Take five (weeks) in China

July 18, 2011

In conversation with Frits van Paasschen, President & CEO, Starwood Hotels & Resorts Worldwide

With over 1,000 properties in 100 countries, Starwood has more hotels outside the U.S. than in, with 80 percent of its future pipeline abroad. China recently became the hotel group’s second largest market (behind the States), with 70 hotels and another 90 under construction.

Starwood CEO Frits van Paasschen was discussing with his wife the challenges and opportunities of his company’s growth in China when she pressed him to put his thoughts into practice, walk the boardroom talk and spend a month there. He concurred, and along with his senior leadership team, spent five weeks in the Middle Kingdom for a deep dive into the business there.

I caught up with van Paasschen towards the end of his trip.

PM: Now you’ve spent a month in China, can you share any key learnings?
FVP: This was all about getting ourselves familiar with the market here and having a set of shared experiences that enable us to talk shorthand with our colleagues. Though I can’t point to one specific learning, because I now have a better level of comfort with my colleagues and because I’ve met a number of the owners and partners a few times – and even though we might be speaking through a translator – I feel more comfortable being myself, adding a little humour to the conversation, giving them a better feel for me, whereas in the beginning I was more concerned that I might say something that would be misinterpreted either linguistically or culturally. This is a relationship business.

You wrote in a recent blog post, “For most of our life we were an American company that happened to do business overseas. Today, we’re a global company that happens to be based in New York.”
As your centre of gravity shifts east, would a permanent shift in HQ be out of the question?
The most important thing for us as a company is to have a global mindset and from that perspective the word ‘international’ is relative and not absolute. There is no base culture – there is the relationship between different cultures around the world, and that’s as much a state of mind as it is anything else.

We can’t practically do what we’ve been doing for this month for a longer period of time, or even on an annual basis: this is a pretty major undertaking for us. That said – this was a terrific investment in getting closer to our business here. Our senior leadership is more than half non-American in origin. Will we move headquarters permanently to somewhere else in the world? You’d have to talk to the IRS: that’s more important than whether we move our office physically to anywhere else.

How have your Chinese employees reacted to this venture?
Everybody I mentioned this trip to had raised eyebrows but thought it sounded like a really interesting idea. I called the team in Asia… their immediate reaction was very positive. For them [it was about] the recognition of the importance of what they’re doing, of their region. For me one of the most enjoyable things about being here is spending time with colleagues who are becoming friends.

Is your travel around China and its rail and airport infrastructure, its second- and third-tier cities, helping to solidify and change your future corporate plans in China?
Travelling to a city like Shenzhen and going to the 100th floor of the building that will have a St Regis hotel on the top of it, having a visceral appreciation of how markets develop, having that personal experience of seeing something being created literally in front of you is something that stays to mind.

[Seeing] third-tier cities, and what opening Sheratons does in those places, and what it takes to ensure we have a market that’s ready for that level – I think we all have a better appreciation for that. Also seeing a luxury hotel in a location like Lhasa, and seeing that as the future of luxury as a new generation of travellers, not just in China but elsewhere, seek out new and interesting destinations.

A century ago people were still talking about The Grand Tour of Europe and visiting its capitals. This generation, many of them have been to so many places already and have a better appreciation of what they want in a luxury experience.

Has your understanding about how the Chinese feel about your hotels changed?
A couple of very challenging things that the Chinese guest is used to: hotels in China have more staff and consequently more service. Most of the hotels are new and built to the expectations of today. As Chinese travellers go abroad, the challenge for us is making sure we can deliver the service and the hotel experience that is equal or better than their expectations.

Cultural differences: People assume that because people don’t express the same way is because they don’t have the need. The truth is that we’re all the same in what we want, but how we talk about it, how we fulfil it, how we express it is very different. One of the steps towards having a global mindset, in intercultural fluency, is understanding those basic needs.

What was your best moment in China so far?
Meeting a dozen associates in one of our Westin Hotels and having them each tell me they’re from a different place in China; I developed at that moment an appreciation for the emergence of China as a country as opposed to an ethnicity or culture or a geography. The pride in not just being Cantonese or Shanghainese, but being a part of this exciting dynamic modern China.

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