Barry Sternlicht

Four weeks before the ITT deal was due to close, Barry Sternlicht threw out a signed $10 billion financing package on the strength of a verbal offer from Lehman's Richard Fuld to underwrite the whole thing alone. His board and his CFO told him not to; the banks followed Fuld anyway, on better terms, and Sternlicht has called it probably the biggest risk he ever took in his career.¹

Sternlicht is the co-founder and chairman of Starwood Capital Group, a private real estate investment firm, and the founder and former CEO of Starwood Hotels and Resorts Worldwide, the company he built into the owner of the Westin, Sheraton, St. Regis, and W hotel brands. He also created the 1 Hotels chain. He had no hotel operating background when he started; his business was buying and financing real estate, not running it.

Background

Sternlicht was born on November 27, 1960, and grew up in Stamford, Connecticut. His father, Maurycy Sternlicht, was a Holocaust survivor from Poland who fought as a teenager with mountain partisans and rarely spoke of the war until late in life; Sternlicht has said his own worst day was better than his father's best day.¹ His father's small camping-equipment business went bankrupt when Sternlicht was young, and the quiet way his father absorbed that shame and rebuilt left a lasting impression. As a child Sternlicht sold tadpoles, mowed lawns, and sold knives door to door, an experience he credited with teaching him how to sell.

He attended Brown University, graduating magna cum laude, took the LSAT but chose not to attend law school, worked as a consultant and an arbitrage trader, then earned an MBA from Harvard Business School in 1986 despite having no math background.

Getting started

After Harvard, Sternlicht joined JMB Realty, working alongside senior dealmaker Neil Bloom. Watching Bloom negotiate was his real education: Bloom would ask for concessions he did not actually want, then trade them away for the points that mattered, playing chess on a different board than everyone else at the table. The lesson, that a negotiating position can be a chip rather than a goal, shaped how Sternlicht later structured deals.

At 30, during the early-1990s savings-and-loan crisis, he was laid off as JMB's business contracted; his wife was pregnant with their first child. A contact backed him to start his own firm, and in 1991, at 31, he co-founded Starwood Capital Group with Bob Faith, raising roughly $20 million to buy distressed apartment buildings being liquidated by the federal Resolution Trust Corporation.¹ Sternlicht has described that buying spree as his founding insight: distressed sellers must transact regardless of price, and someone willing to move fast can buy well.

What he built

Starwood Capital used its apartment gains to move into hotels, buying Westin Hotels & Resorts with Goldman Sachs in 1994 for roughly $561 million, then building a public vehicle, Starwood Hotels & Resorts Worldwide, as an acquisition platform. The defining transaction came in 1997, when Hilton launched a hostile bid for ITT Corporation, parent of Sheraton. Sternlicht positioned Starwood as the friendly alternative; ITT's anti-takeover defenses were struck down in court, and its chairman turned to Sternlicht. Shareholders backed Starwood even though Hilton's rival cash offer was nominally higher, because Starwood's stock had already risen on the deal's prospects. It closed at roughly $84 per share, folding Sheraton, Westin, and St. Regis under one roof. Sternlicht was 38.¹

Financing required a roughly $10 billion package. Four weeks before closing, Sternlicht scrapped the signed financing after Lehman CEO Richard Fuld personally offered to underwrite it alone, against his board and CFO's objections; other banks then followed on improved terms. Selling ITT's Las Vegas gaming assets, Sternlicht chose Arthur Goldberg's bid over Steve Wynn's, then defused Wynn's anger with an unauthorized payment, ultimately about $20 million, to keep him visibly bidding and push Goldberg's price higher.¹

Starwood Hotels & Resorts grew into a roughly 800-hotel company spanning Westin, Sheraton, St. Regis, and the W brand Sternlicht created as a design-forward alternative to legacy full-service hotels. He led it until 2005, when a succession crisis pushed him out; the company sold to Marriott in 2016 for roughly $13 billion. He then kept building through Starwood Capital Group, now a global firm managing well over $100 billion, and Starwood Property Trust, a mortgage REIT he chairs, and founded 1 Hotels and the Baccarat Hotel in New York.

How he operates

Sternlicht's core skill is not running hotels day to day but structuring deals other bidders miss or refuse, the pattern that defines the Transaction Architect archetype. He pairs that dealmaking with an obsessive design sensibility he treats as the moat protecting acquired assets: the first W Hotel ran on a Marriott-scale budget, and an internal "style police" team enforces design consistency across properties. He has said anyone can spend money, and the real skill is creating the appearance of expense while spending little.

He judges executives functionally: he has described knowing he had hired the right person when the pile of related problems on his desk disappeared entirely, a test applied across finance, marketing, and legal as Starwood scaled into dozens of countries. He also believes managing outside perception matters as much as actual performance, a view formed after a factually inaccurate but damaging magazine profile of his management style. His costliest mistake, by his own account, was hiring Coca-Cola president Steve Heyer as his successor out of pride at the hire's prestige; Heyer dismantled Sternlicht's position inside the company, and Sternlicht chose to leave rather than fight to stay.¹

Where things stand

As of the mid-2020s, Sternlicht remains chairman and CEO of both Starwood Capital Group and Starwood Property Trust, based in Miami Beach, overseeing a platform managing well over $100 billion in assets. He is a frequent commentator on monetary policy, arguing that Federal Reserve rate increases in the 2020s overcorrected for supply-driven inflation and damaged regional banks and real estate values, while framing the resulting dislocation as a buying opportunity.¹ He continues expanding 1 Hotels; Forbes has estimated his net worth in the low single-digit billions in recent years. He has named his daughter, a competitive equestrian who also manages her stable's operations, as a potential successor, though she has not been trained in finance.

Key facts

• Co-founded Starwood Capital Group in 1991 at 31, buying distressed apartments from the Resolution Trust Corporation.
• Won control of ITT/Sheraton over a hostile Hilton bid in 1997 at 38, closing around $84 per share.
• Scrapped a signed $10 billion financing package four weeks before closing for a verbal commitment from Lehman CEO Richard Fuld.
• Built Starwood Hotels & Resorts into a roughly 800-hotel company before its 2016 sale to Marriott for roughly $13 billion.
• Left Starwood Hotels in 2005 after a succession crisis involving an executive he had hired as his own successor.
• Now chairs Starwood Capital Group and Starwood Property Trust, a platform managing well over $100 billion in assets.