Unlike some, Simon Turner, the president of global development for Starwood Hotels and Resorts Worldwide, is quite content doing what he does. He harbors no dreams of trying his hand as an artist or running for elected office—and he never imagined playing striker for Manchester United (he is, after all, a Brit). No, real estate is what gets his blood pumping—it’s his raison d’être.
“It’s nice to roll up your sleeves, kick some dirt around on a site and get some mud under your fingernails and really test yourself as to how to make an investment work for an owner,” Turner told Hotel Management during the Americas Lodging Investment Summit in January.
That’s not to say he didn’t have a predilection for something else growing up in England. There, his father was big into golf, so a young Turner spent a lot of his time hanging around golf clubs, chatting up the members and playing a few rounds during the week. At the age of 14, he thought golf club management would be a great career.
Two years later, the Turner family immigrated to Massachusetts (Turner cited a grim England in the late 1970s as reason for the exit). He was 16 and during a meeting with his guidance counselor at high school he spoke of his idea to become a club manager. “Where do I go to school?” he asked.
The answer turned out to be the Cornell School of Hotel Administration, where Turner ended up enrolling. His first job the summer of his freshman year augured things to come. He took a job behind the front desk at the Sheraton hotel in Worcester, Mass. There, he learned an important lesson about himself. “There were many who were much better with dealing with guests than I was,” he said.
Such the case, Turner still realized that he loved the hotel business, wanted to remain in it, but in a different capacity. Back at Cornell he concentrated on finance, marketing and design, among other focuses—just nothing guest facing. “I was not cut out for that part of the business,” he said.
THE EARLY YEARS
The next summer Turner took a job with PKF, performing feasibility studies. Upon graduation from Cornell, Turner continued working for PKF as an analyst, doing a lot of international projects in such countries as Saudi Arabia, Egypt and Jordan.
The latter portion of the 1980s was a freewheeling time in finance: high risk, big bucks. In 1987 Oliver Stone released “Wall Street” and spawned a generation of Gordon Gekko wannabes. The allure was not lost on Turner. “The siren of Wall Street got me,” he said. That year, he took a job with Salomon Brothers, ultimately leading the company’s hotel investment banking unit.
Picture: The 27-story Sheraton Huzhou Hot Spring Resort in China is noted for its horseshoe-shaped design.
He was there nine years before making yet another move. This time he teamed up with Chuck Henry, a classmate of his at Cornell, who in 1994 founded Hotel Capital Advisers. In doing so, Turner came in contact with one of the hotel industry’s more notable real estate owners. That’s because Hotel Capital Advisers was explicitly set up to manage the hotel investment affairs of one man: Prince Alwaleed Bin Talal of Saudi Arabia, who has interests in such hotel companies as Four Seasons Hotels & Resorts and Fairmont Hotels & Resorts. (Of Prince Alwaleed, Turner said he had a knack to be able to sit in a room full of people, extract the best opinions, synthesize them and come up with the best approach or plan.)
Turner’s biggest role with Hotel Capital Advisors was developing the famed Four Seasons George V in Paris. “It’s a crown jewel,” he said. “We took an existing classic hotel, ripped it apart and reassembled it.”
In 2008, Frits van Paasschen, the CEO of Starwood Hotels and Resorts Worldwide, phoned Turner. He picked up, and six years later he remains with the Stamford, Conn.-based company, leading its global endeavors, both developmental and transactional.
Picture: W Verbier in Switzerland is the brand’s first alpine resort. It opened at the end of 2013.
Today, one of his most pressing duties is following through on Starwood’s asset-light approach, a strategy that calls for disposing of owned real estate and instead concentrating on fee-generation business from management and franchising. One of the latest examples of this is Starwood’s $213-million sale of the St. Regis Bal Harbour in January to a unit of Qatar’s Al Faisal Holding Co. Starwood will continue to manage the 207-room property, a key point, Turner said. “When we sell an asset it’s a three-legged stool. We want the right price for our shareholders, the right commitment from that owner toward a future capital investment plan and we want the right long-term management contract or franchise arrangement. If we get all three of those, we are a seller. If we get two, we are probably not a seller and we have the luxury of being able to be selective to whom we sell to and when.”
