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Morgans: Boutique or bust?

Morgans: Boutique or bust?

I have spent more than 20 years in the world of hospitality, assisting industry leaders with executive selection, pay-for-performance, corporate governance and executive leadership. In this blog I will share the human side of our business: people trends, commentary on leadership changes and the not-so-scientific side of decision-making in the hotel industry. Let’s begin with the recent changes at Morgans Hotel Group.

A new sheriff is in town to lead the once high-flying Morgans Hotel Group. Michael Gross comes off the board to take over from Fred Kleisner, who is retiring. The CEO seat at Morgans has been a tumultuous one since founder Ian Schrager stepped aside so the company could go public in 2005. Schrager’s replacement, financial guru Ed Scheetz, bowed out is disgrace when his girlfriend committed suicide in a Vegas hotel room.

The question is, will Gross be able to return Morgans to its spot as the leader in the lifestyle hotel movement? I hope so, but the job won’t be easy. The Hard Rock acquisition and expansion has been a financial disaster, and an “asset-light” strategy is being pursued by a very crowded field at the moment. Furthermore, will lifestyle hotels be able to command the rate premium they have enjoyed when everyone, including Marriott, is invading the space?

Financial superstars like Gross have had mixed results in running hotel companies. Clearly some, like Steve Bollenbach and Barry Sternlicht, have proved hugely successful. Others have made more money selling rather than running hotel companies. Gross appears to be committed to the hotel industry, having attended Cornell, and has a reputation as a savvy investor as a lieutenant to Ron Burkle at Yucaipa. He has already been cleaning house and bringing in a new team, adding Dan Flannery and Yoav Gery from Marriott, but the jury is out. My advice to Gross is to concentrate on what made Morgans great in the first place:

  • Innovation
  • Brand standards
  • Cutting-edge design
  • Being a great and cool place to work and stay
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