CEO Interview: Starwood's Frits van Paasschen

When he’s not running marathons or entering triathlons, Frits Van Paasschen oversees Starwood’s portfolio of 1134 global hotels. But this CEO is not just a hotel operator; rather a developer of global hospitality brands, and as it turns out, there’s quite a difference

Often the hotel company CEOs interviewed in Hotelier Middle East have 20, 30, sometimes 40 years to look back on in the hospitality industry.

Typically, they started their careers in their teens, drawn to hotels through familial influences, then entering hospitality school while holding down a job or two, before fleeing the nest to travel the world and advance their hospitality career.

The CEO and president of Starwood Hotels & Resorts has just five and half years in the business to reflect upon — but it this that makes him so interesting.

Frits van Paasschen was appointed CEO and president by the board in September 2007 having held global management roles at Coors Brewing Company, Nike and Disney Consumer Products, not to mention working independently through FPaasschen Consulting and Mercator Investments. It was a job he’d had his eyes on for quite some time.

“I have to tell you I’ve been interested in Starwood for longer than I’ve been in Starwood and I was drawn to this company because of its reputation for innovation and branding but also to the hospitality industry overall,” he enthuses when we meet at the group’s most recent takeover, Sheraton Mall of the Emirates in Dubai.

“When I arrived, it was almost as if many of the things in my life were a preparation towards joining the company and it brought together so many interesting facets of what I had done before but also so many things that I didn’t know as well.”

Working alongside four regional presidents with a cumulative 125 years’ in hospitality, van Paasschen immersed himself in the business, asking “what if and why don’t we” and developing a rapport with the team — something that is visible during his recent relocation of his head office from Stamford, Connecticut to Dubai for a month, following the success of a similar upheaval two years ago to China.

For any that thought the move was more PR stunt than practical, the numbers speak for themselves. Throughout the month of March, van Paasschen and members of Starwood’s senior leadership team met with 3000 associates, conducted nearly 50 owner meetings and visited all 14 Starwood hotels in Dubai.

Van Paasschen travelled to 19 cities across 12 countries and during the five-week relocation the team travelled 61,000 kilometres – the equivalent of circling the globe one and half times.

“The purpose of coming for a month like this and having visited 70 countries now with Starwood and almost 500 of our hotels is to get out there and listen and to create a culture among the leaders of the company where if someone sees something they think we can do better, then we can have that conversation,” asserts van Paasschen.

Article continues on next page ...

Building a Brand
So, where does a company that has brought not one but two game changers to the market — in the form of W and Aloft — focus on doing better? The answer comes down to branding and innovation — two of the group’s long-held strengths.

“You’re here to deliver a branded experience and if you think of the core positioning of the brand, everything that you’re doing now is built around doing that.

I’m not sure that the industry overall does it; this notion that you would segment hotels by stars and price levels as opposed to saying Sheraton, Westin, Le Méridien, can all be five-star brands, they can all be next door to each other but they wouldn’t compete with each other directly because each one has a different look and feel and appeals to a different type of guest and traveller.

“Think about W and Luxury Collection and St. Regis, all luxury brands but all very different from each other. That has enabled us time and again to enter a market, to add new hotels, to create returns for our owners, which is what we are in the business of doing.”

He adds that it’s vital hotel operators understand the difference “between being an asset owner and real estate developer versus being a manager of global hospitality brands”.
This is the issue behind “the one challenge the hospitality industry has when it comes to branding” — something van Paasschen calls the “asset challenge”.

“In other branded businesses you can change your collection, you can change out the interior of a retail outlet; changing a couple of hundred hotels around the world that are owned by different developers is a process that takes time.”

Now, with its nine brands defined and established, van Paasschen says there are no new brands on the radar, but he says the entrance of these existing brands to new markets will be just as disruptive to the industry as when they first launched.

“We bring Westin to India, we bring W to China, we introduce the same level of disruption and innovation to those markets as we had done previously in other markets with those brands.”

Van Paasschen senses my disappointment that there is no brand X, Y or Z to follow W, but reassures that the company is still innovating at every level — from its new SPG loyalty programme ambassador tier to expansion in emerging markets.

