Kathleen Taylor has spent over 20 years with Four Seasons. Tom Otley asks how luxury hotels can remain at the top in such tough economic times and what she predicts for the immediate future.
It’s not been a great time for five-star hotel brands of late. The financial and investment community stopped travelling, meetings business evaporated (not least under the critical stare of politicians quick to criticise any company that was overspending) and, meanwhile, the pipeline of new properties dried up as developers ran out of finances. Not a great time, then to take over from Isadore (Issy) Sharp, the legendary founder of Four Seasons Hotels and Resorts? Not a bit of it, according to CEO Kathleen Taylor, who now has the top job after more than 20 years at the company this year celebrating its 50th anniversary.
“I’ve said to our people all along that we are in a good place because we have never been about gilding the lily, excessive gold leaf, or ornate things in service or product. We focus on the real needs of the guest as those needs arise, and that need hasn’t gone away.”
Meeting Taylor in the newly reopened Four Seasons on Park Lane in London, it certainly seems like the recession is over. The dated 1970s decor of the hotel has vanished and in its place is an understated elegance and, well, luxury. Taylor says the signs of demand coming back are unmistakable. In 2010, RevPAR (revenue per available room) rose 13 per cent over 2009, which is 30 per cent ahead of Four Seasons’ competitors. Occupancy was up almost 15 per cent, compared to a competitive average of 10 per cent, and particularly strong was the company’s growing Asia-Pacific portfolio, which experienced a remarkable Revenue per available room: A common metric used by the hotel industry to indicate performance. growth of 29 per cent, and a 23 per cent increase in occupancy.
Nevertheless, there’s no doubt that for corporate bookers of travel, staying in a Four Seasons could seem like an expensive luxury. It’s an opinion that Taylor deals with in the brisk way you’d expect from this former corporate counsel and general counsel.
“The word ‘luxury’ became synonymous with ‘excess’, and those two words in the hotel business are not the same. For me, luxury hotels are all about how you make the most of someone’s most valuable asset, which is their time. You can’t buy any more of it. We all have to sleep eight hours and we have to make the best of the rest. So you need to stay in a hotel where you are not woken up in the middle of the night by traffic noise outside, your wake-up call comes on time, your shoes are shined and your clothes are pressed, you have a shower that works, and your internet access lets you work on the presentation that you need for the next morning.
If any one or two of those things go wrong in a busy person’s day then that can be the difference between a successful business trip and a unsuccessful one. The cost of the hotel in the overall scope of a business trip is actually quite small, and therefore the premium for staying in a Four Seasons is even smaller. The major cost is that of the executive’s time. That is the most expensive element.”
Taylor describes the price of paying to stay at a Four Seasons as an “insurance policy” for busy business travellers. However, even with the recovery, there’s little doubt that the cost of that insurance is a little low at the moment.
“There’s no question that in the latter part of the downturn there was a lot of pressure on rate as a result of the decline in occupancy, and as we come out of it, it has been occupancy-led and we hope rate will come back.”
Taylor blames a lot of the woes hotel companies suffered as much on over supply as lack of demand.
“It’s never really about one hotel or even about one segment. A lot of new supply in the four-star segment will ultimately have an impact on the five-star segment because of competition and pricing. People may be trading down to try the four-star properties, so it’s a very dynamic business, and it’s overall supply levels that have to contract.”
The chain is also still holding out against a loyalty or recognition programme, even while competitors such as Kempinski, Ritz-Carlton and Shangri-La have introduced them “We’re continuing to study the space. We are watching closely what the competition is doing, but mainly what we’re doing is talking to our customers and finding out from them, in the face of the other developments, what they would really value and what they would find meaningful. And what we’ve heard, pretty much, is that it’s not points earning, but recognition that is most important: ‘Show me you know who I am’. We will continue to work on it and see what is the right direction for us.”
Taylor admits that part of the challenge has been “to make it more seamless for the recognition of a guest between properties – it has been terribly labour intensive”.
Individual hotels worked on developing their own recognition systems, which did not integrate with one another, “and privacy is a huge issue – we can only collect information from those guests who allow it.”
So what does this year hold for the brand? Surprisingly, given Taylor’s concern of over supply, the answer is more hotel openings.
“Our hotels take generally between five and 10 years to complete from when we meet the developer. Four Seasons Hotel Prague took, from the land assemblage to the reconstruction, more than 10 years, but they’re all worth the wait. Last year we had four openings: Beirut, Hanzhou outside Shanghai, then Vail in the Colorado Rockies and Denver. This year we will open a resort in Marrakech just minutes from the old city.
“Following on from that it will be Baku. From there we have Guangzhou in China and we are still hoping St Petersburg will make it this year, but we’re not sure.”
And what of the much-delayed Moscow Four Seasons?
“We still hope for that one. Maybe the delay is because it’s in such a great position – the old Hotel Moskva, close to the Kremlin and Red Square. Openings like that send a real message to the Russian market as to what the brand is. You will see Four Seasons guests going to Moscow and lots of Russians saying they know us, and then coming and staying with us around the world.”
She joined in 1989 as Corporate Counsel and was appointed Vice President, General Counsel in 1992. In 1997 she was promoted to Executive Vice President, Corporate Planning and Development and made President, Worldwide Business Operations two years later in 1999. In 2007 she was made President and Chief Operating Officer and finally was appointed President and Chief Executive Officer in August, 2010.
Taylor is married with three children and considers herself “… an enabler more than a manager, but I’m also a bit of a control freak”.
Her most memorable travel experiences are cycling with her husband and friends through Morocco and Vietnam and skiing holidays with her family.