Sonia Cheng: More than a billionaire’s daughter

Strategic management from a practice perspective

1
Index

Introduction................................................................................................................................................ 2

Case description.......................................................................................................................................... 3
Period 1: Growing Internationally.....................................................................................................................4
Period 2: The Pandemic.....................................................................................................................................4

Theoretical analyses.................................................................................................................................... 5
Period 1: Growing Internationally.....................................................................................................................6
Period 2: The Pandemic.....................................................................................................................................7

Personal reflection & Conclusion................................................................................................................ 9

Period 1: Growing Internationally.....................................................................................................................9
Period 2: The Pandemic.....................................................................................................................................9
Conclusion........................................................................................................................................................10

References................................................................................................................................................. 11

2
Introduction

For this assignment CEO Sonia Cheng will be analyzed. Sonia Cheng is the Chief Operating
Officer of the Rosewood Hotel Group. Besides this she is also executive director of the Hong
Kong-listed New World Development and the vice-chairman of Chow Tai Fook Jewelry
Group. She was also appointed as an independent non-executive director of the Hongkong
and Shanghai Banking Corporation and an independent director of Primavera Capital
Acquisition Corporation. Since November 2020 she has also become a member of the Hong
Kong Tourism Board. This already impressive resume becomes even more impressive when
you learn that Sonia was just 30 years old when she became the CEO of The Rosewood Hotel
Group (Seligson, 2021).

Under her reign, The Rosewood Hotel Group has become one of the world’s fastest-growing
luxury hotel brands. People even go as far as to say that she has transformed The Rosewood
hotels into the new Four Seasons for Millennials (Gluckman, 2017). This perfectly aligns
with her vision to evolve with the next generation. She is a working mom and millennial
CEO who knows from her own experience what the next generation expects from hotels.

Born in Hong Kong as the daughter of billionaire tycoon Henry Cheng, Sonia was raised to
one day run the family business. Despite Sonia’s lavish upbringing, she was raised to be
unpretentious. Family values are very important in the Cheng family and have instilled a
great work ethic and sense of humility in her. She studied applied math at Harvard instead of
taking the easier route with economics (Handley, 2019). Her drive probably comes from the
fact that she grew up with three competitive older brothers and was never treated differently
from them. This forced her to stand up for herself and to never give up (Seligson, 2021).
These characteristics have undoubtedly influenced certain strategic decisions she has made
along the way. This paper will discuss two important periods in Sonia’s career and will
analyze the strategic decisions that she made.

The first period this paper will focus on is 2011 until 2018. Sonia became the CEO of The
Rosewood Hotel Group in 2011 and her first task was to take the North American brand
internationally. Yet to do this she would have to create a new corporate brand. This period
will show the tensions that came with the new growth strategy and how she dealt with them.

The second period that will be focused on is the Pandemic (2019 – 2023). The Pandemic was
especially hard on the hospitality business. With lockdowns and travel restrictions changing
all the time, there was little to no certainty for hotels and restaurants. This even led to a
change in the behaviors and needs of guests. As the CEO of The Rosewood Hotel Group,
Sonia had to come up with a new strategy to help her business through these difficult times.
Therefore, this period will show the tensions Sonia faced during but mostly post Covid and
how she handled them.

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Case description

In this part of the essay two periods in which Sonia was CEO of the Rosewood Hotel Group
will be described. Each of the periods chosen will show the tensions Sonia faced as a CEO.

Period 1: Growing Internationally

When Sonia Cheng became CEO of The Rosewood Hotel Group in 2011, the hotels had
become a stuffy old North American brand. They were not very well known outside the
United States. The reason for this was that Rosewood hotels where not known as a corporate
brand but rather as individual hotels. The brand was facing competition from corporate
branded hotels. This meant that Sonia was not only faced with the challenge of growing the
brand of The Rosewood Hotel Group internationally, but also creating a marketing strategy
for a corporate branded hotel (Chekitan & Mougeot Stroock, 2007) (Oosthuizen, 2021).
Sonia said about The Rosewood Hotels before 2011:

“Rosewood was a very well-respected brand before we acquired it, but mainly in the U.S., so
it didn’t have any global awareness and recognition. And it was fairly traditional.” (Zhang,
2023)

From 2011 and onward Sonia had to implement her international growth strategy for her new
brand The Rosewood Hotel Group. She was faced with the tension of exploitation of the
individual branded hotels Rosewood already owned and the exploration of the new
international corporate brand she needed to create. About this tension she said:

“They had a wealth of knowledge and experience, and what they did over the last 30 years
was amazing. But it was not so well marketed. Only a small audience knew about it.”
(Gluckman, 2017).

