The following post was written by sophomore, and Tisch Center social media assistant, Camille Aké. Camille will graduate in May 2018 with a B.S. in Hotel and Tourism Management, and a minor in Food Studies.
Only at the NYU Tisch Center would one of the Clinical Assistant Professors have been longtime friends, and ex-Cornell classmate, of the President of Global Development of Starwood Hotels and Resorts.
This installment of the Tisch Center Fireside Chats, held on April 18th, 2016, was moderated by Clinical Assistant Professor at the Tisch Center, Sean Hennessey. The featured guest of the evening was Simon Turner, President of Global Development at Starwood Hotels and Resorts. Simon broke down his chat by discussing with the 60 students and faculty in attendance 1) his personal context for being in the industry, 2) the evolution of hotels, and 3) of course, the Starwood/Marriott merger.
About Simon Turner
How did Simon get to working on management contracts, real estate investments, and corporate development as the President of Global Development at Starwood? It all began when he was a student at Cornell University in Ithica, NY studying for his B.A. in Hotel Administration. As many hotel students do, Simon explored various jobs to figure out what area of hospitality he would be most interested in. He tried front desk, but he did not feel as though the position suited him; “I love the hotel business, but I’m not cut out for it,” he said to himself after trying front office. Next he worked for PKF International accounting firm (Pannell Kerr Forster). One day, he was offered a position by a professor at Cornell to move to Saudi Arabia to write SOPs (Standard Operating Procedures) for 3 hotels owned by a Saudi Prince! Simon emphasized that getting your hands dirty, even if it’s by taking a “boring” job, you should take the time to realize what you can learn from these first few jobs. Building credibility and experience will put you far ahead of other job applicants.
Once his exotic time in Saudi Arabia came to a close, Simon returned to Wall Street with an investment banking position working on the renovation of The George V Hotel in Paris. He spent 5 years in the “guts” of a project and said, “I was a part of the team that built that, and it’s a very satisfying feeling to be able to say that.”
Out of all of this, what did he learn? First off he learned the value of networking and maintaining a relationship. It’s a 2 way street! Secondly, he advised, if you can, to discover a different part of the world (referring back to his experience early on in his career in Saudi Arabia). Finally, the part he emphasized the most was accuracy and work ethic. “If you’re gonna do a job, do it right. If you so something wrong, you put everything else you’ve done into question.” Thus, he advised to the students that if there is something that really appeals to them, it’s likely that the student is really good at it. “It’ll fuel you.”
The evolution of the hotel business
The next portion of Simon Turner’s presentation discussed the evolution and changing nature of the hotel industry. He focused on three main changes. The first topic was the word “management”. Simon has come to the conclusion that hotel brands & companies are no longer simply managing the physical property, but instead are shifting to owning relationships. He of course referenced Starwood for this example. What makes Starwood great is that they are able to maintain, and operate, their hotel properties, but also give priority to serve their guests and maintain relationships with them. The Starwood’s Preferred Guest (SPG) loyalty program is a well-known example of a hotel brand that wants to reward their customers for their commitment to their hotels; this is a relationship that Starwood owns.
Next, hotel brands are becoming less US-centric, and instead, more of a global enterprise. Hotel expansion is going far beyond the lines of state borders and competing with hotels across the road. Hotel brands are looking to new frontiers all across the globe to hold a stake in that area and, hopefully, by building loyal clientele in that area, that brand can continue to expand in thearea and create a global market for themselves.
Finally, the third major change in hotels has been the evolution away from management owned/operated properties, towards franchises. An increasing number of franchisees are keen to join a larger family of hotels that have a recognized, and trusted, prominence.
The Starwood/Marriott merger
Since the Tisch Center students and faculty were in the presence of a top Starwood professional, it was no wonder that the notorious Starwood-Marriott merger would be a focused topic of discussion. As a Starwood professional, Simon gave us his perspective of the events leading up to the mega merger. In February 2015, the CEO of Starwood left the company. In April 2015, Starwood had talks to figure out their strategy for continuing to grow as a brand. They decided, ultimately, that they were open to being bought by another company. In November 2015, the Marriott deal was recognized by the Board of Directors.
The Starwood-Marriott merger could have ended with a simple acceptance of Marriots’s 2015 offer, but this merger was just as unpredictable as the hospitality industry itself. Enter: Anbang. Anbang Insurance Group is a China-based holding company that deals with financial services. In March 2015, Anbang offered Starwood $82.75 per share in cash! Not to be ones open to the possibility of losing the opportunity of a lifetime (being the largest hotel brand in the world!), Marriott fired back. Marriott’s statement about their second offer to Starwood, (according to Bloomberg.com), mentioned that, “They [Marriott] said its second stock-and-cash proposal offers stockholders greater long-term value. That bid is valued at about $78 a share, or about $13.2 billion.”
Despite Anbang offering a staggering 14 billion dollars to Starwood, Starwood accepted Marriott’s first offer because not only would it allow total exposure for both companies around the globe, but Marriott promised complete dedication to guest satisfaction, no matter where the guest stays. Anbang snapped back with a second offer: $14 billion dollars. However, Anbang is known for not wanting to necessarily grow the companies they invest in, but rather, they simply invest in them to have global exposure. The other reason the offer mysteriously did not go thorough was because of China’s very specific (and strict) rules of capital and money; the CEO and Board of Directors of Anbang avoided all interview questions on the source of the $14 billion. They claimed they would complete this deal in cash, but where would they get that available cash to handover to Starwood?
So in April 2016, the Marriott shareholder vote was occurring. The transaction between Starwood and Marriott will close sometime during 2016. There will now be a whopping 30 brands among Starwood and Marriott, making it the largest hotel brand in the world! The merged brand will have major spending power with economies of scale (the more hotels they have, the cheaper it will be to produce/operate them)
Despite the monumental impact, both positive and negative, this merger will have on the industry, Simon has a request. He only hopes that, “…the well-deserving, talented people [from Starwood] find a leadership position, and/or a home at Marriott International. The merger is innovation, and it’s a spectacular opportunity.”
For more on Simon Turner, President of Global Development at Starwood Hotels and Resorts, please visit the Starwood website here.