The clash of cultures

The clash of cultures

What happens when a Chinese company buys a U.S. luxury hotel company? I am certain we will find out soon, as New World Hospitality agreed to the purchase of Rosewood Hotels & Resorts this week. The ownership of real estate is a very straightforward transaction. One party takes the deed from the other, clean and easy. Taking over the “deed” to the hearts and minds of employees is an entirely different story. 

Having been a party to numerous mergers and acquisitions, the success of the deal depends largely on how the acquiring organization sells its culture to the acquired. That’s no easy task when you look at history. Starwood was the perfect storm of cultures as multiple companies were melded together back in the 1990s. Starwood proceeded to reorganize every year for a decade. You could also look at Marriott’s “investment” in Ritz-Carlton as another shining example. Outside of Herve Humler, I don’t think there is a significant executive from the old Ritz still working at the new Ritz. “Merger of equals” is another concept that never works. One culture will always dominate the other — it’s human nature. 

So how will China do in Texas? My guess is it will be a rocky road. New World clearly gets a great collection of hotels and a talented group of people, but will the talent stick around once the transaction is complete? Will New World’s culture, philosophy and principles mesh with Rosewood’s vision, mission and core values? I am sure this will also be a bit of a coming-out party for Sonia Cheng, New World Hospitality’s chairman and granddaughter of company founder Cheng Yu-tung. I would advise Sonia to hire an organizational specialist to assist with the transition, one that is familiar with both cultures and countries. Slow but decisive moves will be the best course of action.