Geller’s sudden departure from Strategic Hotels raises question of sale
BY DAVID ROEDER Business Reporteremail@example.com November 4, 2012 7:50PM
Updated: December 6, 2012 11:47AM
Chicago-based Strategic Hotels & Resorts Inc. hasn’t had a profitable year since 2007 but has come close to stopping its losses. At that pivotal point in its turnaround, it is changing its chief executive.
Strategic said Friday after markets closed that Laurence Geller, its founder and guiding light since 1997, is stepping down. Geller, 64, has been a longtime leader in the lodging industry and in Chicago business circles.
The company’s board replaced him with its chairman, Raymond “Rip” Gellein Jr., who is taking on the role of chief executive officer. Geller will stay on to advise him through yearend.
Gellein, 64, formerly worked for Starwood Hotels and Resorts Worldwide and has been Strategic’s chairman since August 2010. The change was in accordance with a succession plan the company drafted two years ago, he said.
But the announcement produced many questions from industry analysts, some of whom have speculated that Strategic will be sold. The company’s shares closed at $5.57 and are little changed from a year ago. In 2007, the shares commanded more than $23 each.
The recession has been brutal on Strategic’s portfolio of high-end properties and the company has high debt levels from amassing its collection, which includes the InterContinental Chicago and Fairmont Chicago, plus the Marriott Lincolnshire resort.
Gellein praised Geller for building “an outstanding hotel company, replete with some of the world’s most enviable hotels and a deep management team of accomplished professionals.” The successor said his focus will be on reducing debt, making careful acquisitions and “extracting ongoing value from our properties.”
Several analysts on a late Friday conference call probed Gellein’s attitude toward a sale of the company. While he wouldn’t comment on that directly, he sought to dispel any idea that he intends to be a short-term CEO.
“I know that I’m passionate about Strategic and I know who I work for, the shareholders,” he said.
In using the word “passionate,” Gellein appropriated a word often applied to Geller, known for taking a personal hand in property management and renovations. One of Chicago’s most accessible and talkative CEOs, Geller was not on the analyst call and could not be reached for comment.
In a statement from the company, Geller said he regards his tenure at Strategic with “immense pride” and that he holds the company “in the highest regard” as one of its major shareholders. With his second novel about to be published, Geller said he wants to get on to other things.
Whether that includes making a bid for Strategic is unknown. The company said terms of Geller’s separation agreement will be publicly available this week.
Geller said in the company statement, “We have emerged from the recession a strong company with great assets well positioned for sustained growth in a virtually no-supply environment. And with the recent addition of the iconic JW Marriott Essex House New York, the company has re-established its East Coast presence.”
Gellein did not directly answer an analyst’s question about whether Geller left because of disagreement about compensation in a new contract. He said the board’s discussions with Geller “ended in mutual agreement, and that’s what we’re going to continue to tell you.”
Strategic owns 18 properties encompassing almost 8,300 rooms. They include properties managed by the Marriott, Four Seasons, Hyatt and Westin chains. The company has said it is marketing for sale its Four Seasons Resort in Jackson Hole, Wyo.