To overcome this tension, Sonia had to find a way in which the two could co-exist. She grew
the businesses portfolio significantly by adding several new hotels. The Rosewood Hotel
Group grew from owning nineteen hotels, to owning twenty-six hotels and having twenty-
four more in the pipeline (Oosthuizen, 2021). Opening these new hotels in several big cities
around the world was all part of the growth strategy to create a new corporate brand named
the Rosewood Hotel Group. However, Sonia still wanted to exploit the knowledge and
experience she inherited from the older Rosewood hotels. She decided to keep the most
important part of the individual Rosewood hotels, namely their motto ‘a sense of place’.
About keeping this motto and exploiting the old Rosewood brand she said the following.

“Because of that philosophy, every hotel continues to have its own personality. A lot of other
hotel brands have grown to become very big and in order to cope with the growth, they
developed a cookie-cutter approach in their way of developing experience, design, and
concept.” (Zhang, 2023)

As shown by the quote from the WWD interview Sonia believes that keeping the essence of
the old brand is crucial when growing a business. When applying a growth strategy, she
knows that she should not be too aggressive and that she must keep the essence of the brand
alive. Finding a balance between these two is the ultimate challenge for Sonia Cheng and The
Rosewood Hotel Group when growing the business internationally (Zhang, 2023).

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Period 2: The Pandemic

After The Rosewood Hotel Group started to expand internationally and became one of
the fastest growing hotel groups in the world, the COVID-19 Pandemic started and
had a massive impact on the hospitality business. At the time Sonia Cheng had
implemented the aggressive growth strategy for international expansion (period 1), but
due to the pandemic she might have to adjust this strategy (Frost, 2020). International
travel practically ceased and global passenger traffic results for 2020 showed that
demand fell by around 66% compared to the year before (Croll, 2022). The Pandemic
altered guests’ behavior. Sonia said about this change:

“They care about their own well-being. They care about lifestyle, they love to travel, they
miss travel.” (Croll, 2022)

This love of travel and change in guests’ behavior resulted in a fast recovery according to the
report released by Airlines Reporting Corp. (Airlines Reporting Corporation, 2022). Because
The Rosewood Hotel Group is privately owned by the Chow Tai Fook group, the initial seize
of travel didn’t affect the business to much financially. They did scale down on operations
and put the development of six new hotels on hold, while only cancelling the development of
one hotel (Frost, 2020). The real challenge for Sonia did not lie in surviving the seize of
travel in 2020, but rather in how they would accommodate the inflow of the ‘changed’
customers in 2021 and onwards.

Due to this change in guests’ behavior and needs, Sonia faced the tension between stability
and change. The Rosewood Hotel Group could either stay on course with their growth
strategy and new brand or they could evolve with the changes caused by the pandemic and
implement change management. This tension can be seen in the fact that the post pandemic
traveler is more focused on wellness and health. Many hotels in the industry rapidly
responded to this trend with new wellness programs or even complete rebrands to spa
destinations (Croll, 2022). However, it is uncertain if this trend will be long term or if it is
just a short-term consequence of the pandemic. Beth McGroarty, vice president of the
research for the Global Wellness Institute, said about this: “At the big-picture, long-term
level, the case for the wellness markets post-pandemic looks very bullish.” (Chiquoine,
2020).

The Rosewood Hotel Group did began focusing on wellbeing in 2021. They further
developed and grew their wellness brand Asaya. While also focusing on personalized and
private services, think of concierge support, cleaning services, pet-friendly amenities, food
storage and delivery. About this change in focus, Sonia said:

“Covid-19 has led to a new way of life and a seismic shift in sensibilities, which now place a
strong emphasis on the need for community and connection.” (Oosthuizen, 2021)

Managing the tension between stability and change forces Sonia to look at what The
Rosewood Hotel Group already offers and where they should evolve with the traveler’s and
trends. Not hopping on to trends to quickly and focusing too much on one part of the business
is the real challenge posed by the pandemic.

