Adam Aron
Starwood Hotels & Resorts' Adam Aron took over as the hotelier's interim CEO in February in a move intended to accelerate the company's unit growth. Since then, the company has introduced a soft brand called Tribute Portfolio and announced a revitalization strategy for Sheraton that includes $100 million in advertising and marketing spending over the next three years. Aron, who was previously CEO of both Vail Resorts and Norwegian Cruise Line, spoke to hotels editor Danny King during the International Hospitality Industry Investment Conference in New York last month.
Q: Sheraton kicked off a revitalization effort in 2007. Did that fail?
A: No. Sheraton talked about $6 billion being invested to renovate Sheraton hotels, and that happened, and that actually produced great results. Sheraton's market share grew 300 basis points, three whole percentage points, and its guest-satisfaction scores went up. So it did work. But that effort was focused much more on the physical condition of the buildings. There's some pretty spectacular stuff going on within the world of Sheraton, but it's also true that if you open the last 200 issues of Travel Weekly, I bet you wouldn't find many Sheraton ads. The brand has not communicated its strengths through traditional advertising very much in the last several years, which has allowed the brand image to get diffused.
The question we're asking ourselves now is how to make sure Sheraton stays the fastest-growing brand of one of the largest hotel companies on earth. The goal is not to tip our hand to the competition, but you're going to see product innovation occur within the world of Sheraton between now and Labor Day.
Q: How fast do you think Starwood will grow during the next five years?
A: I would expect a 50% growth in the Luxury Collection brand, a 30% growth in the Sheraton brand, probably 100% growth in the St. Regis brand. The real unanswered question is what happens in the select-service space. That question is what we're going to be focused on over the next 90 days.
Q: Any concerns of potential oversupply?
A: No. A lot of people talking about the cycle are looking at the hotel industry through the U.S. lens. We're in 100 countries, and the whole world is not going to flow on the timing of the U.S. economic cycle. Also, Starwood's historic strength has been in the luxury and upper-upscale categories, and if you look at the supply growth, it's only 1% or 2%, so our ability to grow should not be moving at such a pace that would hamper our growth.
Q: Former Starwood Resorts CEO and hotel investor Barry Sternlicht, speaking at the NYU Conference, said the company may have hurt itself by being difficult to work with. Your response?
A: If you listen to the tape of our April 29 earnings call, I articulated that in recent years, we've become difficult to do business with. But we've laid out a task for ourselves to make Starwood a more responsive, more flexible, faster-moving, more nimble and leaner company, and we believe we're already putting in some fairly dramatic steps to make that a reality.
Q: Are you a candidate for permanent CEO, and would you take the job?
A: The job of picking the next CEO for Starwood is the purview of the board of directors, and I'm sure they'll do a great job. My focus is on running this company right, improving its performance and accelerating its growth. That's a full-time job in itself. If the opportunity presented itself, I'll decide at that time.