Is Starwood chief America's fittest CEO?

Associated PressOctober 25, 2013 

— 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 such as 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.

“The whole idea is that you'll feel better after your stay,” van Paasschen says. 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. His company isn’t the largest; 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 seven hotels that Starwood has planned is a luxury property.

The company has announced plans for two new Aloft Hotels in the Triangle in just the past month – a 134-room hotel to be built between the Durham Performing Arts Center and the Durham Bulls Athletic Park in the American Tobacco Campus and a 135-room Aloft Hotel across from N.C. State University’s Bell Tower on Hillsborough Street.

“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 growth overseas

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 past 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.

Before arriving at Starwood, van Paasschen was CEO of Coors Brewing Co. 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.

No extravagant demands

Starwood has made a concerted push to win over road warriors who spend 50, maybe 100, nights a year at hotels. Last year, it introduced a personal ambassador service for its most frequent guests, a personal point of contact to handle their needs.

“About 2 percent of our travelers account for about 30 percent of our profitability,” van Paasschen says. “What I think is surprising is that they actually don’t have very extravagant demands. But what they want are a few things consistently executed.”

That often means a microwave in the room for popcorn, having the temperature set in advance or stocking the fridge with Diet Coke. Big requests only come when they are traveling with their families.

“Folks who travel as much as they do, they do want to be a hero,” van Paasschen says. “They want to make up for it somehow.”

Staff writer David Bracken contributed.

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