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Theoretical analyses

In this part, the characteristics and strategic decisions of Sonia Cheng will be connected to the
relevant theory.

Period 1: Growing Internationally

The key to a successful business consists of four factors according to Probst and Raisch.
These factors are a high growth rate, ability to change continuously, a highly visionary
company leadership, and a success-oriented company culture (Probst & Raisch, 2005). The
factor of high growth rate is certainly something that Sonia and The Rosewood Hotel Group
focus on. When Sonia became the CEO in 2011, she started her rapid growth strategy for The
Rosewood Hotel Group. The stuffy North American brand had to gain international
recognition and expand after the takeover. However, this posed the tension of exploitation vs
exploration for the young CEO.

According to Smith, the tension of exploitation vs exploration is as follows: “Exploring

introduces novel innovations to achieve long-term sustainability, while exploiting finds
operational efficiencies in existing products for short-term performance.” (Smith, 2014). In
Sonia’s case, exploring was all about creating a corporate brand that could grow
internationally. While with exploiting she could further use the old brand’s philosophy of ‘a
sense of place’, which gave each hotel its own personality (Zheng, 2023). However,
successfully exploring and exploiting simultaneously is what ultimately determines long-term
organizational performance according to ambidexterity studies (Smith, 2014).

There are various ways to deal with this particular tension, but one of the main strategies is to
reframe the tension. Leaders often respond defensively because of the uncertainty and
ambiguity that comes with these tensions. They will see it as an either/or dilemma and forget
the option of merging the two together (Smith, 2014). This is where the challenge of adopting
a both/and approach comes in to play (Smith et al, 2016). But merging exploitation and
exploration is paradoxical and involves contradictory, self-referential, and persistent tensions.
Studies have recognized that paradoxes defy resolutions and refer to a specific management
approach that helps with responding to these paradoxes. To both exploit and explore at the
same time, management should adopt the strategy of accepting, accommodating, and
differentiating/integrating (Smith, 2014).

This management strategy can also be found in Sonia’s approach to the tension of
exploitation vs exploration which she faced in 2011. She decided to apply the both/and
approach rather than the either/or approach. She merged the old philosophy ‘a sense of place’
with the new corporate brand of The Rosewood Hotel Group. Here the management approach
of accepting, accommodating, and differentiating/integrating can be seen in the following
ways.

As shown in the case description, Sonia did not hide the fact that the company she became
CEO of was not well marketed (Gluckman, 2017). She recognized that in order to grow and
ultimately survive in the fast-paced hospitality business, the Rosewood Hotels had to evolve
into a corporate brand (Zhang, 2023). But at the same time, she also stated that the
philosophy of the old Rosewood Hotels and the wealth of experience and knowledge should
not be wasted (Gluckman, 2017). Acknowledging this paradox of exploiting the old brand
while exploring the new at the same time shows that she was accepting it. She recognized and

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embraced the conflicting tensions so she could work through them (Smith, 2014). Secondly,
accommodating can be seen in the way Sonia did not use the ‘cookie-cutter approach’ when
expanding her hotel business. Most fast-growing businesses use the ‘cookie-cutter approach’
to safe time, but Sonia decided to treat every hotel separately so that she could accommodate
the philosophy in her growth strategy (Zhang, 2023). She found a synergy that addresses both
oppositional elements together. Lastly, when ultimately creating the new corporate brand of
The Rosewood Hotel Group, she integrated the old philosophy into this new brand. By doing
this she also differentiated her new brand from the competition (Smith, 2014).

