Hospitality and Leisure Practice Update

Brands and Talent

If you grew up in New England, you might remember fondly that Baskin-Robbins had 31 ice cream flavors. But now it seems there are 31 flavors of hotel brands for the consumer to consider. At what point does it become too much? Are there too many brands to choose from?

Clearly the hotel industry seems to have swung the pendulum, from having to decide between Marriott, Hilton, or Hyatt to now having dozens and dozens of choices even under each one of those parent companies. One only needs to attend a session at either the ALIS or NYU hotel conference to see that the luxury and lifestyle brand categories have caught on like wildfire in the last five years. Sessions on these topics at the conferences are standing room only.

Is it all too confusing for the consumer?

When assessing the talent landscape across brand organizations in hotels, it has been fascinating to watch the evolution. Some hotel companies have always had their brand presidents held in the highest esteem within the organization (at the top of the pecking order), where others have brand with a small “b”. Clients have been focused on finding talent who really understand true brand positioning and brand strategy. Some companies have been more open to brand leaders who come from other brand-led organizations, as they are in consumer goods companies, while others have felt the need to take people with experience in the lodging industry.

The industry has had mixed results; some have translated those skills from other industries well, understanding the importance of factoring in the operational complexity of the business. Others have failed to understand all of the competing priorities of the business, often not understanding the importance of the owner versus the consumer.

Figuring out how to differentiate one’s brand will become even more important in the next decade as more and more brands enter the marketplace. Consolidating brands becomes quite complex in a franchise environment, where convincing an owner to change names and make significant investments will simply become a competitive disadvantage.

When will it be time to retire some older, more tired brands?

Hotel Industry Buzz

Could there be any more gossip and speculation in the hotel industry these days? Is the time right for consolidation in the hotel industry? With the number of changes at the top – Starwood, La Quinta, Belmond, Trump, and others – it is no wonder that industry insiders are buzzing about all of the news. Many close to the situation at Starwood were as surprised as anyone to learn that talks with Hyatt were “serious” and “late stage”. While it is well known that companies like Starwood and FHRI are talking to potential buyers, it does beg the question if 2016 is the year for industry consolidations, just like the airline industry has seen.

What will that do to the tremendous talent that sits in the C-suite of these well regarded companies? If history is any indication, one could imagine that people will be faced with early retirements and career crossroads. When two industry titans come together in a big merger, often one becomes CEO of the newly combined entity and the other chairman. Those are not easy “mergers” at the top. In many cases, one just sails off into the sunset. Some reinvent themselves in other industries. Some will decide now is the time to become a professional board member.

The team at RSR Partners has consulted with scores of executives at the crossroads of their careers who are contemplating such enormous career decisions. What do you want your legacy to be? Are you satisfied with putting this stamp on your career? When the answer is “I am not ready to be done” or “I still want to go for that home run”, then you must choose wisely. Many years ago, we heard the term “failing unemployment”, which was code for jumping at the first big thing. That is unwise for many reasons.

As we consider the recent news about some of the industry giants, one cannot help but think there are interesting times ahead, as brands sort out, real estate sales for large assets escalate, and talent realigns. Stay tuned.

The Sizzle Behind Fast Casual Dining

Those focused on the restaurant industry know that the fast casual dining sector has been growing at an unprecedented rate for years. Positioned between fast food (QSR or quick serve restaurants) and casual dining (think Chili’s, Friday’s, and even Outback Steakhouse), fast casual provides the consumer with greater service, albeit not “full table service”, than a fast food establishment. The perceptions of difference, however, grow sharply from there. The consumer perceives that fast casual dining is fresher, healthier, and that the quality of the food is superior. In many cases, this is true.

