What It Takes To Be a Successful Hotel CEO in 2016
June 20, 2016 9:00am
By Chris Mumford and James Houran, Ph.D.
What do Belmond, Caesar’s Entertainment, Carlson, China Lodging, Jumeirah, Mandarin Oriental, Millennium & Copthorne, Starwood Hotels & Resorts, and Whitbread have in common? The answer is they all announced a change of CEO during the past 12 months.
The economy continues to rebound and indications suggest the road ahead is paved for growth, so boards and shareholders are maintaining a close eye on CEO performance as never before. After a quiet 2014 in which there were few changes in CEO, 2015 saw a sharp increase with annual turnover among the world’s 50 largest hotel companies hitting 10%. Some of these leadership changes were abruptly forced by boards who expressed impatience with slower than expected growth. In other cases, carefully considered succession planning was at play as incumbent CEOs reached retirement and market conditions were judged favourable for a leadership transition to occur.
We have tracked CEO tenure and turnover among the world’s 50 largest hotel companies (via HOTELS magazine’s ranking) since 2004. In that time the peer group has evolved, reflecting the changing landscape of the global hotel industry. The ‘50 largest’ today comprises significantly more Asia-based companies, particularly Chinese ones, than ten years ago while the dominance of North American companies has diminished. Tenure of CEOs has typically been longer among those North American companies where historically there was a higher tendency for the CEO to have been the founder of the business. The median shelf-life of a hotel CEO today is seven and a half years – a figure which has remained fairly constant over the past decade.
What does the typical CEO of a large hotel company look like these days? In just over half of cases the CEO is typically a hospitality professional seasoned in the hotel business. The remainder are immigrants to the hotel sector, coming increasingly from sectors such as retail where there is a degree of synergy with the key industry dynamics of scale, brand, and customer service. He, and yes the CEO tends to be a man in 90% of hotel companies, is in his early 50s and is often educated to a master’s degree level. While men dominate hotel boardrooms, the good news is that the number of female CEOs is at its highest level since we began monitoring in 2004. Interestingly, we see more women CEOs in Asia than in the West. At some point in his career the CEO may have done a tour of duty overseas in a bid to better equip himself 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 dynamics of Shanghai as of Dubai, London and New York. He also most likely sits as an independent director on another company’s board as a means to help broaden his knowledge and expertise.
Click here to view the typical CEO profile for companies in Asia, Europe and North America.
These newly appointed CEOs are navigating a market that is fast moving, ever changing, highly competitive, and both ripe with opportunity and threat. In particular, the current issues at the top of most Chief Executives’ agendas fall into these five general categories:
This is the sobering climate CEOs inherit when moving into the corner office. Given that, statistically they have 7 years ahead of them in the hot seat, what is it that will make them successful? Speaking directly to this question, the AETHOS partnership has been interviewing and psychometrically profiling “successful” CEOs for several years in its executive search and performance management work. The results and implications are carefully articulated and discussed in the new book, The Loneliness of Leadership (LuLu, 2016). Rather being a superstar in a particular area of expertise, AETHOS’ research using the next generation 20|20 Skills™ assessment (measuring Execution, People, and Cognitive skills) indicates that a strong generalist skill set is the secret sauce to address the six business challenges outlined above.
Click here to view the competency profile of hospitality leaders.
This chart reveals more than just an “above average” competency set. It’s interesting to see an absence of “Very High” scores across the board, which illustrates that leaders needn’t be “top of class” in every facet. Rather, leaders exhibit exceptional balance and proficiency across a range of competencies. That said, there are strengths in two particular categories, Creativity and Sense of Humour. In common terms, this translates to strengths in “Vision and Perspective.” Effective CEOs clearly articulate a common mission, combined with optimism, charisma and even a touch of playfulness. The presence of marked creativity also underscores the relevance of flexibility, adaptability, and curiosity as critical business skills. This holistic profile is much more of what you would expect from a Richard Branson at Virgin versus a corporate drone.
Note that CEOs also pay close attention to Service Orientation and Team Building (group process). Indeed, the most effective CEOs are hands-on, accessible to others, and exhibit marked emotional intelligence and a management style rooted in servant leadership versus a dictatorial, self-serving demeanour. This is quite unlike the perceptions the public usually holds about “celebrity CEOs” who are always in the spotlight and seem larger-than-life. Rather, the humility CEOs exhibit adds to their effectiveness as intellectual bridge-builders, who can communication across a team to bring the best out of other people’s talents and challenge their teams to exceed targets. In the end, the CEO gains a well-aligned team of specialist advisors who can inform decisions both on the big-picture, strategic level and in the field where tactical metrics and minutia rule.
Among the cohort of large hotel company CEOs globally, Arne Sorenson at Marriott and Sébastien Bazin at Accor are two that, to our mind, currently stand out as strongly reflecting the above competency profile. Adopting a generalist skill set, providing vision and perspective, and surrounding themselves with talented advisors has enabled them to be bold and confident in their leadership. Time will tell if the new intake of Chief Executives into the sector are able to display similar strengths and competency sets and to lead their companies at the forefront of the industry. After all, there’s one prediction we make with 100% confidence – 2016 won’t be about maintaining the status quo, it will be about facing new market conditions, unforeseen disruptors, and constant attention to talent and culture challenges that can and do affect brand equity.
Tags: chris mumford,
james houran, ph.d,
Chris Mumford studied in England and began his professional life in Germany and Japan before entering the world of hotel recruitment. Following 3 years in New York, he returned to London in 2002 to set up the EMEA offices of HVS Executive Search. In 2013 Chris became a founding partner in AETHOS Consulting Group specialising in senior executive appointments, advising on compensation packages, and consulting on significant strategic organisational needs for players in the hospitality industry. A regular speaker on industry related issues, Chris is a frequent author of articles on executive selection, compensation trends, and general HR topics for a number of industry publications.
Contact: Chris Mumford
+44 (20) 7065-1391
“Dr. Jim” Houran is a 20-year veteran in applied psychological research and a published expert on peak performance, online testing and interpersonal and organizational compatibility. He has authored over 100 articles, and his award-winning work has been profiled by a myriad of media outlets and programs including the Discovery Channel, A&E, BBC, National Geographic, NBC’s Today Show, USA Today, New Scientist, Psychology Today and Forbes.com. He remains a member of the American Psychological Association, the American Psychological Society, the Hospitality Sales and Marketing Association International and the American Hotel and Lodging Association, and serves as Research Professor in the Laboratory for Statistics and Computation, ISLA – Instituto Politécnico de Gestão e Tecnologia (Lisbon, Portugal).
Contact: James Houran, Ph.D.
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