CEO Profile: Starwood, Van Paasschen both on the move

If you want to get to know Starwood CEO Frits van Paasschen, grab your running shoes.

His version of a power breakfast is a strenuous, 10-mile run at 6 a.m. He runs every day and has run 12 marathons.

Van Paasschen — who prefers to be called "Frits" and rarely wears a tie — took the helm at the $6-billion-a-year hotel company last September after Starwood's board ousted former CEO Steve Heyer. The board, chaired by Bruce Duncan, spent five months searching for a new CEO. About 60 candidates were interviewed, but van Paasschen was their unanimous choice.

Duncan says that van Paasschen, (pronounced "van passion") 47, stood out because of his "intellectual firepower," success shaping global strategies for consumer products at Disney, Nike and Coors, his likable personality and the aggressive way he promised to tackle the job. Because he lacked hotel experience, he vowed to immerse himself in the industry. Since joining, he's visited 132 hotels in 20 countries and 45 cities.

Van Paasschen's passion for running didn't hurt, either.

"That shows someone who's tenacious, someone who has a plan and gets it done," Duncan says. "It shows he'll do whatever it takes."

Van Paasschen credits running with much of his management style. Business, he says, is about conquering personal fears, setting high goals for yourself and breaking barriers, which in many ways meshes with Starwood's culture.

A decade ago, the company's W brand revolutionized the hotel industry by creating the "living room," or open lobby space where younger generations mingle with laptops, cocktails and friends. Most chains today are adopting the concept in one form or another.

Starwood hot, based in White Plains, N.Y., reported a $32 million profit, or 44 cents a share, for the first quarter. It was less than last year's first-quarter results due to a one-time tax charge, but it beat analysts' estimates. For the year overall, the company expects to make more money than last year. Starwood shares are trading at about a third of what they were a year ago (they closed Friday at $44.44), but the entire sector's generally down.

Worldly CEO targets global growth

Well versed in the nuances of opening new foreign markets, van Paasschen plans to continue Starwood's strategy of transforming itself from a U.S.-based company into an international powerhouse. He's determined to set the pace for hotel development as rivals such as Marriott, Hilton and Hyatt also sprint into emerging cities.

Starwood currently operates 900 hotels in 100 countries under nine, mostly upscale brands, including St. Regis, Sheraton, Westin and The Luxury Collection. About half are outside the USA. But van Paasschen plans to push more future growth in emerging markets. Half of the 600 hotels slated for construction within the next four years will open in countries such as China, India and Qatar.

"It is an extraordinary time for us," he said during an interview at the W New York. "When you see Macau or Shanghai or Qatar and see the amount of construction going on, you get a much more visceral feel for just how extraordinary this phenomena in development and wealth creation is."

Steering international growth is clearly fun for this worldly CEO. Born in the Netherlands, van Paasschen maintains duel citizenship and has a love for all things international.

He regularly studies GDP rates for different countries in the Economist magazine, speaks five languages and is currently learning Czech with his chauffeur each morning, says his wife, Laura di Bonaventura. He learned Italian just four years ago, when — despite the demands of his Nike job — he squeezed in a starter Italian-language course so that he could converse with his Italian colleagues in a less formal way, she says.

A paper boy and a ditch digger

Van Paasschen and his older sister were raised in Seattle by Dutch immigrants, and they visited the Netherlands each summer. His father was a pediatrician and his mother was a biomedical researcher who specialized in kidney dialysis. The family lived modestly, so he started delivering the Seattle Times at age 12 to pay for his interest in skiing.

"What I learned is to work hard, treat everyone well and listen," he says. "It's more about effort than ability. We all know brilliant people who haven't had a very successful life."

In the fifth grade, he started running regularly to strengthen his soccer game. He wanted to "get faster and better," says di Bonaventura, who likes to tease him about his oddly mature goals as a youth.

"That's been a constant theme in his life," she says. "Clearly he's ambitious, but it's more than a drive to achieve. It's a drive for personal growth."

He dug ditches for landscapers and worked as a janitor in his father's office to put money toward his undergraduate degree at Amherst College in Massachusetts. There, he majored in economics and biology, unsure whether he wanted to attend medical school or become an economist.

He chose a different path entirely after reading an article in Harper'sMagazine about the exciting lives of young consultants. It sounded like a good fit for his energy level and analytical skills, and he landed a job at the Boston Consulting Group. He later returned to school, earning his MBA at Harvard Business School.

He'd already lined up consulting jobs in Munich and Amsterdam when he met di Bonaventura, a fellow student who had a consulting job offer in Boston. A whirlwind romance ensued, and they arranged to work together at McKinsey Consulting in Los Angeles.

"Forty days before the end of school, when all the students have jobs lined up and their lives completely organized, both of us threw caution to the wind," she says.

They got married in 1990. Van Paasschen spent six years at McKinsey in Los Angeles and Amsterdam, but decided to leave the hectic lifestyle as they were about to have the first of their three children.

"I wanted a little more balance and to put family first," he says.

Di Bonaventura says her husband still puts family first. He eats breakfast and dinner with them, and if he needs to work, does so near them instead of shutting himself in a home office. He speaks only Dutch to the children — ages 13, 11 and 7 — so they can be bilingual, and engages them "on their own terms," she says. The family recently moved from Denver into a home in Connecticut. After his first child was born in 1995, van Paasschen joined Disney's consumer products division to gain more global experience. He established Disney's retail stores in Japan and crafted a strategy to open new markets in countries such as Poland.

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.