HAMILTON, Bermuda—Any ambiguity over John Scott’s resignation as president and CEO of Belmond Limited was laid to rest on Monday morning with a sharp critique from the company’s chairman of the board.
“The board absolutely lost confidence in leadership’s ability to execute forward. We lost confidence in John Scott’s ability to take us to the next level. It wasn’t a flaw in the strategic plan. It wasn’t that we don’t have fantastic (iconic) properties around the world. … It is because we didn’t have the right leadership at the top not to do what has been done so far, but to take us to the next level,” said Chairman Roland Hernandez during a call with analysts, which was webcast.
Scott, who took the post November 2012 amid talk of a potential takeover bid, is replaced by Roeland Vos, effective immediately.
Vos comes into Belmond with high expectations. Himself a member of Belmond’s board, his most recent active tenure in the hotel world came as president of the Europe, Africa and Middle East division of Starwood Hotels & Resorts Worldwide, where he increased the number of Starwood’s hotels in the region from 127 to 243, grew revenues to more than $4 billion and managed a key region with approximately 45,000 employees, according to a news release.
“With Roeland we are now (better) positioned by having a CEO having the experience necessary to help this company achieve its immediate and long-term strategic objectives,” Hernandez said.
“I’m honored to be appointed Belmond’s chief executive officer. This is a great opportunity to get back into the day-to-day leadership, and to do that in such a highly desirable company,” Vos said.
The strategy is set
Both Belmond’s chairman and its new CEO reiterated several times during the webcast that the core strategy is sound and will not change.
“At this point in time we’ll stick with the strategy that we have been putting in place,” Vos said.
The executives reaffirmed the company’s outlook for the third quarter (revenue per available room increases of between 5% and 9%) and full year (RevPAR increases between 6% and 10%), with the sole exception of central costs related to Scott’s departure.
According to an 8-K filed with the U.S. Securities and Exchange Commission, Scott will receive a cash payment of $2,791,650 (less all applicable withholding taxes), accelerated vesting of 110,000 shares of the company’s class A common shares previously granted, and his accrued salary and contractual benefits up to and including 20 September 2015.
Hernandez declined to discuss Belmond’s class A/B share structure despite being asked several times by analysts.
That strategy, rolled out during the past few years by Scott, called for a rationalizing of the group’s portfolio, a reduction in costs and an acceleration of growth, in part via a third-party management platform introduced in March 2014.
Also enacted was a rebranding in February 2014 that saw the Belmond name replace Orient-Express Hotels Limited.
Analysts did not ask about that rebranding exercise and its effect on the company’s expansion or the lack thereof.
Vos said acceleration of the strategic plan will come by making Belmond a brand of choice among customers and, as a result, owners.
“There are a lot of things that still could be done. … In my experience, it always starts with a relatively small team that is put together and then starts to apply their resources in a very disciplined way,” he said.
He pointed to work done during his tenure at Starwood regarding the launch of the W brand and rollout of the Luxury Collection as examples.
The existing Belmond portfolio, which includes 46 hotel, rail and river cruise experiences, can be bolstered rather quickly by rebuilding underutilized space into revenue-driving areas such as new food-and-beverage outlets or extra guestrooms, Vos said.
Also on the front burner: improving Belmond’s revenue management and sales culture technologies to help drive the top line, the new CEO added.
“The board felt that it was time to take decisive action so that we could accelerate growth going forward … growing our top line, growing the footprint, advancing the development opportunities that we have,” Hernandez said. “We may in fact get some currency through additional asset rationalizing, but the thrust of my message is that the direction and the mandate … is to accelerate the top line growing forward. That is Roeland’s mandate going forward. We are highly encouraged given what he actually managed at Starwood.”
A sale still in the cards?
An analyst asked Hernandez whether an outright sale of the company would have been a more effective way to realize value for shareholders.
“The real opportunity, as you will see, is the strength of the leadership we’ve introduced here,” Hernandez said. “That’s what Roeland is here to bring about.”
But Hernandez did not completely rule out the possibility of a sale.
“This board is fully open to considering each and every possible way to create that strategic value for shareholders. But today we believe it is in allowing Roeland Vos to execute that strategic plan. That gets us there. You will be able to watch along with us,” he said.
Shares of Belmond (NYSE: BEL) were down 1.4% in the day’s trading as of press time. Year to date they’re down 14.1%. The Baird/STR Hotel Stock Index, by comparison, is down 16.3% year to date.