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Four Seasons Hotels and Resorts Business Analysis

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I. Introduction

This hub aims to provide a comprehensive business analysis of the Four Seasons Hotels and Resorts. Since its establishment in 1960, after more than 5 decades of operation in the hospitality and tourism industry, it is undoubtedly that Four Season Hotels and Resorts has become one of the most well-known, internationally-recognized brand names in the field.

The hub starts by providing an overview and analysis of the hotel’s performance, organizational cultures, development strategies and implications for its future management options. The hub also discusses the company’s current product portfolio, key markets, capabilities, and its corporate social responsibilities. An analysis of the micro and macro environments in which the company operates is followed to provide more insights into the company’s performance. SWOT analysis is then employed to point out the company’s areas of strengths, weaknesses, opportunities, and threats. Finally, the hub aims to evaluate options and give recommendations for the companies’ development plans in the next 5 – 10 years.

II. Company overview

2.1. Four Seasons Hotels and Resorts’ historical growth strategies

Four Seasons Hotels and Resorts is a Canadian-based company which was established in 1961 by Mr. Isadore Sharp. The first Four Seasons Hotel was built in down-town Toronto, Canada, featuring an upper-class hotel with 125 spacious rooms. Within the first decade of its inception, three Four Seasons hotels was constructed, showcasing the most sophisticated luxury hotels in the area. The 1970s witnessed Four Seasons’ strategic expansion to international markets, setting up its facilities first in England and then entering the US’s market. In 1986, Four Seasons’ stocks were listed on Toronto Stock Exchange and became an instant success. Four Seasons Hotel established its presence in Asia in 1992 with the first hotel opening in Tokyo, Japan, and rapidly constructed its facilities in other Asian countries including Thailand, South Korea, Singapore, China, India, Indonesia, and Vietnam. In 2012, Four Seasons officially entered the Sub-Sahara African market with an opening in Tanzania. At present, Four Seasons Hotels and Resorts has more than 104 hotels, resorts, and other properties in in 43 countries, and plans to develop more than 50 projects (Four Seasons Press Room, 2017). In 2015, Four Seasons’ revenue was estimated at USD 4.3 billion.

The first Four Seasons Hotel in Toronto, Canada

The first Four Seasons Hotel in Toronto, Canada

According to the World Luxury Index Hotels which was published by the Digital Luxury Group in 2014, luxury hotels were grouped into three categories – luxury majors (luxury brands of a mixed hotel chain), luxury exclusives (small and medium-sized exclusively luxurious chain) and upper upscale (top-notch brands) – and Four Seasons was considered a luxury exclusive. As a medium-sized luxury hotel, Four Seasons Hotels target the niche market of high-income customers who have discerning needs and preferences (Discover Four Seasons Hotels and Resorts, 2015). Four Seasons Four Seasons’ growth has been driven mainly by its differentiation strategy which is a relatively popular strategy in the hospitality industry due to its intricate nature of hospitality service and diverse customer needs (Enz, 2011). To distinguish itself from other luxury hotel brands, it concentrates much efforts on providing uniquely superior service culture to its customers. To reduce the risk of its competitors’ imitation of its strategy, to create a deeply ingrained corporate culture focusing on perfecting customer services, and to strengthen their competencies, Four Seasons executives accentuated internal staff training and employees’ job satisfaction. In fact, Four Seasons Hotels has been voted as one of the best 100 companies to work for by Fortune Magazine, and on average, employees received about 30 – 40 hours of training annually (100 Best Companies to Work for, 2016). Unfortunately, in areas where there is a scarcity of qualified human resources, the company will expect to face with challenges to keep up with its service quality standards.

2.2. Four Seasons Hotels and Resorts’ missions

Four Seasons Hotels and Resorts specializes its operation in the hospitality industry with an ambition to provide its customers with high quality services. When establishing the first Four Seasons Hotel, Mr. Isadore Sharp envisioned it as a place where every guest would be treated with individual care. The company redefines the meaning of luxury travelling experience, which does not only limit to living in the most exquisitely designed hotel rooms but also extend to receiving the most satisfied services. Four Seasons Hotels and Resorts strives to become the world’s leading luxury accommodation brand. The company stated mission labels it as a luxury brand targeting high income professionals and visitors. As the company’s selling point is its service quality, it can secure a firm competitive advantage since an intangible asset is harder for other rival companies to mimic (Enz, 2011).

2.3. Four Seasons Hotels and Resorts’ portfolio

Currently Four Seasons Hotels and Resorts’ operated more than 104 hotels, resorts, and properties around the world with another 50 projects under development. Most of the company’s properties are in North America with more than 42 hotels and resorts, followed by Asia (27 hotels and resorts), Middle East and Africa (19 hotels and resorts) and Europe (16 hotels and resorts). Most of the hotels are equipped with world class amenities such as spa, restaurant, bar lounge, pools, business, and conference centers, and even golf course. The company also provides vacation ownership properties and private lodging. Like many other hotel chains, Four Seasons now does not own most of its properties; instead, it helps the owner to manage the hotels and resorts and provide technical assistance and training with a fee. In 2006, Mr. Isadore Sharp took Four Seasons private and sold 95% of the company’s stakes to Bill Gates and the Saudi Prince al-Waleed bin Talal. He retained a 5% stake and continued to serve as the company’s chairman.

