The resignation of Andy Cosslett as CEO of InterContinental Hotels Group last week came as a shock to the City, but the impact soon passed, as the company’s shares closed the week having regained the moderate losses suffered after the announcement.
IHG will now be headed up by Richard Solomons, CFO and head of commercial development, who has been a board member since 2003, having joined in 1992. In contrast to Cosslett’s background in marketing, Solomons’ CV includes seven years as an investment banker prior to a series of financial roles, experience which IHG will now look to as it cements its recovery.
There has been no talk of a rift in the board room and, when Cosslett told a conference call that he had been overseas for up to 60% of his time in the role, this was accepted as strong cause by the sector, with analyst Nigel Parson of Evolution Securities, commenting: "The market will be disappointed … but he has a good sense of timing and is probably sick of living in an aeroplane or hotel room… Solomons is very capable and will ensure no change in strategy".
Cosslett is also not moving to take on another position, telling analysts: "I don’t have any immediate plans… I’ve been globetrotting pretty much non-stop for the last 24 years so it seems like a good idea to stop doing that for a while and let my brain settle."
Cosslett’s departure was textbook, according to data supplied by Chris Mumford, managing director at HVS Executive Search. The group compiles information on the 50 biggest hotel companies and their executives and confirmed that, at 55 years old Cosslett was three years above the average age for CEOs to leave but, at six years, was dead on the average CEO tenure.
Cosslett’s appointment was part of a trend for leaders in the sector who had brand, but not hotel experience, which began with Starwood Hotels and Resorts’ appointment of Steve Heyer from Coca-Cola in 2004. While that didn’t work out too well for Starwood – Heyer left less than three years later with the group citing "issues with regard to his management style" – it didn’t stop them hiring outside the sector in the form of Frits van Paasschen, former CEO at Coors.
While Cosslett’s exit was more amicable than some recent changes at the top in the hotel sector, Mumford pointed out that, at both Accor and NH Hoteles, the new CEOs had previously been non-executive directors at the companies they were now leading, a theme continued at IHG and, as this went to press, Morgans Hotel Group.
The appointment of Solomons from within may have been in keeping with current sector thinking, but it is not known if he had any competition from other IHG executives for the position. Observers will note that he had, however, a dry run in the role when he lead the group’s conference calls for its third-quarter results last year.
One investor, talking to Hotel Analyst after the announcement, described Solomons as a safe pair of hands and a true hotelier, who would use his financial acumen to steer the group forwards in its recovery, now that the departing brand-man had strengthened the group’s brands and asset-light strategy.
For any aspiring future IHG CEOs thinking about what undergraduate degree to do, heading to the University of Manchester looks to be a good bet – both Cosslett and Solomons earned their BAs in economics from that seat of learning, although with around five years between them were unable to have made any succession plans in the uni bar.
It is felt by some observers that Cosslett would have left the group earlier, had it not been for the downturn, but stayed on to see the company through to recovery. The question now is what Solomons will do with his hand on the tiller now that the route ahead is less stormy. Not a great deal differently, seems to be the consensus, but, after close to 20 years at IHG, he must have some ideas of his own.
HA Perspective: Cosslett’s departure was a shock and the City reacted as it always does to unexpected and sudden news, badly. But after a few days the fretting abated and stock market investors renewed their faith in IHG.
To describe Solomons as a hotelier would be a stretch for those of the old school given that he has not had the hands-on operational experience usually associated with executives lauded with the term. But this is not necessarily a bad thing.
Solomons has been part of the cultural shift at IHG that has seen it move from being a purely guest focused company to one that understands its customers are also the owners of its hotels.
IHG has already signaled that it is prepared to dispose of all of its real estate, including its four flagship InterContinentals in London, New York, Hong Kong and Paris. This, and the ongoing work refreshing the Crowne Plaza brand, is likely to keep Solomons busy for the next few years.
Unlike his fellow newly installed CEOs at Accor and NH he does not face the pressure to change the pace or style of the leadership of his predecessor.