Starwood’s CEO Resigns — Why?

Filed Under: SPG

While this perhaps isn’t of much interest to the average guest, it is big industry news. Starwood’s CEO, Frits van Paasschen, has suddenly resigned. The resignation apparently came by “mutual agreement” between him and the board of directors.

While I’ve never interacted with him personally, he has always struck me as a passionate and energetic guy, so it’s sad to see him go. For example, here’s a CNBC Mad Money interview he did a while back, which gives you a good idea of his personality:

Scott Mayerowitz of the Associated Press has the scoop:

The Stamford, Connecticut-based hotel company has been led by van Paasschen since September 2007. Last week, Starwood announced plans to spin off its timeshare business as a separate company, but Duncan said that was unrelated.

Shares of Starwood shot up 3 percent to $81.17 in morning trading.

Aron told investors Tuesday that Starwood can improve its revenue and speed up the number of hotels it has under development.

“We can do better,” he said on the call.

Van Paasschen, 53, will remain with Starwood as a consultant to help with the transition.

It’s interesting to note that:

  • Starwood isn’t announcing a permanent CEO replacement immediately, which seems a bit odd if this was planned out and as mutual as they’re making it sound
  • Van Paasschen will stay on as a consultant, which suggests he’s not necessarily moving on to another gig immediately (and if he’s not immediately moving on to another gig at his age, chances are this wasn’t his choice)

So we can only speculate as to what has happened, though the circumstances suggest to me that this may not have been as “mutual” as they’re making it sound.

St-Regis-Deer-Valley-01
St. Regis Deer Valley, a Starwood hotel

I’ll be curious to see who Starwood finds to replace him, and how his/her strategy will differ from the current one.

What do you make of this shakeup in Starwood’s management?

Comments

  1. Unrelated but what are your thoughts on The Westin Pasadena? My first SPG stay ever in 1.5 months.

  2. The resignation apparently came by “mutual agreement” between him and the board of directors.

    That euphemism is often used when it comes to the board’s attention that he’s having an “inappropriate” relationship with one of his minions.

  3. Westin Pasadena is old and not particularly impressive, though it does have a nice view of Pasadena city hall (which is picturesque) and easy access to Old Town Pasadena, where there are plenty of bars and restaurants.

  4. The stock is up on the news. All you need to know, really. And the chairman said Fritz wasn’t executing their growth plan fast enough.

  5. Quite frankly I am happy to see him go! Lots of wind no delivery or execution
    The company has sunk under his leadership and various departments are running the poorest I’ve seen in the 16 years Starwood and SPG has been in existence
    Perhaps off topic
    I cant think of a single good promotion or improvement in years unless you consider devaluations, poor handling of consumer relation cases and partnership with sinister Delta Airlines improvements.
    Even their Amex partnership has sagged.to new lows
    Cash and Points is overpriced and typically unavailable. Yet at other programs readily available and more sensible valuations.
    Starwood was the first at Cash and Points and now has amongst the worst at fulfilling expectations of all the majors when it comes time to book!

    Club lounges and their offerings are an embarrassment in some markets and the Sheraton brand in many markets looks like ghetto crap with rotten cheap amenities and over pricing of tired rooms
    Barry Sternlicht was a great leader.
    Ever since then I’ve seen a slowly eroding Starwood over the years from the time they lost the Freddie’s
    Remember the ex Coke CEO running the company? Another creepy clown
    Even the stodgy Marriott company is more interesting to me and credible
    Starwood has become mature and complacent most have stolen their thunder and done it better
    Almost every decent hotel is category 5 or higher making it unusable with nights and flights

    Just Read what the New York Times wrote about them recently over this past week (The Haggler)
    How about horrible if not unacceptable customer service with account issues through escalated channels?
    Its a shocking decline of a company who was once at the top of their game.Scary
    Many folks/members are caught unaware unless something goes wrong.
    And it doesn’t have to be W Barcelona to have a rotten experience with Starwood
    Simply calling their customer service with their run arounds are bad enough
    Ill leave out what’s good about them but the ship keeps sinking IMHO
    It is time for change with leadership with a vision of bringing back their former program and brand supremacy across the board.

  6. Clearly, he was behind the whole conspiracy in Barcelona. It had to be someone high up on the SPG hierarchy!

  7. @Abdel The Westin Pasadena is a typical suburban Westin. One of the better middle-upper chains in the area (compared to the Langham). I only had one issue at check-in, where they decided to not honor the Platinum/Gold line, even though it’s clearly marked as such. Instead, the clerk sent me to the back of the line, accusing me of cutting in line.

  8. Isn’t the reason obvious?

    He’s pissed at Delta for hiding their award charts, so he decided (like me) to cancel all his Delta Amex cards, and cut all times to any program associated with Delta Skymiles. SPG points transfer with a bonus to Delta (20K -> 25K) so he’s giving Starwood the heave-ho.

  9. He was on the earnings call today to mention the new non-branded collection that Starwood is developing with properties. If he was a branding guy, it’s interesting that they are developing “non-branded” properties in the growth plans.
    As for the “mutual agreement”, that’s just wording for we’ve all signed the legal documents to give/take what we each need for our separation per the contracts. Working through the transition as a consultant is a better spin than “we fired him today”. With enough incentive anything can be “mutual agreed”
    Their Senior VP of Sales resigned today after 15 years with the company so obviously things are afoot at Starwood.

  10. Could be health or personal issues that will take away from his duties and there’s no point sharing them with the public

  11. An increase in lower-end properties is in the future, perhaps?

    Starwood is known for its strength in luxury hotels like St. Regis and lifestyle brands such as W. It, however, lacks a large number of limited-service properties — hotels like Holiday Inn Express and Marriott’s Fairfield Inn that offer a room but lack restaurants and room service. Aron said the leadership is “mindful of this as we look ahead.”

  12. Consultant means he will have an office and a paycheck in addition to a huge severance package but will not be asked to do any actual work.

  13. Interesting to see what happens to the time share business – I am an Elite SVO and value that immensely, and was a bit suspicious of the email, which I saved for further reading. I have transferred all my points for this year, so they are safe, but wondering what could happen. We recently got a call from SVO to sell our position at 40% profit but we value it so much as an investment that we declined. Silly?

  14. This is surprising, especially because of that part of his contract that assured him that upon his termination or resignation from his current position he would be upgraded to best position available at that time up to standard board member positions. I’m sure this apparent violation of that is simply a glitch in the system or something that appears to be a violation but really is not.

  15. ThanksTravelinWilly !! That was very kind of you to link the article
    So disappointed with Starwood.
    If you asked me years ago would I ever be doing business with Marriott, Hilton and Hyatt happily over Starwood I would have thought no possible way on earth
    They have become cheap frugal and frequently uncaring and neglectful
    Of course there are some exceptional properties still in the chain

    At the end of the day corporate has sunk into quicksand and lost their passion and their innovative ways
    Platinum light and Platinum heavy also helped to weaken the program
    and the wait listed upgrades laughable for that much business

    Become a Diamond light 25 stays or 50 nights at Gold Passport and confirm your upgrades way in advance!
    Do I mention 20% rebate on all redemptions through July including cash and points?
    I can see the SPG version now nothing higher than a category 2 property and 5% back only good on weekends
    This was once a company that was program of the year year after year and led the way in creative and compelling promotions. I remember when people once complained about targeted marketing
    If I didn’t know any better I would say SPG went out of business and the hotels still use the basic program to compete
    Cheers

  16. He didn’t help a Australian worker who was raped in Dubai. The hotel held her passport & didn’t pay for her work.

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