Starwood Hotels CEO mum on sale rumors
 
Starwood Hotels CEO mum on sale rumors
30 JULY 2015 1:03 PM
The growing list of would-be suitors for Starwood Hotels & Resorts Worldwide didn’t deter interim CEO Adam Aron in his quest to breathe new life into the beleaguered company. 
By  
STAMFORD, Connecticut—It didn’t take long for Adam Aron to address the elephants in the boardroom. 
 
“Both processes are very much and well underway,” said Starwood Hotels & Resorts Worldwide’s interim CEO, anticipating analysts’ questions regarding the company’s search for a permanent CEO and resolution to its review of strategic and financial alternatives announced during the first quarter.
 
Exploration of the latter has received intense scrutiny in recent days, with various media reports pointing to both InterContinental Hotels Group and a merger between Jin Jiang International Hotels Group Company Limited and Plateno Group as would-be suitors. 
 
“At this point we have nothing specific to report and have said previously that we would not be commenting on either topic midstream,” Aron said during the company’s second-quarter earnings call, which was webcast. “We will share news with you on these two important topics as soon as there is news we can share.”
 
When pressed to lay out a timeline for said news, Aron only said executives are “very much” in the process and will take whatever time is needed to do it right. 
 
Regarding the media speculation, he later added: “It’s no secret that we have a strategic alternatives review process in place. You’re going to see lots of information in the press. Sometimes it’s right; sometimes it’s wrong.” 

IHG supplied the following statement to Hotel News Now shortly after Starwood’s earnings call: “Following recent market speculation, the Board of Directors of IHG states that it is not in talks with Starwood with a view to a combination of the businesses.” 
 
Pedal to the metal 
Despite the rumor mill swirling behind them, Starwood’s executive team made good on a number of goals made in previous earnings calls. Chief among them was unit growth. 
 
The company opened 21 hotels and approximately 4,000 rooms during the second quarter, an increase of 5% over the same period in 2014. 
 
Executives also signed 64 deals representing 14,400 rooms, an increase of nearly 70% over the prior period. 
 
“What we are doing is turning up the burners here and working harder, working smarter, working faster,” Aron explained. “We’re talking to more owners. There’s considerable more outreach to the hotel owner community than before.” 
 
A streamlined decision-making process has helped, he added. Whereas before decisions had to be run up the corporate flag pole, now more power has been delegated throughout the organization. 
 
“We can approve a deal in a matter of weeks that might have taken months and months and months previously. That all adds up,” Aron said. “Plus I also think that there’s appeal in some of our brands.” 
 
Four of every 10 hotels in Starwood’s pipeline are now select service, with Four Points by Sheraton and Aloft representing the majority. 
 
While Four Points occupied the largest share of the pipeline, Aloft stood out as a leader in market share. The brand reported revenue per available room up 10% during the quarter. It’s up more than 25% in the past two years. 
 
System-wide RevPAR for same-store hotels increased 4.1% in constant dollars compared to 2014. 
 
“We’re doing it better,” Aron said of the management team. “That’s what we’re supposed to do. And we’re getting results accordingly.” 
 
Starwood shares (NYSE: HOT) were down 3.4% year to date, as of Thursday afternoon. The Baird/STR Hotel Stock Index, by comparison, was down 6.4%.
 
Depositions on track
Starwood is above pace in its goal to dispose of $800 million worth of assets during 2015. 
 
The company sold three hotels for gross cash proceeds of $533 in the three-month period ending 30 June: the Gritti Palace, Phoenician and the Element Denver Park Meadows.  
 
The Phoenician’s $400-million price tag was the largest in the company’s history, Aron said. 
 
“We remain confident we will achieve our $800-million disposition goal for full-year 2015,” he added. 
 
The company owned and leased 33 hotels comprising 12,656 rooms as of 30 June.
 
“The global hotel market is still frothy and robust,” Aron said. “We are seeing plenty of interest in the variety of properties that we currently have hired brokers and are out to market with. Interest remains strong. I don’t see any change, positively or negatively in the interest of hotel buyers to acquire hotels.” 
 
Despite the ongoing strategic review and the search for a permanent CEO, Aron said he and his team have power to pull the disposition lever. 
 
“We think we have complete leeway to sell hotels one-off, a package of two, a package of three, a larger package if we so choose. We’re quite active in talking about a variety of owned hotels that are still in our stable,” Aron said.
 

No Comments

Comments that include blatant advertisements or links to products or company websites will be removed to avoid instances of spam. Also, comments that include profanity, lewdness, personal attacks, solicitations or advertising, or other similarly inappropriate or offensive comments or material will be removed from the site. You are fully responsible for the content you post. The opinions expressed in comments do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Please report any violations to our editorial staff.