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Changing Landscape of Hotels Worldwide

Sydney, Australia
posts: 9,697
reviews: 30
Changing Landscape of Hotels Worldwide

Last fortnight has seen the CEOs of two global hotel giants 'removed gracefully' from their respective positions. The news of Accor and Four Seasons has been received with significant surprise, particularly the latter as they were a 27 year company veteran, hand selected by the founder of the company.

The impact of such a change to Accor would not be so significant to consumers, however the same cannot be said of Four Seasons. Being one of only three global hotel groups at that level, as a single entity within their group, they have always been seen as a consistent and 'pure' brand. The current news circulating, seems to indicate an executive head hunt is on the cards for a non industry 'outsider'. Sign of things to come? Perhaps. Days of old school hotel companies may very well be numbered.

6 replies to this topic
Houston, Texas
Destination Expert
for Solo Travel
posts: 8,853
reviews: 161
1. Re: Changing Landscape of Hotels Worldwide

Agree with you. Seems to be a new business model emerging.

Sydney, Australia
posts: 9,697
reviews: 30
2. Re: Changing Landscape of Hotels Worldwide

Absolutely bk_t1.

It almost appears that legacy hoteliers from the 'old school' have been left behind, and the new business models which indeed are emerging, seem to be all about crunching numbers.

The above news has split the industry, with one half feeling that certain 'old fashioned values' should never be discarded in favour of profits, whilst the other half quite strongly believes in the mantra of whoever can make the best returns, regadless of where they are from.

It makes for an interesting debate, as recent history may appear to indicate the latter can be successful, but it hasnt been an easy ride for hotel groups who have chosen that path.

Starwood is a perfect example of a company which was held in the highest possible esteem, yet their attempt seven odd years ago to hire the CEO of Coca Cola was a dismal failure and cost the company a fortune.

They have of course turned this around with great expansion, but whilst doing so, have diluted their two top-tiered products in St Regis and Westin - brands that have not won any significant hotel awards or recognition during this period.

Many in the industry believe Four Seasons may very well being going down the same path, and fear not only will they lose a level of exclusivity, but also lose a reputation built on relationship and loyalty since the early 70's. Four Seasons were once famous for only accepting 25~40 year management agreements, the longest of any hotel company in the world.

No doubt alarm bells will be ringing for the Pritzkers and Marriott Jnr.

Edited: 10:15 am, May 17, 2013
Geneva, Switzerland
Destination Expert
for Geneva, Liechtenstein, Air Travel
posts: 2,910
reviews: 260
3. Re: Changing Landscape of Hotels Worldwide

For what I could read regarding Four Seasons, we are "simply" talking about a disagreement between the shareholders (2 in this case) and a CEO. The latter never wins in this situation. Shareholders want expansion. And I tend to agree with this view. Looking at FS portfolio, the company is weak where the growth is: in the BRICS.

Geneva, Switzerland
Destination Expert
for Geneva, Liechtenstein, Air Travel
posts: 2,910
reviews: 260
4. Re: Changing Landscape of Hotels Worldwide

Accor is an interesting case. While no-one seems to be opposed to a strategic move to grow outside of gloomy Europe (70% of the sales), speed is questioned. Denis Hennequin, former CEO, wasn't fast enough for a couple of private equity shareholders...

Sydney, Australia
posts: 9,697
reviews: 30
5. Re: Changing Landscape of Hotels Worldwide

>>>For what I could read regarding Four Seasons, we are "simply" talking about a disagreement between the shareholders (2 in this case) and a CEO. The latter never wins in this situation. Shareholders want expansion. And I tend to agree with this view. Looking at FS portfolio, the company is weak where the growth is: in the BRICS<<<

Absolutely agree, and that is the sentiment of half the industry, (mostly younger) looking from 'the outside in'.

The other half, firmly believe in the previous model of slow but steady growth, without compromise or threat to what the brand stands for. Four Seasons had meticulously acquired and built approximately 75% of their portfolio, at almost agonizingly slow speed, between 1970 and 2007, and the remaining 25% since. This can be viewed as a story of two halves; one, the creation of an empire based on the vision of Isadore Sharp, the other as a greed ridden push by Bill Gates and Al-Waleed Bin Talal.

Yes, they have had weakness in the developmental aspect, particularly in regards to the future growth of the BRICS market, but until recently, this wasn't their primary focus. Their belief had very much been to strategically locate properties in high frequency travelled cities, to increase brand presence in the spirit of 'Four Seasons' - not strategically place properties to follow future investment wealth. This 'belief' disparity can clearly be seen now, as Four Seasons have commenced opening properties in regional locations in mainland China - specifically to target government and the resource market - quite contrary to their previous business model.

For or against, should they continue down this path, I do agree with those that say, Four Seasons will eventually become "just another brand".

Sydney, Australia
posts: 9,697
reviews: 30
6. Re: Changing Landscape of Hotels Worldwide

>>>Accor is an interesting case. While no-one seems to be opposed to a strategic move to grow outside of gloomy Europe (70% of the sales), speed is questioned. Denis Hennequin, former CEO, wasn't fast enough for a couple of private equity shareholders<<<

It is indeed interesting ,as they have firmly set themselves entrenched in Asia Pacific, but has never placed themselves in a position to be a serious competitor in the US. Their dominant presence and high volume in Europe is of course expected, but should their recent few years be any indication, their actions in the Asia Pacific region should be a pointer to their intentions.

Just using Australia as an example, Accor have acquired the management rights of 50 odd properties, through their buyout of Mirvac, and introduced three brands that have previously never existed here. Sounds very impressive, but unfortunately an absolute disaster. It was seen within the industry as a property grab, without much thought, and very little planning before hand. It occurred in such a rush, it was rumored that half the hotel owners, did not know it until it happened - and now Accor are facing an enormous backlash. They wrongly assumed that as they are the management company, they have the right to brand each hotel according to what they believe suited their portfolio. The end result? A great number of properties are refusing to change hotel names, whilst a handful are in legal proceedings. Industry view? Accor were trying to get closer to IHG in the number stakes, they didn't care how or what.

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