“In the last five years we’ve gone from 13 to 30 St. Regis hotels and we have another 10 on the way, we’ve doubled the size of W in the last five years from 20 to 43...There is as much challenge in coming up with the next new idea as making sure the current idea is fully realised to its benefit.

“With W we stand alone among hotel companies with a brand and it makes all the sense in the world for us to do our utmost to make sure we have the strongest global portfolio of W hotels before anybody else even gets started.”

Article continues on next page ...

Boundless Energy
In a world that is “changing extraordinarily quickly”, van Paasschen says his goal is to achieve these targets by creating a company that has agility and fluidity.

“The most important thing for any company is the ability to be able to change quickly and see what’s happening, try new things and be willing to make mistakes.”

As a result of the real time, dynamic nature of the business, van Paasschen says it would be pointless for him to be based in an office. He doesn’t have a computer — everything he needs is on his iPad.

“We’re so far past the point where there can be one smart person sitting in a headquarters somewhere making all the decisions and having people come in and ask for permission. What’s much more important today is as business leaders all of us to be clear about what the role of the company is and to constantly read and hear about what’s happening and make decisions.

“At the heart of it this company and the brands that we have are built upon a belief that people want a better way to experience the world. Our job at Starwood is to create different opportunities and access points for doing that,” he adds of the underpinning strategy.

The fast-moving pace of the business is something that seems to suit van Paasschen’s own approach to life and work. As an avid runner and cyclist, who has completed several marathons and now moved into the even more challenging sphere of triathlons, pushing the limits comes naturally.

“I don’t think I have a ‘sit in one place, think deeply and patiently mentality’ right? What’s energising for me in a job like this is spending time with people and all of us, if we’re in business for the right reason it’s because we want to explore human potential, right? We want to see what we can do and we want to create opportunities for other people to see what they can do. And if that energises you, then sitting behind a desk is almost separating you from the chance to do that.”

Indeed, where he finds the closest bonds with his team — including fellow athlete Guido de Wilde, regional VP for Stawood here in the Middle East — is out on the cycling track. Not only are they gaining some control over their hectic schedules — with exercise becoming almost a ritual — but all barriers are broken down.

“I have to say that the best moments that I’ve had at Starwood and otherwise at work have been those moments when you get to run or ride with someone that you work with because after a few minutes the titles have sort of fallen off behind you and you’re two people having a run or a cycle or a sweat and you get to know each other in a different way and after you’ve done that you sit at the same level.” De Wilde says this is one reason why people like to work for “Frits the biker”, whose first activity upon landing in Dubai was an 85km cycle in the desert.

“If I do a six-hour triathlon and I’m thinking about ‘am I ready to keep going and how do I keep track of my own fatigue’ — in a way [it’s the same during] a month like this,” van Paasschen concludes of the relocation. “There is a bit of a sports mentality, both in the pushing as well as knowing when you are getting close to the edge.”

As a marathon runner myself, I know where he’s coming from; but sense there’s quite a bit more pushing to come before this hotelier gets too close to that edge.

Article continues on next page ...

Starwood expansion at a glance
By 2017, Starwood Hotels & Resorts will operate more than 130 hotels in Middle East and Africa, marking some key milestones, including:
• Portfolio growth of more than 60% in the UAE with 12 new hotels, including six in Dubai, bringing Starwood’s portfolio to more than 30 hotels across the country. Starwood’s growth plans in the UAE also include expansion into Sharjah and Ajman.
• Rapid expansion across Saudi Arabia with six new hotels slated to open by 2015, bringing Starwood’s portfolio to 15 hotels in this key developing market.
• The re-entry of Starwood Hotels & Resorts into Iraq with the milestone signings of three hotels across three brands in the city of Erbil, located in the re-emerging Kurdistan area of the country.
• Momentum in Nigeria with two new Starwood hotels under the company’s Four Points by Sheraton brand.
• Addition of two new hotels in Algeria, with a new Sheraton-branded property in Annaba and a Four Points by Sheraton hotel located in Oran.
• The launch of Starwood’s Aloft Hotels brand in Saudi Arabia and Iraq. Aloft will also open its second property in the UAE, in the emirate of Sharjah.