Four Season Room

Four Seasons Hotels, Inc. is a Canadian-based international luxury hotel management company. Travel + Leisure magazine and Zagat Survey rank the hotel chain's properties among the top luxury hotels worldwide.

Business model

Four Seasons does not own any of its properties; it operates them on behalf of real estate owners and developers. The contracts between Four Seasons and property owners typically permits the company to participate in the design of the property and run it with nearly total control over every aspect of the operation.

Four Seasons generally earns 3 percent of the gross income and approximately 5 percent of profits from the properties it operates, and the property owners are required to additionally contribute money for chain-wide sales, marketing and reservations systems. Four Seasons hotels have larger staffs than competing chains, therefore they create a separate reserve accounts to cover upkeep costs. While profit margins are relatively low, the reputation of the brand and the value of the hotel for sale as well as loan collateral generates developer interest.

History

Canadian businessman Isadore Sharp founded Four Seasons in 1960. While a young architect working for his father, Sharp designed a motel for a family friend that succeeded and inspired him to try creating his own hotel in Toronto. As the only large parcel of land he could buy was in a disreputable area, he designed the hotel as an oasis for business travelers; the Four Seasons Motor Hotel opened in 1961. Sharp built more hotels, but upscale luxury did not become part of brand until the company expanded to London. When a developer approached Four Seasons about building a hotel in London, Sharp argued that the hotel should compete with the city's old-world, elite hotels, such as Claridge's and The Connaught, which he felt treated customers based on their social class. The hotel opened in 1970.

In 1974, cost overruns at a Vancouver property nearly led the company into bankruptcy. As a result, the company began shifting to its current, management-only business model and eliminate costs associated with buying land and buildings and instead begin earning profits once the hotel opens. The company went public in 1986. The first full-service spa was introduced in 1986 at Four Seasons Resort and Club Dallas at Las Colinas and since 2001, all Four Seasons hotels have had spa facilities. In the 1990s, Four Seasons and Ritz-Carlton began direct competition, with Ritz-Carleton emphasizing a uniform look while Four Seasons emphasized local architecture and styles with uniform service; in the end Four Seasons gained market share.

The company's management arrangement with owners has created problems during times of economic hardship. When the September 11 attacks caused the collapse of the travel industry, Four Seasons refused to cut room prices in order to preserve the perceived value of the brand, which caused tension with property owners who were losing money. The company recovered and, in 2007, it agreed to a buyout by Microsoft Chairman Bill Gates and Prince Al-Waleed bin Talal of Saudi Arabia for $3.8 billion. The pair own 95 percent of the company, in equal shares, Sharp owns the rest.

Conflicts with owners returned with more severity during the financial crisis of 2007–2009. The company made its first corporate layoffs in its history, cutting 10% of its Toronto workforce. Several of the chain's owners entered arbitration with the company; in March 2009, the owners of the Four Seasons Resort Aviara attempted to revolt: The owners entered the management offices, seized documents and changed locks before attempting to void the contract with Four Seasons. In response, the Four Seasons management opted to hold its ground and prevent the owners' designated replacement management team from entering the property. A lawsuit is ongoing.

The Four Seasons has a fractional ownership division, Four Seasons Residence Clubs.

Philanthropy

On June 19, 2002 the Canadian Opera Company announced Four Seasons Hotels as the naming donor for the COC's new Opera House, the Four Seasons Centre for the Performing Arts, located in Toronto.

References

1. ^ World's Best 2006, Travel+Leisure.com
2. ^ Zagat Survey Rates, Hotel-online.com
3. ^ ^{a b c d e f g h} David Segal, Pillow Fights at the Four Seasons, The New York Times , June 28, 2009, Accessed June 30, 2009.
4. ^ Staley, Oliver. Four Seasons Hotels agrees to bid from Gates and Alwaleed. Bloomberg News , February 13 , 2007 .

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