Does Stephen Ho’s departure from Marriott hinder the company’s ability to succeed in China?

Analysts have made it clear how critical China is to Marriott’s future. However, currently the company faces a leadership vacuum in that country.

Stephen Ho served as the CEO of Greater China for Marriott until December 2017. Prior to the merger he had spent more than three decades rising through the ranks of Starwood’s Asian operations.[1] However, less than two years after the merger, Ho was scooped up by Hyatt to serve as President – Greater China, Global Operations.[2]

Ho has not been replaced. Within a few months of his departure, the company sent out a politically incorrect email survey, inciting outrage across China.

How does Ho’s departure square with Marriott’s imperative to grow in China?

Marriott’s acquisition of Starwood was supposed to assist growth in China

Analysts have connected Marriott’s purchase of Starwood with the company’s major growth in China. Writing in Fortune, Shawn Tully pointed out, “Marriott, however, could compensate for a U.S. slowdown with gigantic growth in what will, over the next decade, be the world’s fastest-growing major hotel market: China. Prior to the merger, Marriott was relatively weak both in China and across Asia. Starwood, by contrast, was the leader in the region among global chains, thanks to Sheraton’s long-standing position as a top full-service brand.”[3]

An analyst for investor website Motley Fool sounded the same themes: arguing that while virtually every lodging company hoped to get a piece of the Chinese domestic tourist market, Marriott’s good positioning in China was at least partly attributable to the Starwood purchase.[4]

Ho would seem to be a natural fit with Marriott’s goal of growing in China. Ho climbed through the ranks of Sheraton and Starwood since 1981 to become President of Asia Pacific.[5] The business news network CNBC awarded Ho its Travel Business Leader of the Year in October 2014 for his success as President of Starwood Asia Pacific: “Under his leadership, Starwood’s expansion in Asia Pacific has outpaced the industry with new hotel openings over the last three years and growing the number of operating hotels as of December 2013.”[6]

Marriott retained Ho, only to see him leave after 16 months

The acquisition of Starwood by Marriott was followed by the announcement by Marriott of a series of lay-offs of former Starwood employees, with most of the job cuts at the executive level.[7] Although Ho was retained, he was appointed Marriott’s CEO Greater China[8] – a significant narrowing of his portfolio.

A significant milestone of Ho’s tenure with Marriott was the partnership agreement signed with Alibaba. Over the course of 2017, Marriott’s Greater China RevPAR (a key performance metric) grew 8.5% year over year.[9]

Nonetheless, Ho left Marriott in December 2017. His departure was not announced. He spent the next months “Taking a Break,” according to his LinkedIn profile.[10] By April, Hyatt had hired Ho to serve as President – Greater China, Global Operations.[11]

Can anyone fill Ho’s shoes at Marriott?

Since his departure, Ho’s former position has not been filled by Marriott.[12] Marriott’s President and Managing Director for Asia Pacific, Craig Smith, previously served for two and a half years as President of Marriott’s Caribbean and Latin American region before moving to his current role in 2015.[13] Smith has served for Marriott for at most 14 years in Asia-Pacific.[14] After Marriott sent out a politically insensitive email to Chinese customers earlier this year, Smith apologized for the incident, according to China Daily: “This is a huge mistake, probably one of the biggest in my career.”[15]

Smith was quoted in FDI Intelligence stating, “I want our China team to be Chinese, not Westerners running it, because we will never understand China like the Chinese.”[16] The current Vice President of Operations – Greater China for Marriott is Richard Taffs, appointed in November 2016.[17] Neither Smith nor Taffs have stated that they have any fluency in Chinese in their LinkedIn profiles.[18]

Why hasn’t Marriott found a replacement for Ho’s key role in a key region? What does his relatively quick departure signal about the company’s future in China?

 

[1] Stephen Ho, LinkedIn Profile, retrieved 6/25/18. https://www.linkedin.com/in/stephen-ho-704ab312a/.

[2] “Hyatt Appoints Industry Leader Stephen Ho as President – Greater China, Global Operations,” Hyatt Corporation, 3/14/2018.
http://newsroom.hyatt.com/news-releases?item=123658.

