Starwood Hotels & Resorts Worldwide has a new chief—for now. The Stamford, Conn.-based hotel company has announced that Frits van Paasschen has resigned by mutual agreement as president, CEO and a director. Adam Aron, a Starwood director since 2006, has been named interim CEO while Starwood’s Board conducts a search for a permanent CEO that will include both internal and external candidates.
While van Paasschen’s resignation was announced as “mutual,” it follows mixed full-year reports for the company, which as a global hotel company has large exposure throughout the world and is more affected by swings such as currency movements.
A stronger dollar was one of the reasons Starwood reported lower-than-expected full-year profit.
REAL REASON FOR THE CHANGE
However, in a conference call Starwood conducted this morning, it was clear that the change at the top was made in order to, in the words of Bruce Duncan, chairman of the Starwood board, “do better.”
This includes accelerating the company’s pipeline, driving top-line revenue growth, increasing net-room growth, continuing an asset-light approach, managing costs better and sharpening operational performance.
“We came to the conclusion that it was the right time to turn to new leadership,” Duncan said.
Duncan said that Aron was appointed interim CEO based on his unique vantage point, deep knowledge of the hospitality business and years of CEO experience. Past CEO roles for Aron came at Vail Resorts and Norwegian Cruise Line.
“I am here to take action,” Aron said. “I have no intention of merely being a caretaker. My mission and charge is to get certain things done. A focus on operational excellence, enhancing consumer appeal of our brands and accelerating growth.
“I’m now in the CEO hot seat, and let me reiterate: I endorse and embrace Starwood’s current strategy; however, we can execute better than we have of late.”
Starwood on the call also noted that while its upscale through luxury business is strong, it could do better in the select-service segment, where it operates the Four Points and Aloft brands.
“We are not as strong in select service compared to competitors,” Aron said.
van Paasschen, who became CEO back in 2007, will reportedly continue with Starwood as a consultant to assist in the transition.
“Frits has made many important contributions over the past seven years to Starwood’s successful evolution into a global company with leading lifestyle brands that possess distinct competitive advantages. He’s put innovation and technology leadership at the forefront, while building a culture of collaboration across a dynamic organization,” Duncan said.
For his part, van Paasschen said in a statement, “I’m proud of Starwood’s accomplishments and the growth we’ve seen around the world and across all nine of our brands. We have challenged ourselves to deliver on bold plans while continuously finding new ways to provide better experiences for our guests, and it’s clear from our progress that Starwood is now in a strong position for the future. Creating this powerful global platform would not have been possible without the talented team of associates I have been honored to work with, and I am confident that Starwood will enjoy continued success for many years to come.”
WHAT THE STREET THINKS
Ahead of today's opening bell, shares of Starwood (HOT) are rising on the news, up 2.48 percent to $80.50 in pre-market trading.
TheStreet's Jim Cramer wrote on Twitter: "I like the change at the top at Starwood, because I think the company can prosper under Vail Resort ex-CEO and Philly friend Adam Aron."
Last week, Starwood said it planned to spin off its vacation ownership business into a separate company, a move it said would take advantage of the increasing growth opportunities within the timeshare industry.