CHAIN OF THE MONTH: Four Seasons Hotels & Resorts
How the Canada-based operator made it to the top & plans to stay there
Becoming the best is one thing; remaining at the top is quite another. Hotelier Middle East looks at Four Seasons to see what the company is doing to stay relevant in the region
It’s tough to get ahead in any business but once you do, staying there is even harder. With consumer expectations constantly rising, even big names synonymous with being the best have their work cut out.
Four Seasons, for many the byword in luxury travel, is one of these entities. It made it to the top in the region, but with increased competition has, like its luxury hotel rivals, had to examine what it offers in order to stay relevant to clients.
The chain’s Doha hotel is a prime example of this; for years, Ritz-Carlton was the main competitor, but now St.Regis has entered the market and Mandarin Oriental and Shangri-La are waiting in the wings.
However, efforts to stay ahead of the pack are reaping rewards for the company and its guests, according to regional vice president and general manager at Four Seasons Doha, Simon Casson.
One area that he says has “absolutely” become increasingly important for the company and his specific property is the creation of more innovative F&B concepts.
“If anything in years past we have possibly been a bit behind the curve on that in terms of having the most exciting buzzing F&B offerings,” Casson admits.
“But I think over the last two or three years it has changed. When you look in our hotels in North America, Europe and across the world, some of the concepts we are doing now are cutting edge and Doha is probably the best example of that.”
The owners of the Four Seasons Hotel Doha have just invested US $5 million in a new restaurant called Nusantao: Sea Kitchens, an Asian-fusion outlet that focuses on the cuisines of Japan, Thailand, China, India and Indonesia.
Designed by Henry Chebaane of Blue Sky Hospitality fame, it’s a visually stunning restaurant that is certainly a statement of intent on the part of Four Seasons.
“What we realised, probably in the Middle East more importantly than maybe big urban Western cities, is that F&B in the hotel is a key signature of the hotel,” Casson explains.
“It is what draws people to the hotel and we are excited to have just opened that in Doha.”
But why tackle the issue of modernising F&B with individual restaurants in single hotels? Well it typifies what Four Seasons wants to be — relevant. And this is part of the reason why the company doesn’t have any in-house restaurant brands.
“We choose not to do that because we want to be relevant to the market place. Relevant doesn’t have to mean indigenous such as an Arabic restaurant in Middle East,” Casson asserts.
“It means you have to look at the local market place and see where there are gaps and opportunities.”
The Four Seasons Hotel Doha is well established, which is great in one respect, but with so much inventory hitting the market —much of which is targeting Four Seasons-type business — well established can easily become yesterday’s news.
Casson says it is therefore vital to have a strategy in place to keep existing accounts and attract new ones.
“Strategy by virtue means if you are thinking about it now then it’s too late. Three years ago we planned our rooms renovation and the owner invested $10 million in the hotel over the past year,” he explains.
“If you have new sparkly, quality product coming into the market you don’t want to look average by comparison or tired and old.”
Aside from the physical product on offer, Casson adds that what always makes the difference for guests is service excellence.
“The team (at the Four Seasons Doha) have day-by-day earned the reputation for being the service leaders in the market. They have worked really hard to do so and I think that’s what Four Seasons is renowned for — to be able to bring a culture and ethos into a hotel, a soul if you like,” he explains.
But for high-end luxury guests you have to get the basics right.
“It’s got to be a seamless and fast check-in; the coffee has to be hot; the shirt has to be beautifully pressed and returned on time,” he adds.
“Business travellers are not looking for wow-type entertainment, they are looking for the basics to be excellent and then for the intuitive ‘show that you care’ opportunities.”
Doha is certainly a “growing story” for Four Seasons. As Casson reveals, when he arrived there eight years ago there was only around 20% of the room inventory that is now available in the Qatari capital.
“When we came it was a $150 market and I think we pioneered and reinvented that market,” he says.
“We came in with a great location, a very strong product, the Four Season brand and over two years brought that market up to what it is today with average rates in the high end of around $450. I think the big danger is when you have dramatic supply increase, like we have now, is that you can very quickly lose all those gains.”
Gains are important, Casson argues, first and foremost because businesses want to make profits, but the underlying driver behind that is reinvestment in the hotels. Ultimately, if rates drop, profits drop and so the ability to reinvest in restaurants and rooms is compromised.
He argues that these factors will make Doha a challenging market.
“With such relatively static demand and significant supply there’s going to be dilution in the market, so whoever is best at what they do is going to try and grab disproportionate share to protect their business and some others are going to suffer greatly,” Casson adds.