But one has to wonder, is it the concept of fast casual that people like or it is the specific concept or brand that is more successful? One only has to look at success stories like Blaze Pizza that boasts “custom built artisanal pizzas”. What doesn’t sound good about that? Even LeBron James thought it was a much better bet than sticking with his relationship with McDonald’s. Do all fast casual concepts stand a better chance than their casual dining or fast food rivals? Perhaps it is just that a number of these concepts, including Chipotle, are just newer and fresher ideas.

It is interesting to note that a number of these highly-successful fast casual concepts are seeing success after being led by CEOs who do not come from the traditional fast food or casual dining segments. Most of them were entrepreneurial at heart or grew up under the tutelage of restaurant industry icons like Danny Meyer. What does that tell us? First, it seems that the “been there, done that” way of operating in the restaurant business no longer works. Of course, the restaurant industry has always been trend-driven, but now innovation is even more important. Assessing senior leaders’ creativity becomes even more important in today’s environment.

Meanwhile, if you have grown up in a fast food or casual dining environment, don’t give up! There are still many talented people throughout the industry, and some of those innovative approaches can be learned. Look at Shake Shack’s story. The company was founded by Danny Meyer, but is now led by Randy Garutti, who was Danny’s director of operations who ran a successful hot dog cart for the organization for three years before opening the first Shake Shack in 2004.

A Sampling of Our Recent Work

The world’s leading hospitality company recently engaged our team to search for a vice president of product development and brand services, a newly-created role responsible for finding new opportunities for both services and products within a branded hotel company that will enhance guest offerings. Our client’s portfolio spans more than ten brands, from luxury and full services hotels and resorts to extended-stay suites and focused-service hotels. The company was looking for a new vice president who would be responsible for the oversight of innovation across all hotel brands. Our successful candidate was identified early in the search because of his outstanding reputation and diversified experience within the cruise industry. He had achieved cross-functional results when creating and implementing new restaurant concepts and guest initiatives throughout his 15 years in the cruise business.

Another major hospitality holding company turned to our team to find a head of brand management for the flagship brand. Our client for this search has more than 6,000 hotels, making it a global hospitality leader. This role would be responsible for the development and execution of brand positioning and strategies for the company’s largest brand. Our successful candidate came from a major competitor, where she was a senior director of global brand management. She had joined that company in order to execute and drive results, which she did through designing and executing brand strategies. She has had global experience, and her career is rooted in the consulting world, with past positions at both McKinsey and Booz Allen Hamilton.

Finally, one of the world’s top-five largest public transportation operators engaged our team in search for a chief executive officer for its sightseeing operation in New York City. The company runs an extensive network of leisure transportation operations worldwide, in addition to its historical management of the transit system in Paris, France. Our client was looking for a chief executive officer who would be responsible for it subsidiary’s operations in New York City, a key market for the company’s strategic growth plan. Our successful candidate was identified as an excellent business leader with a strong foothold in the regional transportation business. Not only did he have a strong track record of performance in a variety of entrepreneurial ventures, but also he had grown and sold a direct competitor to our client’s business. With his track record of hands-on leadership, strong financial acumen, and business mind, he was a clear choice for our client.

Recent Firm News

Alan Renne Appointed Managing Director in Firm’s Industrial Practice

Firm Launches Expanded Board Advisory Practice

C. Jeffrey Grogan Appointed Senior Advisor

Michael Fahey Appointed Principal in Firm’s Financial Services and Legal and Regulatory Practices

Davonne Helmer Appointed Principal in Firm’s Human Resources Practice

Dany Berghoff Appointed Principal in Firm’s Sport Leadership Practice

About the Hospitality and Leisure Practice at RSR Partners

The Hospitality and Leisure Practice of RSR Partners helps solve complex talent issues for organizations involved in gaming, lodging, restaurants, and travel and leisure. Our team of domain experts serves its clients in search of senior leaders who can develop new strategies, strengthen brand loyalty, and improve the customer experience. Our capabilities include board recruiting and board advisory, chief executive officers and other C-suite executives, and functional experts in human resources, marketing, and finance, among other roles.

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