The founder and former CEO of Starwood Hotels thinks it’s in the company’s best interests to merge with a larger hotel chain.
According to Barry Sternlicht, founder of Starwood Hotels & Resorts Worldwide, the hotel chain he formed has fallen behind others in the industry. Despite its bleak decline over the decades, though, the current chairman and CEO of Starwood Capital Group says he expects the chain to make a full recovery.
Starwood launched a strategic review into the company following the abrupt departure of CEO Frits van Paasschen earlier this year, hiring a banker to “explore a full range of strategic and financial alternatives to increase shareholder value.”
Although Sternlicht acknowledged that back-end technology at Starwood is doing well thanks to the former CEO’s attention to the system, he said it might be wise for the hotel chain to merge with another, larger business to increase its select service visibility, which is currently a major trend in the hotel industry. Hilton was cited as a great example of how consolidation helps boost growth in the hotel industry, with the company’s core business growing at about 25 percent while some of its its spinoff brands — Hilton Garden Inn and Doubletree — are seeing 200 percent growth rates.
Sternlicht shared his comments Monday at the 37th Annual NYU International Hospitality Industry Investment Conference in New York City. He also noted during the conference that Starwood is seeing more and more competition from other hotels, AirBNB and consolidated chains across the industry. The Internet is also having a huge impact on the industry and changing in the way everyone does business, Sternlicht said, joking at the conference that: “You can’t lie to your customers as easy as you could 20 years ago.”