New Starwood CEO to Add Fizz?

In a move designed to strengthen its already powerful brands, Starwood Hotels & Resorts ventured outside the real estate and hotel industries and selected marketing maven Steven Heyer, former president and COO of The Coca-Cola Co., as its new CEO.

White Plains N.Y.-based Starwood has spent almost a decade acquiring and building its empire of more than 750 owned, managed and franchised hotels. Over the last several years, the company also has focused on distinguishing and growing its hotel brands, including Sheraton, Westin, W, St. Regis and Four Points by Sheraton. So, it came as no surprise when Starwood chose a branding expert to succeed founder Barry Sternlicht, who is now the company's executive vice chairman.

“I think Steve will do a tremendous job for Starwood. He's a gifted marketing executive who significantly improved the marketing and advertising of the Coke brands,” says John Sicher, editor and publisher of trade publication Beverage Digest.

Building a responsive and consistent brand is the same whether the product is Coke or a hotel chain. “It's all about building brand equity and creating lasting relationships with your customers. Someone like Steve will appreciate brand dynamics in lodging,” says Dan Lasik, Americas director of hospitality at Ernst & Young.

The new leader may also be pivotal in helping the company launch, acquire and define new brands, adds R. Mark Woodworth, executive vice president of PKF Consulting in Atlanta.

“Starwood has an outstanding selection of brands,” adds Marc Falcone, lodging analyst at Deutsche Bank. “Who better to guide the direction and leverage the strength of those brands than [a marketing expert like] Steven Heyer?”

The fact that Heyer, 52, known as a hands-on executive, doesn't come from a real estate background is not a concern of industry experts, particularly since Sternlicht, a real estate deal maker, will work closely with the new CEO on long-term strategies and issues related to capital investment and real estate, reports Starwood. Heyer's annual base salary will be $1 million, and his initial term is for four years.

Heyer, who started his new job Oct. 1, steps in at a time when Starwood's properties are already outperforming their peers, according to William Marks, a lodging analyst at JMP Securities in San Francisco. The company reported that revenue per available room (RevPar) jumped 16% in the second quarter over the same period a year ago at its North American-owned hotels. That double-digit increase in RevPar surpassed the industrywide average of 8.6% recorded during the same period, reports Smith Travel Research and JMP.

Now that the lodging industry is rebounding after three years of falling revenues and lower occupancy, brand strength is imperative as more travelers seek hotels that suit their individual style, says Woodworth.

Creating unique customer-driven experiences has been one of Starwood's hallmarks. Yet, this will become even more important to the company's future as the brands grow and the hotel industry picks up steam, according to analysts. With the introduction of W in 1998, for example, Starwood became the first major chain to roll out a “designer” brand. W is now adding Bliss spas into many of its 20 hotels.

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