But the increased competition hasn’t dulled ambition. All the ground work has just been completed for Four Seasons Doha at the Pearl and the tenders are out for the above ground construction, with doors expected to open by the end of 2014.
The bigger picture
But Casson, while based in Doha, is a regional man for Four Seasons and there is plenty keeping him busy.
Hotelier was speaking to him at Arabian Travel Market (ATM) during his packed tour of the Middle East and beyond, where he had been visiting the company’s properties in Amman, Jordan, Cairo, Beirut and Marrakech as well as attending senior leadership meetings in Toronto and delivering a speech at the Young Hotelier Summit in Lausanne, Geneva.
Such a regional overview is a mixed bag for Casson, a story for the company that, like most hospitality groups at the moment, is brimming with highs and lows.
“Beirut is having a wonderful start to the year, significantly up in occupancy year-on-year, quarter-on-quarter from last year,” he says.
“At the start of 2011 there was instability in the government, but Lebanon is such a resilient destination and people are coming back — it is probably benefiting from people not going so much to Cairo.”
The property has just completed a sky bar roof terrace that Casson expects to be a Beirut summer hot spot this year.
He also reveals that Amman has had a strong start to the year.
“That market tends to be a city that does well when there is instability in the region,” Casson asserts.
“What has happened with the Arab Spring has probably been a positive for a stable place like Amman. They have had a lot of Libyan business people who have come into Amman as a refuge.”
The Four Seasons Hotel Amman is adding a new F&B outlet on an existing empty terrace which is expected to open in June.
Cairo on the other hand is one of the lows and Casson doesn’t share Egypt’s tourism board’s views — publicised during Arabian Travel Market 2012 in Dubai — that by the end of the year rates will be at the level witnessed in 2010.
“It’s a big ask, because you have a market that was actually doing very well that has been absolutely decimated,” he explains.
“Experience would tell us that any market that goes through catastrophic downturn like that I think takes three years to really regain where it was at, because the volume doesn’t come back at once.
“In order to attract volume back you have to be attractive rate wise… so I think it will take two to three years to really come back.”
Casson puts it diplomatically when he says the situation in Egypt “is a long story”.
“Certainly there is no optimism in terms of results on the ground in Cairo today in any of the hotels. The hotels are probably doing 50 or 60% less business pre-crisis. We see it continuing to be soft this year.”
But the Qatari owners of the Cairo property are using the situation to invest more in the hotel.
“They have completely renovated the pool deck and created a new restaurant called Aura that’s just opened this month,” Casson says.
“There are beautiful cabanas, Lebanese cuisine and it’s all themed around the existing pool, and we are now looking with designers in partnership with the owners on doing a room renovation.”
But of course, in terms of difficult operating environments, the title goes to Damascus and “there is still a huge amount of uncertainty”; Casson even using the word “catastrophic”.
“It has been down to single digit occupancy and we have had to let a lot of staff go there,” he reveals.
“In order to keep the business whole, you can’t carry a head count that was intended for a hotel [with occupancies] in the 70 to 80%.”
“It has been incredibly difficult and dangerous to operate, but it is open, it’s operating and we brought all the expats out.”
Currently the hotel’s GM is operating the hotel remotely from Beirut — “a Skype GM”, as Casson puts it.
Moving south to Saudi Arabia, while the Four Seasons Hotel Riyadh is not in Casson’s portfolio, he reveals that a room refurbishment has been completed as has an overhaul of two of the restaurants. The investment came to counter the impact of the new Ritz-Carlton, but the market remains strong for Four Seasons.
A firm announcement has still not been made on a Dubai property, despite the rumours, but Casson insists “when you see where it is it will be worth waiting for”.
The digital age
Of course, it’s not just physical expansion that keeps a lodgings company relevant — there has been a need to address the way in which the company embraces the digital age. This included a website launch as VP sales – Europe, Middle East and Africa, Jane Burnell explains.
“Technology has become so important. It’s like someone visiting our hotel, it’s an experience that needs to be as enjoyable, easy and as informative as when you go and visit one of our hotels,” she says.
“So you’ll find when you go to the website there’s a lot more images and this is one thing clients were telling us, we need to see more about your hotel, and also the destination.”
Burnell says another issue was clients wanted to know more about the destination, rather than just facts about the hotel.
But the process of being relevant goes deeper than just making a user-friendly website — it is about understanding the processes and dynamics behind the decision making when booking a holiday or business hotel.
