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AETHOS
Releases its 2015 Hotel CEO Turnover Study
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Boulder,
CO – September 2015 / Newsmaker Alert / Hotel company boardrooms were
more settled places in 2014 than the previous few years with only two changes
in CEO occurring among the world’s 50 largest hotel groups, according to
the recently released 2015 Hotel CEO Turnover Study, published by hospitality
advisory firm AETHOS Consulting Group.
“In
fact, 4% was the lowest rate of turnover we have measured since tracking
Hotel CEO turnover from 2004,” states Chris
Mumford, Managing Director of AETHOS’s London office, and author of
the report. “Turnover had been climbing steadily since the 2009 depths
of the world financial crisis. That year only three companies dared to
change their CEO. This rose to five new appointments in 2010.”
“It
appears that 2012 may have been the crunch year where companies began to
see signs of financial improvement and sought to replace their survival
mode CEO with new leadership to manage the business through a time of recovery
and positive growth,” adds Thomas
Mielke, Managing Director and co-author of the Turnover Study. “That
year saw eight CEO seats revolve and this trend continued, albeit at a
slower rate, in 2013 with 10% CEO turnover. In 2014 however turnover curtailed
sharply with only Wyndham (enter Geoffrey Ballotti) and Jin Jiang (hello
Simon Zhang) making new appointments.”
The
median tenure for the CEO of a large hotel group is seven-and-a-half years.
“Many were taken aback earlier this year by the departure of Frits van
Paasschen from Starwood, “ adds Mumford, “ but, having not long passed
his seven year anniversary, perhaps we should not have been surprised.”
“Furthermore,
tenure is typically shorter at public companies than at privately held
corporations. Chief Executives who are approaching, or have recently passed,
similar seven year milestones include Chris Nassetta at Hilton, Steve Joyce
at Choice and James Murren at MGM.”
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The
hotel industry continues to largely promote and recruit its senior leadership
from within its borders. Half of the world’s largest hotel groups are
led by CEOs possessing previous hospitality sector experience. Among other
sectors from which hotel companies are drawing talent, retail is gaining
ground. The dynamics of retail (property, brand, and customer service)
appear to be increasingly valued by the hotel sector, as recently demonstrated
by Whitbread whose incoming CEO in 2016, Alison Brittain, comes with an
extensive track record in retail banking in the UK with Lloyd’s.
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Brittain’s
arrival at Whitbread next year will also be viewed as a positive step by
advocates of greater female presence at the helm of hotel companies. With
Trudy Rautio having recently departed from Carlson however and been succeeded
by David Berg, overall women still represent less than 10% of all CEOs
in the study. The good news, however, is that the number of women occupying
the corner office is higher than at any other time in the last eleven years.
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CEOs
are travelling more and more. In North America in particular, there
is a clear trend of executives completing an international assignment during
the course of their career in order to better equip them for the eventual
challenges of running a global business. The world has become a smaller
place and today’s hotel CEO needs to be as familiar with the market challenges
of Hangzhou as of Houston.
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In addition
to encouraging their executives to spread their wings and experience other
geographies, boards are also generally supportive of their CEOs holding
a non-executive directorship on another company’s board. The exposure
and insight into another business that the role of an independent director
gives can provide a valuable learning opportunity and information exchange.
This tends to be more commonplace among public companies than private corporations
and over the past couple of years we have noticed a significant increase
in external board seats being held by CEOs of Chinese companies.
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No
matter where you are in the world, the CEO is likely to be a man in his
early fifties and degree educated. Region to region however there are
subtle differences in the paths these individuals have trodden to the CEO
office and how long they stay there once inside.
“As we
write mid-way through the year, our prediction for the report on 2015 turnover
is a slight uptick over 2014,” adds Mielke. “With changes already announced
in the first 6 months of this year at Starwood (forced), Carlson (retirement),
Caesar’s (forced) and Whitbread (retirement) as well as increased M&A
activity such as Jin Jiang’s acquisition of Groupe du Louvre and Fairmont
Raffles rumoured to be on the market, we expect boards to be keeping CEO
succession planning high on their agenda.”
The
AETHOS Hotel CEO Turnover Study has been reviewing annual turnover
in the sector since 2004. The study’s peer group is the world’s 50 largest
hotel companies by number of rooms count as reported each year by HOTELS
magazine. Companies range in size from IHG with 679,050 rooms to Okura
with 23,686 rooms, some are publicly listed, others are private family
owned businesses. 23% of the peer group is headquartered in Asia, 32% in
Europe, and 45% in North America.
Click
here
for an overview of the CEOs at the Top 50 hotel companies. Click here
for an overview of the typical CEO profile by region.
About
AETHOS Consulting Group
AETHOS
Consulting Group (www.aethoscg.com)
is a hospitality-focused advisory firm, renowned for its hands-on, consultative
and bottom-line business approach. Through its offices in North America,
Europe and Asia, AETHOS provides executive search, compensation consulting,
business strategy, and performance, risk and asset management. AETHOS’
research and white papers provide industry stakeholders with valuable insights
and best practices that can dramatically improve business performance.
The Daily News
Wires ensure that executives are always up-to-date with trends, transaction
activity and other relevant movements within the sector. In autumn 2015,
AETHOS will present its first book “The Loneliness of Leadership”, revealing
the realistic yet motivational perspectives of becoming a leader in the
service industry. Clients watching AETHOS’ award-winning film “The Power
of Advice” will hear first-hand about the challenges that leading hospitality
personalities and their organizations have had to overcome – a task our
principles are determined to assist with through expertise, transparency,
integrity and humility.
Contact:
AETHOS
Consulting Group
718-618-4376
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