CEO Profile: Starwood, Van Paasschen both on the move

Nike recruited him in 1997 to spearhead strategic planning, which at that point wasn't emphasized, says Tom Clarke, Nike's then-president. Nike was then in the midst of growing from a $3-billion-a-year company into a $9-billion-a-year company and needed strategic vision, says Clarke, who joined Starwood's board last month.

Van Paasschen left Nike as one of four division chiefs in charge of Europe, the Middle East and Africa operations. While there, he opened Brazil and Russia to Nike products, and pushed to manufacture shoes and apparel in Brazil, Mexico and southern Africa because it was cheaper and less risky than Asia. His division's revenue grew to $4 billion from $2.5 billion, and profits doubled over a four-year period.

"Frits is extremely smart, but he's also very practical, which is a great combination," says Clarke, who became van Paasschen's frequent running partner.Van Paasschen left Nike in 2005 to become CEO of Denver-based Coors Brewing, Molson Coors' largest division. During his two years there, he reversed declines in sales of Coors Light beer in part by adding a temperature-sensitive label that turns blue when the bottle is chilled. He also added regional general managers who focused on profit instead of volume.

Changes on tap at Starwood

Van Paasschen expects to produce similar profit-boosting results at Starwood as he focuses on building a new team, improving employee morale and selling hotels that no longer make sense to own. He doesn't expect the weakness of the U.S. economy to get in his way, even though a prolonged recession could decrease travel and the U.S. credit crunch could mean less financing for the next year.

As CEO, van Paasschen says it's his job to be contrarian, which in this case means optimistic. Revenue per available room, a key industry measure of financial success, is slowing but he says he doubts it will "fall off a cliff" because the growth of new hotel rooms is below historical averages. He expects Starwood to fare better than rivals because it relies mostly on business travel, which isn't as discretionary as leisure travel.

Taking Starwood into new locales

Besides overseeing international expansion, van Paasschen is bringing Starwood into untapped, lower-end markets in North America. It's taking its first plunge into the limited-service hotel business that's dominated by Marriott Courtyard with a new brand, Aloft, designed with W's style. The goal is to open 500 Aloft hotels in the next five years. It's also launching Element, an extended-stay chain designed as a lower-priced alternative to Westin.

Some moves have been controversial — even making it on to the gossip pages.

To emphasize Starwood as the operator of global consumer brands akin to Coke or Pepsi, van Paasschen recently hired Phil McAveety, a former Nike global marketing executive, as Starwood's chief brand officer. The move added a new management layer above Ross Klein, Starwood's luxury brand president who oversaw the W chain's expansion for five years and is widely credited with spinning it into a cutting-edge, fashion-forward brand. In the last two weeks, Klein and another luxury team member quit Starwood jobs and signed on with rival Hilton, a move that made it into the New York Post's Page Six gossip column.

Jan deRoos, a professor at Cornell University's hotel school, says van Paasschen's informal style and background should benefit Starwood in coming years.

"This is not a rah, rah top-down person, but a person who gets out of his office and listens to people," deRoos says. "People feel empowered by him. They don't feel like they're going to be punished for making mistakes, so they're encouraged to take risks."

And to put on running shoes. At the NYU Hospitality Investment Conference in early June, Starwood organized a 5.1-mile "Run with Frits" bonding event for developers through New York's Central Park. Used to running 7:30 miles during long running meetings with colleagues at Nike and even faster miles on short runs, van Paasschen realized his pace was too swift during a previous hotel industry run. This time, he was careful not to run too fast.

"They told me to dial it down," he says.

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