“I met up with a Saudi Arabian family and they were telling me that their children picked their vacation,” Burnell says.
“They’d go on the websites and pick where they wanted to stay. It was interesting these kids who were teenagers were picking where the family would stay relative to what they would get out of it.”
Year–on-year website bookings are on the increase — up 10% from 2010 to 2011 — and the company is hoping to build on this with the new site, especially considering the reduction in distribution costs when customers come to the properties through its own portals.
But Burnell warns it’s not a case of dismissing other channels.
“(Booking direct) is a really slow trend; people are gradually getting into it and I think it depends on where you’re going to stay,” she reasons.
“If you’re sitting in London and want to go to Paris for a couple of days you can do everything online. If you’re in Dubai and want to go to PomPom, then Australia, you probably want to go to a travel agent.”
One might assume that the guest profile of Four Seasons has changed with new methods of bookings and contemporary F&B offerings, but this is not strictly the case. Burnell explains that the change is slight and the brand still appeals to the 35-45 year old business person, families and honeymooners.
“We’re definitely seeing the next generation of Four Seasons traveller,” she adds.
“The Four Seasons kids that were staying with us 10-15 years ago are now in their first jobs, or excelling in their careers and continuing to use us — we pride ourselves in terms of the repeat guests we have.”
While any business will tell you loyalty is key, Four Seasons has yet to follow the likes of Ritz-Carlton in offering a loyalty programme. Admittedly, Ritz-Carlton top brass said they never thought they would see the day when the company offered a rewards-style vehicle for customers, so will Four Seasons do the same?
Once again staying relevant to customers is driving the decision.
“We don’t have a loyalty programme out there right now, we’re looking at developing something along those lines,” Burnell explains.
“We’re very conscious again, from customer feedback, that we don’t have anything like that. In the past, although we’re the largest luxury hotel company in the world, we’re only 87 hotels, so loyalty programmes work when you can actually use the points if you’ve got enough product, or routes for an airline, you can make that work. As we’re growing and getting more hotels the potential for us to develop something meaningful to the client is growing.”
But she does add that “some clients have told us getting a few points is not going to motivate them to stay with the Four Seasons”.
“They’ll stay with us because of the experience they get when they use us and work with us,” Burnell asserts.
“It’s something on our to-do list and something we’re taking seriously, and we’re looking at it because it’s out there and people are talking about it.”
There is also the added issue of corporates being motivated by points programmes and therefore issues surrounding due diligence.
But this brings up the topic of which markets Four Seasons is actually serving.
“Our corporate market has actually decreased over the last… not just from the recession even before that, so in terms of our business mix — corporate market used to be a really important market, it’s still important, but we’re seeing more individual leisure, conference and incentive business starting to come through for us,” Burnell reveals.
“As we’ve opened different destinations that have been more attractive to leisure travellers and meeting planners, you see that when you open hotels in different regions your business mix changes suddenly, you’re reopening different avenues with different experiences available.”
Middle east matters?
As the company makes tweaks to its offering, Hotelier wanted to know how important the Middle East region was for Four Seasons.
Executive vice president worldwide development, Scott Woroch, admits the region, in terms of its global portfolio of existing hotels, is “still relatively small”.
“We’ve four hotels in Egypt, so in 2011 for example things fell in Egypt quite dramatically,” he begins.
“Then we theoretically had Luxor and El Ghouna from a development perspective, so obviously those [have been impacted]. In Luxor...they’ve undertaken a value engineering exercise... to allow it to move forward given the current environment there.,” explains Woroch.
“It was still under the design phase, but we had gotten fairly close to the end of [that], now they’ve said ‘come back and relook at this’, there’s some things we can do that will allow us to save money and reduce the scale and scope of the project to allow it to move forward.”
In El Ghouna, design work stopped even earlier, he adds.
“So looking forward, where we’re growing outside North America — it’s the Asia Pacific region, there’s the Middle East and [we’re] getting into Latin America, South America,” reveals Woroch.
There are six hotels signed for the Middle East, plus one in Baku in Azerbaijan, increasingly a focus for chains operating out of this region. There are also the yet-to-be announced hotels in Dubai and Kuwait, and the delayed Egypt properties, with Hotelier learning that the Dubai hotel is expected to be located on Jumeirah Beach Road.
Plans for expansion in the region may be small compared to those in Asia Pacific, but there is no doubt that Four Seasons will continue to remain relevant — and the team is determined it will keep its perch at the top of the tree.