Starwood Hotels & Resorts Worldwide, which has been lagging behind its competitors both in revenue and hotel growth, is banking on new executive leadership to gain momentum and traction in a lodging industry that has seen a significant surge in acquisitions and new brand development over the past 12 months.
Last month, the hotel company announced that Frits van Paasschen, president and CEO, had resigned, and Adam Aron (pictured), former CEO of both Vail Resorts and Norwegian Cruise Lines, who has been on Starwood's board of directors since 2006, will serve as interim CEO until a permanent replacement can be found.
In a conference call on Feb. 16 announcing the resignation, Bruce Duncan, chair of Starwood's board, stressed that the decision for van Paasschen to step down was not only a mutual one, but "one that's been building over the past few months."
Under van Paasschen's leadership, which began in September 2007, the company had been slow to keep pace with competitors in growing its reach through acquisitions and new brands. Marriott International, for example, not only launched Moxy in Europe over that period, a new brand aimed at the Millennial traveler, but also in recent months announced that the company had acquired Canadian chain Delta Hotels & Resorts, extending Marriott's reach even further north.
Conversely, during van Paasschen's tenure, most of Starwood's development had been limited to existing brands such as W and Sheraton in the Asia Pacific region, already an oversaturated market. And while the chain, under van Paasschen, did add the Aloft and Element brands to its portfolio, several years have passed since any newer brands have been developed under the Starwood umbrella.
"The board is always focused on the future of the company. And with that comes a viewpoint on leadership," said Duncan during the conference call. "With this in mind, we have come to the conclusion that now is the right time to turn to new leadership to drive execution of Starwood's growth strategy, improve performance and sharpen our focus on operational excellence."
Duncan said van Paasschen will remain with Starwood as a consultant to help with the transition. His resignation came a week after Christie Hicks, senior vice president of Starwood's sales organization, announced she would be leaving after 15 years with the company. Van Paasschen, 53, exits with a $7.2 million severance payment, a prorated bonus and other compensation.
His replacement is ready to take on the challenges that the hospitality company faces. "I am someone who has a bias for action," said Adam Aron during the conference call. "In taking on this challenge, even on an interim basis, I have no intention of merely being a caretaker."
Following the announcement of van Paasschen's departure, Starwood gained $361 million in market value and its stock climbed 2.7 percent to $80.64 a share, according to USA Today
's Moneyline column.