A Four Seasons' Case Study: The Ultimate Test for Isadore Sharp's Recession

Topics: Hotel, Hotel chains, Hotels Pages: 8 (2799 words) Published: December 1, 2010
In early May 2009, Isadore Sharp released a much awaited book about his business brainchild. The founder and CEO of Four Seasons Hotels and Resorts, a company he spent nearly five decades building out of a motor lodge in Toronto, Sharp shares the secrets to his astounding rise in the most unpredictable of industries.

‘Four Seasons: the Story of a Business Philosophy’ ends as the company and the lodging industry enter a crucial period of existence, with the dawn of an unprecedented economic downturn on a global scale. Having given numerous interviews on creating one of the most recognised and respectable brands in the industry, Sharp now has to answer questions on the feasibility of the company’s business model in the current economic situation.

Four Seasons has been through a number of recessions in the past, having survived and even prospered on two instances, most significantly during the slump post-9/11. However, Sharp acknowledges that the extent of the latest slump is the most extreme, and definitely worth worrying. He has done a reasonable job in keeping promises of not cutting down on hotel amenities, reducing services, or laying off members of staff at any of its properties. But the company has had to cut back almost 10% of its 400 odd employees at the Toronto headquarters. A further reduction was carried out at one of its premier hotels when a total of 323 employees at the Four Seasons Park Lane, London were made redundant prior to the hotel’s closure for an 18 month refurbishment, starting September 2008. Nonetheless, in true Four Seasons style, a third of the employees were absorbed in other hotels in the group, and for the rest the company organised a massively successful job fair which had 52 employers attending and recruiting.

Consequently, such measures have resulted in minimal reductions in its famously high prices, at a time when the rest of the industry is competing on slashing prices to stay in business. According to Sharp, ‘exceptional guest experiences’ are a fundamental part of the business, irrespective of the economic situation.

It is worth noting that even though the company’s business philosophy lays considerable emphasis on creating shareholder wealth, it is sometimes overshadowed by the duty to act responsibly towards its customers and employees. Sharp personally takes immense pride in the fact that Four Seasons is one of only 13 companies that have featured on Fortune ‘100 Best Companies to Work For’ ratings every year since its inception in 1998 and has consistently been the highest ranked hotel company on this list. In 2006, Four Seasons became one of only five companies worldwide to receive Great Place to Work® Respect Award from the Great Place to Work Institute, recognising the company’s pioneering work in creating a comprehensive management process which requires newly hired managers to initially perform duties of employees reporting to him/her in order to understand and respect each position.

Speaking of maximising wealth, David Segal, writing for The New York Times takes an interesting view on the situation of hotel owners that work together with Four Seasons. He talks about the company’s reluctance to let hotel owners cut costs on any aspect of operations, starting from the number of fresh flowers bought everyday to the thread count of bed sheets. For hotel owners, who still have to maintain these lofty standards and continue paying management fees and a percentage of gross income, the pressures might be getting too high. (http://www.nytimes.com)

Such increasing pressures of the economic slowdown added to the policies of Four Seasons have led to some hotel owners voicing their displeasure publicly. On March 27, 2009, representatives of Broadreach Capital Partners , owners of Four Seasons Resort Aviara seized accounting ledgers and changed security locks during their feud with Four Seasons. Broadreach then proceeded to take legal action towards terminating its...
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