The Book of the Week is “Four Seasons, The Story of a Business Philosophy” by Isadore Sharp, published in 2009. In the early 1950’s, in his early 20’s, the author worked with his father, a construction contractor. He served as construction manager, rental agent, salesman, and financier. He parlayed his experience into building hotels in later decades.
The first Four Seasons opened in Toronto in 1961. It was a motel. Because the location of the second Four Seasons (actually called “Inn on the Park”) was less than ideal– the Toronto section of North York– it had to offer a few unusual features and amenities, such as smoking and nonsmoking floors, a restaurant and a fitness center, in March 1963. The property manager got a famous sports trainer to run the fitness center. In 1966, the trainer was accused of pushing performance-enhancing drugs. “He later died of lung cancer, from smoking.”
In the late 1960’s, London already had five five-star hotels. But Sharp wanted to build another one anyway. He and his business partners “…signed an 84-year lease at 210,000 Pounds Sterling a year, to be renegotiated every 21 years. He insisted on having air conditioning, unlike the competition. The hotel, opened in January 1970, ended up costing 700,000 Pounds. The lease was modified to allow a renegotiation every fourteen years.
Over the course of four years prior to the building of the hotel, the author’s London contact engaged him in social interaction to make sure he was trustworthy. The foundation of business is trustworthy relationships. The author said of certain of his major investors and his brother-in-law, “There was complete trust. Once we shook hands on a deal, there was no need for lawyers and signed documents.”
The author established an investing policy due to skyrocketing inflation in the mid 1970’s: putting a ceiling on his share of ownership at a small percentage of equity. No more than $3-5 million per property. This was based on a simple calculation of the maximum hotel fees he would collect over the first five years; Four Seasons became a property manager, rather than a real estate developer.
The Four Seasons hotels offer high-end luxury, targeting exclusively wealthy Americans and business executives. As its culture has evolved, it has identified a set of values to which its employees adhere and by which it does business: respect, fairness, honesty and trust. Sharp sought to make it a companywide habit.
Sharp knew that employees whose jobs include direct guest interaction are the ones who directly generate most of the hotel’s revenue, and the experienced ones are “… storehouses of customer knowledge, role models for new hires and advisers for system improvement…”
The author claimed that hotels other than Four Seasons face the major competitive challenge of easily accessible reservations data due to technological advances. The Web “…put every week’s best hotel deal at every traveler’s fingertips, raising the specter of unusually lethal periodic price wars… We didn’t compete on price… we were the one hotel company that could take full advantage of the new [economy] without any problems.” Right.
The last quarter of the book was a brag-fest. Nevertheless, read the book to learn of Sharp’s unpleasant episodes with regard to: Sheraton in Vancouver, attempts to open hotels in Italy, India and Venezuela; political unrest in Indonesia, ownership of The Pierre Hotel, and much more.