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Monday, October 20, 2014         

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Starwood CEO is expanding reach, philosophy of hotels

The fitness-loving leader's focus is on adding sites overseas

By Scott Mayerowitz

Associated Press

POSTED:

Associated PressStarwood Hotels CEO Frits van Paasschen's fit lifestyle is now popping up in his resorts.

NEW YORK » Frits van Paasschen is standing with his bike on the edge of Central Park. It's a brisk autumn morning. The city has yet to fully wake, but he's eager to ride.

The CEO of Starwood Hotels & Resorts — best known for brands like Sheraton, Westin, St. Regis and W — exercises six days a week no matter where he is in the world.

These are not light workouts. Van Paasschen, 52, just completed his first Ironman triathlon — 2.4 miles of swimming, 112 miles of cycling and a 26.2-mile run. It took 12 hours and 44 minutes.

Since taking over as CEO in September 2007, van Paasschen — who is vegan — has injected parts of his lifestyle into Starwood's hotels. He's changed menus to make them healthier, for instance, and made it easier for road warriors to work out.

Given his penchant for exercise, I suggested a bike ride as a way to learn more about him and the company.

Which brings us to a chilly October morning two weeks ago. Dressed in back spandex biking shorts and cycling jerseys, we head out for laps through the park. I am not a triathlete, so van Paasschen promises to take it easy.

"So have you done this before?" he asks. No. Most of my reporting is stationary. "Yeah, I can't say I've been interviewed on a bike, either."

His love of fitness started at age 7 while watching the 1968 Mexico City Summer Olympics on TV.

"I thought, OK, I'm going to go out and be in the Olympics, and I started running," van Paasschen says. "I realized after a few years there was no way I was going to go to the Olympics, let alone even compete at a high level. But I also just kind of, I just fell in love with doing it."

Biking came later, when a junior high school gym teacher on Mercer Island, Wash., would take van Paasschen's class out for long rides at the end of the day.

Starwood guests can see those influences today.

Westin hotelsloan guests running shoes and clothing. New menus have been crafted around foods thought to improve well-being and longevity such as green tea, honey, blueberries and kiwis. And the company's newest brand, Element, offers bicycles.

"The whole idea is that you'll feel better after your stay," van Paasschen says as we speed past some joggers. It doesn't matter that nearly three times as many guests use Sheraton's free lobby computers than use the hotel gym. It's important that the gym is available. "It strikes me that more people have the intention of working out than not."

The number of Starwood hotels has grown 28 percent during van Paasschen's tenure to 1,150 today and is expected to hit 1,500 by the end of 2018. (In Hawaii, Starwood has 11 properties, which are branded as Sheraton, Westin, Luxury Collection and St. Regis. Starwood's Oahu properties include the Sheraton Waikiki, the Royal Hawaiian Hotel, the Moana Surfrider and the Sheraton Princess Kaiu­lani.)

Starwood, though, isn't the world's largest hotel company. Holiday Inn owner InterContinental Hotels Group holds that title with 4,600 properties worldwide. But Starwood is trying to position itself as the biggest luxury hotel group. One out of every 7 hotels that Starwood has planned is a luxury property.

"People are surprised to hear how fast the luxury segment is growing," van Paasschen says. "Our three luxury brands — W, Luxury Collection and St. Regis — have essentially doubled their footprint in the last six years, even with the financial crisis."

Most of that growth is overseas.

Starwood, based in Stamford, Conn., opened 67 new hotels in the past 12 months. Only a third of them were in the United States. The focus for van Paasschen has been on China, the United Arab Emirates, India and Latin America.

"The hotel business grows alongside economic growth," he says. "So as you can imagine, wherever there's the kind of massive growth and urbanization we're seeing in so many markets around the world, that's where the majority of new hotels are being built."

It seems to be working. In the last 12 months, Starwood has earned $649 million, up about 12 percent from the prior year. Its revenue per available room — a combination of occupancy levels and room rate — is up 4.2 percent systemwide this year and an impressive 8.5 percent at its luxury properties.

We zoom past a group of tourists on rented bikes near the Central Park Reservoir. New York is a great market for Starwood and is its largest city with 22 properties. But rising quickly is Dubai, Starwood's second-largest city with 14 hotels.

Then there is China. Most Western hotel chains have entered the market, but Starwood has an impressive 120 properties there. They aren't only in big cities like Beijing and Shanghai, but in the resort sections of Hai­naniIsland and in smaller cities such as Daqing, Gui­lin and Luohe.

"We'll have more hotels on Hai­nan island than we do in Hawaii by the end of next year," van Paasschen says.

Two-thirds of the guests in China are mainland Chinese, many part of a growing middle class that is starting to travel outside the country for the first time. Starwood hopes its name recognition within China will lead those new Chinese tourists to its properties as they visit other parts of Asia, Europe and the United States.

"Chinese travelers today spend more outside of their country than Americans or Germans do," van Paasschen says. "They've passed the two biggest countries in terms of outbound travel spending."

Prior to arriving at Starwood, van Paasschen was CEO of Coors Brewing Co., and before that he held several positions with Nike, ultimately overseeing its business in Europe, the Middle East and Africa. He was previously a vice president in finance at Disney Consumer Products and began his career as a consultant at the Boston Consulting Group and McKinsey & Co.

While at Nike it was routine to have meetings while jogging, giving van Paasschen an informal chance to give updates to his boss. Now, at Starwood, when van Paasschen travels, somebody on the hotel staff usually invites him on a run or a bike ride.

"A run in the morning is sometimes the best way to see a place right, particularly if the rest of your day is booked," he says. "You end up in some places you wouldn't expect."

Managers who work for van Paasschen know that feeling. He moved the company's entire leadership team to Shanghai for a month in 2011 and to Dubai for a month earlier this year. He wants his staff to better understand the cultures in which they are opening hotels.

"One of the best ways to draw attention to something is to go there," he says, adding that staff back at headquarters in Connecticut had to adjust to doing business across several time zones. "My focus was to reinforce the notion of a global mindset."

So, I wonder, is van Paasschen one of the most fit CEOs in America?

"I'm not competing against other CEOs," he says. "It's really a kind of a personal goal-setting thing."






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