Frits van Paasschen resigned one week after the company issued a weak outlook. Starwood's stock has risen less than half of Marriott's since he took office. Fred Katayama reports.
Starwood Hotels' CEO won't be lodging in the corner office any more. Frits van Paasschen suddenly resigned by mutual agreement after more than seven years as chief executive. Replacing him as interim chief is board director Adam Aron, a former CEO of Norwegian Cruise Line and Vail Resorts. Investors welcomed the news, sending Starwood's shares higher in early trading. The move comes just one week after the operator of Sheraton, Westin and other upscale hotel brands issued a weaker-than-expected profit outlook and said it would spin off its timeshare business, something Marriott had done several years ago. As part of its "asset light" strategy, Starwood has sold off $1.5 billion worth of hotels and other properties over the past two years. It's focusing on operating properties instead of owning them. In announcing the change, Starwood said it was the right time to "improve performance and sharpen our focus on operational excellence." As for its stock performance, Starwood's shares have risen less than half of those of rival Marriott since van Paasschen took over in September 2007. And they have underperformed other hotel stocks this year. Look for Marriott and other rivals, Hilton and Hyatt, to report earnings this week.