[3] Shawn Tully, “Why Hotel Giant Marriott Is on an Expansion Binge as It Fends Off Airbnb,” Fortune, 6/14/17. http://fortune.com/2017/06/14/marriott-arne-sorenson-starwood-acquisition-airbnb/

[4] Bradley Seth McNew, “Why China Is So Important for Marriott International and Hilton Worldwide,” Motley Fool, 10/12/16. https://www.fool.com/investing/2016/10/12/china-is-still-marriott-and-hiltons-most-important.aspx.

[5] Stephen Ho, LinkedIn Profile, retrieved 6/25/18. https://www.linkedin.com/in/stephen-ho-704ab312a/.

[6] “Region’s Top Travel and Tourism Leader Named at the 2014 CNBC Travel Business Leader Award,” CNBC, 10/28/2014. https://www.cnbc.com/2014/10/28/regions-top-travel-and-tourism-leader-named-at-the-2014-cnbc-travel-business-leader-award.html.

[7] “Starwood Layoffs at Headquarters Are Set to Begin By Year’s End,” Skift, 11/1/2016. https://skift.com/2016/11/01/starwood-layoffs-at-headquarters-are-set-to-begin-by-years-end/.

[8]  Stephen Ho, LinkedIn Profile, retrieved 6/25/18. https://www.linkedin.com/in/stephen-ho-704ab312a/.

[9] Marriott Q1 2018 Investor Factbook, p. K-14. https://marriott.gcs-web.com/static-files/be3e4b14-5761-4a18-aca9-d265589a7403.

[10]  Stephen Ho, LinkedIn Profile, retrieved 6/25/18. https://www.linkedin.com/in/stephen-ho-704ab312a/.

[11] “Hyatt Appoints Industry Leader Stephen Ho as President – Greater China, Global Operations,” Hyatt Corporation, 3/14/2018.
http://newsroom.hyatt.com/news-releases?item=123658.

[12] “Executive Leadership,” Marriott International, retrieved 7/5/2018. http://news.marriott.com/p/executive-leadership/. Compared with the archived version from September 2017, Ho’s former position is not listed on the current version of the site. See also: Restored Website, news.marriott.com/p/executive-leadership/, screen capture 9/6/2017 @ 4:40:18, Internet Archive (Wayback Machine), retrieved 7/5/2018. https://web.archive.org/web/20170916044018/http://news.marriott.com/p/executive-leadership/.

[13] Craig Smith, LinkedIn profile, retrieved 7/16/18. https://www.linkedin.com/in/craig-s-smith-083010a1/.

[14] As of a June 2012 analyst meeting, Smith had been with Marriott in the Asia-Pacific region for 8 years. (Marriott International Security Analyst Meeting Transcript, 6/19/18, p. 33. https://marriott.gcs-web.com/static-files/3f085930-b296-46a2-ad4a-f6aa957aa654). According to Smith’s LinkedIn, he served as President of the Carribbean and Latin America region from January 2013 to May 2015, after which he returned to Asia Pacific. (Craig Smith, LinkedIn profile, retrieved 7/16/18. https://www.linkedin.com/in/craig-s-smith-083010a1/)

[15] Xu Junqian, “Marriott announces ‘rectification plan’ to regain trust,” China Daily, 1/18/18. http://www.chinadaily.com.cn/a/201801/18/WS5a600374a310e4ebf433e9ac.html.

[16] Natasha Turak, “View from the C-Suite: Marriott finds Marriott finds China’s middle ground,” FDI Intelligence, 12/14/17. https://www.fdiintelligence.com/Sectors/Hotels-Tourism/View-from-the-C-Suite-Marriott-finds-Marriott-finds-China-s-middle-ground.

[17] Richard Taffs, LinkedIn Profile, retrieved 7/16/18. https://www.linkedin.com/in/richard-taffs-45309a18

[18] Craig Smith, LinkedIn profile, retrieved 7/16/18. https://www.linkedin.com/in/craig-s-smith-083010a1/; Richard Taffs, LinkedIn Profile, retrieved 7/16/18. https://www.linkedin.com/in/richard-taffs-45309a18