reinvigorate Sheraton, but had other investment priorities — especially the launching of W, the chic chain that opened in 1998 aspiring to be a see-and-be-seen hot spot.

Sheraton's sheer size also posed challenges, as it took time to negotiate with owners and franchisees. Starwood owns the brand, but other investors mostly own the real estate. "It took time to come up with a comprehensive plan to apply to so many properties," Harper says.

Harper says many Sheraton properties were "outdated." Room furnishings at these hotels appeared to be little changed from the 1980s in scheme, color and layout — marked by nondescript armchairs, faux-antique writing desks, maroon comforters, bland draperies and beige carpets. The lobbies were similarly uninspiring.

In its 2008 North America Hotel Guest Satisfaction study, JD Power gave Sheraton only two points out of a possible five in the "upscale hotel" category.

Paul Wischermann, president of Wischermann Partners, which manages a Minneapolis Sheraton that was a prototype for the new design, says some Sheratons were like "a condo that hadn't been renovated in 15 years."

Frequent Starwood customer Alan Intrator, president of a merchant services firm in Great Neck, N.Y., agrees the renovations are long overdue.

"I find the Sheraton brand to be old, dull and totally run over."

Starwood is betting that an enhanced reputation will result in more dollars. Sheraton's revenue per available room is less than its main competitors'. Sheraton generates about $100 in per-room revenue, compared with about $120 for Marriott.

Many of the ideas used to launch and modernize the company's other brands — W and Westin — were reworked for Sheraton, Harper says. The head of design for Westin, D.B. Kim, led the redesign team, emphasizing brighter colors and a minimalist scheme.