Sonia Cheng’s approach has certainly led to success. The company has grown from owning
nineteen hotels in seven countries, to owning twenty-six hotels in fifteen countries, with
twenty-four new properties under development. (Oosthuizen, 2021). The Rosewood Hotel
Group has even become one of the world’s fastest growing luxury hotel brands (Gluckman,
2017). Despite this fast growth the hotels really did not lose the philosophy of ‘a sense of
place’. Twenty properties of the Rosewood Hotels & Resorts were selected by the Condé
Nast Traveler’s 2022 Readers’ Choice Awards. Four of them were even selected for the
award’s list of ‘Best Hotels’ and ‘Best Resorts’ in. the world (Condé Nast Traveller, 2022).
This reflects that the true care with which these hotels are created doesn’t go unnoticed.

Period 2: The Pandemic

During the pandemic the behaviors and needs of the guests changed. They started to care
more about their own wellbeing and a personalized experience (Croll, 2022). Financially, The
Rosewood Hotel group had not suffered much due to the fact that its privately owned by the
Chow Tai Fook Group. This Hong-Kong based conglomerate has a lot of financial resources
and could support The Rosewood Hotel Group in difficult times, if needed. They did scale
down on operations and canceled the development of one of their hotels (Frost, 2020).
Ultimately, the challenge for Sonia did not necessarily lie in the seize of travel during the
pandemic but rather in the changed guests that returned after the first stages of the pandemic.
This resulted in a new wellness trend and Sonia had to decide whether she went along with
the new trends or stayed on course in this already uncertain time (Croll, 2022). This created
the tension between stability and change for Sonia as CEO (Schad et al., 2016).

Once again, this tension seems to be a paradox. However, stability and change are not just
contradictory but can be better conceptualized as dualistic forces that are not only
complementary, but essentially also define each other. This means that stability can only be
achieved when the system makes constant changes in response to variability in the
environment. But also, that variability can only be achieved when there are clear, stable rules
and routines which essentially means it needs stability (Schad et al., 2016). Past success and
stability are also often associated with one another. You might have heard the phrase ‘never
change a winning team’. However, thinking about success in this way can foster persistence.
Organizations will tend to repeat actions that have led to positive outcomes, and they will feel
that retaining proven competencies is more efficient than creating new ones. Also, too much
success might demotivate companies to evolve with times. Yet if a company is too persistent
because of past successes this can have a negative impact on its performance. As long as
there is little to no environmental change staying persistent when it comes to success will be
advantageous for the company’s performance. Nonetheless, everyone knows that
environments do change eventually and when that happens this persistency which offers
stability will become self-destructive (Audia et al., 2000). In this case it seems that again the
best solution for leaders is to find a way manage the tension between stability and change.

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Leaders should adopt practices of paradoxical inquiry and find a way to deal with stability
and change simultaneously (Schad et al., 2016). To find this balance between stability and
change one must first separate and then connect the individual goals. Fist the company should
evaluate each goal separately, so that eventually the linkages and synergies across these goals
can be found (Smith et al., 2016; Schad et al., 2016). By doing this the tension of stability and
change can be overcome.

Sonia had mainly used this strategy to overcome the tension between stability and change she
faced. She anticipated the change in guests after the pandemic when it came to their behavior
and needs. Accordingly, she updated the current wellness program she already had instead of
creating a completely new one or letting the wellness aspect take over the brand. She also
took the personalization and private services of her hotels to the next level (Oosthuizen,
2021). She also saw that traveler’s during and post covid had more flexibility because they
can work remotely. This will give guests advantage of opportunities beyond a traditional
hotel stay. That’s why Sonia evolved The Rosewood Hotel Group into the lifestyle space with
her new brand Carlyle & Co, so she could meet de need for community and connection of her
guests. Additionally, the Rosewood Residences also closely observe these changes and trends
for long-term stays (Oosthuizen, 2021). This all shows that she changed with the trends and
needs of her guests but created stability by evolving parts of her business that already existed.
She did not completely rebrand or change the focus of her strategy. She simply evolved her
already existing offerings and brand to meet guests’ new expectations. It could not be
concluded whether Sonia used the strategy of separating before connecting, from her
interviews. However, she did keep the old brand strategy and only evolved already existing
parts of her business with the changes she saw. This might indicate that she looked at each
goal separately before finding common ground so that they could al exist together.

