Why Starwood Hotels Keeps Moving Its Headquarters Around The World
The purpose of the move? "To shift the focus across our organization, not just in headquarters but the whole company to those parts of the world where growth and change is happening most radically," CEO Frits Van Paasschen told Business Insider in an interview last week.
The Fortune 500 hotel company, which includes brands like Westin, Sheraton, and The W, has done this before, moving its headquarters to Shanghai two years ago. Soon after, the company saw an acceleration its growth in the country, more hotel openings, and more Chinese outbound travelers in Starwood's hotels around the world, Van Paasschen says.
During the trip, the company's leaders traveled to 19 cities in 12 different countries, as far afield as Kazakhstan, and spent time in all 14 of the company's hotels in Dubai.
Van Paasschen, 51, formerly CEO of Coors and a Nike veteran, says that this is the kind of big push companies need to create a truly global culture.
The initial idea came to him "where all great ideas come from," he says: from his wife. They were away for the weekend together, and Van Paasschen was thinking about how he could adapt Starwood to a rapidly changing world.
"When I had run businesses outside of headquarters in different markets, I always felt like the guys from headquarters had seen a lot, but I felt like they got on a plane not having changed anywhere near as much as I had hoped they would," Van Paasschen said. "I was sure that around the world some of our executives felt the same way, and wouldn't it be great to move headquarters for a year?"
A year wasn't a realistic option, but his wife suggested a month would still be worthwhile. Van Paasschen brought the idea back to his team, started hashing out the details, and decided to give it a shot in China.
Right now, the company has 82 hotels in the Middle East and plans to open 50 more over the next five years, making Dubai a practical choice. The culture of the region made relocating there particularly effective.
"This is a market where the real estate owners and developers that we work with are individuals and families," Van Paasschen said. "Relationships in many respects are more important than the formality, governance and contracts the way they are in North America or Europe."
There are some relationships you can't build in short trips where every hour is rigorously scheduled.
"There's a difference when you're on a one-week business trip and you have a chance to see someone once, versus seeing someone in the office and then being invited to their home," Van Paasschen said.
He's confident that they'll get the same kind of tangible results and acceleration of business that they saw in China. "I'm looking at some of our leaders in the room and making sure they hear me say that," he joked.
Of course, that doesn't mean picking up and moving headquarters is easy. As much as he's tried to manage his time, "you feel like you're doing a day job and a night job," Van Paasschen said.
You have to be prepared for "a continuous work experience." Because things are so immediate in the new environment, they take precedence over what Van Paasschen might normally focus on at headquarters.
It takes a lot of effort to stay caught up, and some things get missed.
But that might be a good thing. Many times when a CEOs is at their headquarters, they focus on what's immediate and urgent there, and ignore some of what happens elsewhere. "In some respects, that's exactly why a move like this is such a good idea," he argues.
As for whether he'd advise other to do it?
Every company has to find a way to stay close to its operations around the world, he argues, and to find a way to become flatter and more responsive. Global development and technology changes demand it.
"That's a challenge to all of us," Van Paasschen said, "and to the extent that other people would benefit from a move like this, I would imagine, if I were speaking to a friend who was leading another company, I'd suggest they at least consider it."
It's worth noting that the company has high end hotels all over the world, making this kind of relocation more practical and less expensive than it might be for others. And Van Paasschen's used to a punishing travel schedule. He spends "about half" of his time on the road, though usually in week long stints.
We asked Van Paasschen what the single most important lesson or story he'd take away from the trip was. One thing immediately came to mind.
"I think the one moment that epitomizes my visit here is that we had occasion to speak with the ruler, Sheikh Muhammad, and I was proudly telling him that Dubai is the city in the world, after New York, with the most hotels for our company. He didn't miss a beat and asked, 'well when are we going to pass New York?' I think it speaks to the vision and the audacity of the mindset here and of the government. If I remember one thing many, many years from now from this visit, it'll be that moment."
It's easy for top management to get isolated and caught up in what's happening in their home market, or in finances, or in research. It might be worthwhile for more companies to take steps to avoid that.