Most industry icons haven’t achieved success in their respective fields by playing it safe. In fact, taking risks and doing the unconventional just seems to be part of their DNA. Legendary lodging executive Barry Sternlicht is certainly no exception.
Whether it’s the creation of the famed Heavenly Bed, or his creative use in the mid-’90’s of the grandfathered paired-share REIT structure to ensure that Starwood would outbid the competition and acquire ITT Sheraton for some $14 billion, the current Starwood Capital Group CEO and former Starwood Hotels & Resorts Worldwide chieftain marches to his own beat.
Taking a risk
The latest example is the recent decision to appoint Steve Goldman as CEO of Groupe Du Louvre, one of the Starwood Capital Group’s holding companies, which includes luxury subsidiary Concorde Hotels and budget hotel group Louvre Hotels. The latter is currently the eighth largest hotel chain in the world with more than 1,000 hotels and seven brands.
Goldman brings to the table some 27 years of lodging experience, which ranges from acquisitions and finance to development and operations. The gamble in this case has nothing to do with his qualifications.
For anyone not familiar, Goldman was most recently head of global development for Hilton Worldwide before being put on administrative leave last September in the wake of ongoing litigation. Starwood Hotels & Resorts Worldwide is suing Hilton Worldwide alleging that the company and a couple of Starwood’s former employees, namely Ross Klein and Amar Lalvani, stole intellectual properties in the creation of the now-defunct lifestyle brand called Denizen. Goldman has been both implicated in the allegations as well.
Notwithstanding the aforementioned lawsuit, the real gamble from my perspective is whether or not Goldman can be a long-term solution for Sternlicht. After all, this will be his third position since leaving Hyatt Hotels in 2007. Throw in the fact that he’s moving to a foreign land and a completely different culture. Paris may be a nice place to visit, but it’s hard to be sure it’s the right place to live until you’re actually there.
The hospitality industry is notoriously tight-knit and Sternlicht worked together with Goldman for some 10 years, first at Starwood Capital Group and later at Starwood Hotels & Resorts. Maybe this is just a case of a friend and former colleague reaching out to someone who is in need, someone whose reputation has been sullied somewhat—justly or not—and is looking for a fresh start.
Perhaps. But what I do know about Sternlicht would suggest otherwise. More likely it is a calculated gamble that someone who has a wealth of brand experience and maybe something to prove can help grow an already thriving business. We know he has the backing of some deep pockets. The company currently has some $16 billion of assets under management and the Starwood Capital Global Hospitality Fund II closed earlier this year with $1.83 billion of commitments.
Looking to the future
Starwood Capital has certainly made itself into a major player in the global hotel marketplace and Sternlicht continues to deliver for his stockholders. But come to think of it, we still haven’t heard or seen much from One Hotels & Resorts, the eco-friendly brand Sternlicht promised a few years ago. Who knows if things don’t work out in Paris, maybe Goldman will get to help launch a brand after all.