Hiring CEOs From Outside the Hotel Industry. By Christopher Mumford ~ HVS International London Thursday, 26th April 2007

Three of the world’s largest hotel companies have hired CEOs from outside the industry -It was almost as if Barry Sternlicht, David Michels and David Webster had sat down together and made a pact: if you hire a non-hotel CEO then so shall we.

Starwood struck first with the hire of Steven Heyer, President and COO of The Coca-Cola Co. In December Hilton Group Plc announced the appointment of Ian Carter, President for Europe, Middle East, Africa and Asia at Black and Decker, as Chief Executive of Hilton International Hotels. Not to be left out, InterContinental Hotels Group informed the world eight days later that their new CEO, Andrew Cosslett, would be coming from Cadbury Schweppes.

The fact that three of the world’s largest hospitality players chose to recruit Chief Executives from outside the hotel sector is not so much uncanny as a reflection of the changing strategic direction of today’s hotel companies. Such choices may once have been regarded as potentially foolhardy and, at the least, bold.

As the focus of these companies’ shifts however from one of traditional real estate ownership to product and brand management, these appointments appear to fit well with declared corporate strategy. Steven Heyer is regarded by Barry Sternlicht as, “a marketer who has championed some of the world’s most valuable and global brands.” Andrew Cosslett too is a global brand marketing expert with experience at Unilever and Cadbury Schweppes under his belt. Likewise, Ian Carter’s background includes 11 years with General Electric.

Time will tell if these CEO appointments have been a wise move and shareholders will be monitoring their performance intently. Starwood’s share price rose on the news of Steven Heyer’s appointment, but Hilton’s and InterContinental’s prices both took a fall on their respective announcements.

The decision to search for candidates with strong brand marketing expertise from outside of the hotel ranks raises a few interesting questions. Are there no home-grown branding experts in the hotel sector? Do those hotel executives aspiring to achieve the CEO slot now have to consider leaving and gaining experience in other industry sectors? Can a non-hotel CEO relate to and gain the respect of the frontline troops in the field? Can the reverse happen; will we ever see senior hotel executives taking up Chief Executive roles at soft drink or power tool companies?

One point of particular interest is that, at a time when the hotel industry in general is experiencing such difficulty in attracting and retaining new talent, three of the world’s biggest players chose to ignore the traditional profile of hotel and real estate backgrounds and decided to plump for candidates with completely different experiences and skill sets. Is this something which should also be happening at other levels of the organisational chart? Should the hotel industry spend more time looking outside its borders for talent?

I was put in mind of this recently by a young Sales Manager in New York who had been highly recommended to me and who impressed me greatly with her dynamism, industry knowledge, and ‘can do’ personality. This lady is highly educated to degree level but does not possess a single hotel related qualification. She was pursuing a career in the technology sector until given a break in hotels by a General Manager who had the insight to spot her potential. In essence, she combined intelligence, adaptability and, most importantly, the right attitude to succeed in hospitality. Thrown in at the deep end, she rapidly learned the business and today consistently exceeds her quarterly sales targets and is destined for a bright hotel management career. Thanks to the prescience of an individual General Manager she is in a job she loves and the hotel industry has another young star among its ranks.

This example however is typically the exception rather than the rule. Rarely do hotel companies consider taking what they perceive as a gamble to hire individuals with no prior hotel experience. Rather the customary attitude is that if the candidate was not washing dishes nor carrying bags at the age of 14 then what can they possibly know about the hotel business? Indeed, in our role as Executive Search consultants, we rarely see a resume which does not conform to the typical pattern of the requisite hands-on experience at line level followed by hotel management studies and subsequent apprenticeship.

Naturally, we should continue to support hotel schools, promote hotel management as an attractive career, and hire individuals with hotel backgrounds. At the same time however, the hotel industry is facing an ever dwindling population of future talent. Thinking ‘out-of-the-box’ and hiring from other industries can work, as demonstrated by Mandarin Oriental for whom we recruited a Regional Vice President of Communications for the Americas. The selected candidate came from Veuve Clicquot and made a successful transition from champagne to hotels. In addition, surely the hotel industry will benefit from bringing in professionals who have a different set of experiences and who can perhaps offer fresh ideas and perspective.

It will be interesting to observe how Heyer, Carter, and Cosslett perform and, more importantly, how the fortunes of Starwood, InterContinental and Hilton International fare under new leadership. The boards of the big players have illustrated a creative approach to executive recruitment. It remains to be seen if this can filter down the organisation chart and apply to hiring at other management levels.