Expect more sales. The casual observer may not know it but Starwood is always in the market with at least a couple of assets. The organization doesn’t overly publicize it in order to evade any appearance of imminent change. “Hotels are operating businesses,” Turner said. “When a hotel goes on the market, there is job concern. We are not trying to withhold information, but it can be easily misinterpreted. Also, if it gets out that hotels are being marketed, then meeting planners, groups, they can get spooked.” (Turner assured that when a hotel does change hands, and remains affiliated with Starwood, there are, typically, no staffing changes.)
Starwood does have a systemized, established approach when it comes to selling assets. Consider the sales of four W hotels in Chicago and New Orleans to Chesapeake Lodging Trust, all within the past three years. “We look at our portfolio and we know where capital is coming from,” Turner said. “In the case of Chicago and New Orleans, we said these are top 10 markets, they don’t have a huge capital need and REITs are filling up with cheap capital looking for places to deploy it.”
What Starwood did was send what Turner called a rifle shot to the five REITs it thought would be the most aggressive payers from a price standpoint and who had a like-minded vision for the future direction of those assets. Chesapeake won out. Turner likes doing business with REITs. “[They] are great owners,” he said. “They have a long-term hold mentality, know the industry and push us to be a better manager.”
Starwood’s trophy assets—The Gritti Palace in Venice, The St. Regis Florence, The Imperial in Vienna, to name three—may be more in the purview of sovereign wealth funds and high-net-worth investors, Turner said. “There is a real desire to allocate their capital in safe havens,” Tuner said, counting the U.S., where Starwood owns The St. Regis San Francisco, as one of those.
Turner also played up Chinese investment as the new wave coming, he said, comparing it to the rapid Japanese investment of the 1980s and more current global investment from the Middle East. “As they become more multinational and accumulate more wealth in China, they will look to diversify,” Turner said.
As Turner steers Starwood along its divestment path, he is also guiding its brand growth. In 2013, Starwood signed a total of 152 new hotel management and franchise agreements, which represents an increase of 16 percent over 2012 signings levels. Further, nearly 75 percent of the company’s development pipeline and 60 percent of the 2013 signings were in fast-growing markets, including Bangladesh, Malaysia, Indonesia, Colombia and Saudi Arabia. In China, where Starwood has 130 hotels, the pipeline is close to 100 hotels.
“Our growth strategy is like an investment portfolio: you want a diversified and balanced approach. We constantly are pulling levers and twisting the dials so that as the world changes, we can adjust the strategy,” Turner said.
Picture: The Tiffany Suite at The St. Regis New York is part of the hotel’s Designer Suites, joining the Dior Suite, Milano Suite and Bentley Suite.
Geographically, Starwood did about a third of its deals in the United States, 50 percent in Asia Pacific and the remainder in Latin America and EMEA. Turner said his pipeline nirvana is to have the spread be more even. “It’s never going to be perfect. You never know what’s going to happen, so I want a balanced portfolio approach,” he said.
In emerging markets, growth predominantly is via managed new builds. In North America the growth vehicle has been franchised conversions. “In Europe, we are seeing more franchised and conversion growth,” Turner said.
Starwood also relies on its Starwood Preferred Guest program to dictate expansion. “There is demand for Starwood properties where we don’t have a presence,” he said. “There’s a list and that’s driven from the guest side.”
W, for instance, which is close to 50 hotels strong, isn’t in Tokyo. There isn’t a big-box Sheraton in Washington, D.C., or a Westin in London. The message is clear. “There should be,” Turner said.
At a glance.
Starwood Hotels and Resorts Worldwide
Headquarters: Stamford, Conn.
Structure: Owner, operator, franchisor
Portfolio: Nearly 1,200 properties across nine brands