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Personal reflection & Conclusion

Period 1: Growing Internationally

In short, the essence of period 1 was the start of Sonia’s career as a CEO of a large hotel
group. She still had to earn respect, while also taking the old North American Rosewood
brand internationally and create a new corporate brand for the company.

The fact that Sonia was able to manage this at the age of thirty in a male dominated industry
inspires me. She shows that age and gender do not matter if you have the right skills and
mindset. Even though she got a head start by being the daughter of billionaire tycoon Henry
Cheng, I think she has shown what she is capable off and that she should not be
underestimated.

Furthermore, by the way she evolved the old brand into the new corporate The Rosewood
Hotel Group brand shows that she respects the experience and knowledge of the company
and their employees, while also being able to evolve them into her own vision. Being able to
keep the core philosophy that makes every hotel unique, while also applying a radical growth
strategy is impressive. Most companies that want to grow fast in a short amount of time will
opt for the cookie-cutter approach. In my opinion this all shows that she does not have an
and/or mindset. She can overcome paradoxes by integrating and differentiating at the same
time. I might even go as far as calling her a paradox-savvy leader.

When it comes to Sonia’s growth strategy and the way she handled the tension between
exploitation and exploration, I would not change anything. I think she found a great way of
exploiting the old, while exploring the new. This is also reflected in the facts and figures for
the company. The Rosewood Hotel Group has become one of the fastest growing hotel brands
in the world and their hotels and resorts had a peak revenue of around 2 billion dollars in
2022 (Zippia, 2023).

Period 2: The Pandemic

Period 2 is about the COVID-19 pandemic that hit the hospitality business in 2019. Sonia had
to navigate her vastly growing business through uncertain times with travel restrictions and
even complete lockdowns. Even though she had enough support and capital to keep her
company afloat, she already looked ahead at new ways to improve her company when
traveling would be possible again.

She anticipated the needs of guests post covid and watched the trends closely. Even though
nobody knew exactly when the pandemic would be over, Sonia knew that when people were
able to travel again, they would. So instead of only focusing on how to survive the current
situation she also looked ahead to the future needs of guests. She saw a change to anticipate
her guests’ needs and changed her own strategy with that. This makes me respect Sonia as a
leader even more. In my opinion it shows that Sonia is not afraid of taking risks and trusts her
own observations and intuition.

Regarding this strategy, I would have done certain things differently. Although Sonia made
the right call with evolving her brand with the needs of guests instead of completely
rebranding and changing her strategy, I think she still went a little to far. The wellness brand
Asaya and especially the members club Carlyle & Co have evolved into very elite brands.
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She wanted to focus on the wealthy millennials who view travelling differently, but working
moms like herself won’t be able to afford all these services and even with the extra flexibility
of working remote, they still won’t have the time to hang around a hotel all day. These new
services only focus on the ‘super rich’ who don’t actually have real jobs. In this regard I think
Sonia might have lost her own vision of the brand she wanted to create. I recommend her to
shift her focus back to her original target group and adjust the services accordingly, so that
she won’t lose touch with her loyal clients.

Conclusion

In conclusion, both strategies that Sonia executed in the respective periods have paid off. She
has transformed The Rosewood Hotel Group into one of the fastest growing hotel brands in
the world. The business is doing well even after COVID-19, due to the new guest experiences
that are catering to the post covid traveler.

However, the only recommendation I would make based on my analyses is to not completely
shut out Rosewoods old customers. By completely focusing on elite services like Asaya and
Carlyle & Co, Sonia might lose touch with her target group of working millennials like
herself. I would recommend taking the differentiation of the Rosewood brand not too far.
Sonia could differentiate and cater to a new group, while not forgetting or neglect her old
customers.

Overall, I learned a lot during this course and my case study. Analyzing Sonia Cheng showed
me that with hard work and commitment you can earn respect. It doesn’t matter whether you
are male/female or the offspring of a tycoon or not. In the end if you want to be a good CEO
you must prove your worth and gain the respect of your employees. Only then you can
become a transformational leader. In this regard the case study has really inspired me.
Becoming a CEO in a largely male dominated world is not easy. I aspire to become a leader
myself one day and having female role models shows me that, yes women do have what it
takes and can make it happen. This has inspired me to explore the field of leadership even
more.

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