At the moment, there are 30 Four Seasons properties that earned Forbes Travel Guide’s Five Stars rating in 2017 including Four Seasons Resort Costa Rica at Peninsula Papagayo, Four Seasons Resort Bali at Jimbaran Bay, Four Seasons Hotel Boston, Four Seasons Hotel Chicago, Four Seasons Hotel George V, Paris, Four Seasons Hotel Guangzhou, and Four Seasons Resort Maui at Wailea, etc.

Four Seasons Resort Bali at Jimbaran Bay

Four Seasons Resort Bali at Jimbaran Bay

2.4. Four Seasons Hotels and Resorts’ organizational culture

Organizational culture refers to the system of collective assumptions, values, behavioral conducts, rituals, and perception of leadership. Every organization designs its own unique culture which guides employees’ behaviors towards customers as well as towards one another, dictates management practices, and protects the organization from incompatible ideas or people (Schein, 1990). The patterns of an organization’s culture are believed to be consistent, nurtured by various monetary and non-monetary incentives. Barney (1986) argued that organizational culture can constitute a company’s continual advantage and lead to exceptional performance if that culture is beneficial, unique, and non-imitable. This finding implies that if a firm does not already have a beneficial, unique, and non-imitable culture, it will be infeasible for it to change its culture and rely on it as a dependable source of competitive advantages (Barney, 1986).

Since the beginning of its time, Four Seasons Hotels and Resorts has built its organizational culture around its stated mission and principles. The company’s Golden Rule states that one should treat others the way one would like oneself to be treated. Consistently based on that underlying assumption, the managers and employees have been trained to be able to offer exceptional services and provide guests with the most intimate, personalized, and professional experiences. For instance, according to Hallowell, Bowen and Knoop (2002), customer-oriented attitudes are expected at all levels, times, and hotels’ locations. In fact, Four Seasons executives set “service culture standards” which all staff across the globe must follow precisely (Hallowell, Bowen, & Knoop, 2002):

SMILE: Employees will wholeheartedly welcome guests, smile, and speak politely.

EYE: Employees will make eye contact to ensure guests that they recognize guests’ presence even in passing.

RECOGNITION: All staff will address guests by their names, when known, in a natural and respectful manner.

VOICE: Staff will always speak to guests with a thoughtful and courteous tone, never speak with a sign of anger or impatience.

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INFORMED: All guest contact staff will need to memorize all relevant information about their hotel, their product, quotes and be able to assist guests with all their requests, or direct guests to the person in charge.

CLEAN: Staff will clean, fit, and neatly-dressed.

EVERYONE: Everybody, everywhere, at all times pay attention and show interests in serving guests.

To keep up with continuously providing remarkable customer service, and making it difficult for competitors to perfectly imitate, Four Seasons’ Hotels and Resorts’ needs a vigilant hiring process and effective training programs to ensure that it has the most competent staff. In areas where the quality of human resources is mediocre, the company does face with challenges in finding the right personnel. In addition, in countries with different cultures and norms, the company’s behavioral codes also need to be flexible to avoid misunderstandings and conflicts. For example, Japanese people tend to make less eye contacts than North American people, or in short, different cultural norms lead to different interpretations of such a seemingly simple action of looking into someone’s eyes (Akechi, et al., 2013).

2.5. Four Seasons Hotels and Resorts’ international strategies

Four Seasons’ first overseas facility was established in London, England despite doubts from his British partners due to the highly competitive and saturated market of hospitality industry in London. With Isadore Sharp’s philosophy of offering royal-like services to even ordinary people, against all odds, Four Seasons could compete in London even with popular local names like Savoy and earned the award of “Hotel of the year” (Four Seasons History, 2017). After more than 50 years of developing, Four Seasons Hotels has moved outside of Canada and operated in 43 countries of all five continents. To break into a new market and maintain its competitive edge, the company applies three main strategies:

- Innovation: For companies that are early adopters of internationalization, technological competency, innovation, research and development activities, unique product provision, and know-how transfer are highly correlated with their international success (Knight & Cavusgil, 2004). Hence, it comes with no surprise that Four Seasons Hotels’ capabilities to innovate help it to thrive when penetrating a new market. For example, following its initial success in the American market, to serve the lucrative but demanding American markets, Four Seasons managers decided to offer more innovative products to the US customers such as launching a hotel with full-service spa, which is not only the first of that kind for Four Seasons but also for the whole industry (Four Seasons History, 2017). What’s more, for each of its new lodging, depending on the logistics and characteristics of the new location, Four Seasons came up with completely new concepts and presented guests with a new experience. To illustrate, while Four Seasons Hotel in Chieng Mai, Thailand offers a signature Ytsara Samunprai spa treatment which was created in the 18th century emphasizing the use of herbs and flowers to reduce tensions, Four Seasons Resort Langkawi in Malaysia brings guests close to nature and opportunities to participate in various adventurous outdoor excursions (Discover Four Seasons Hotels and Resorts, 2015).

- Customer Service: Even when going global, Four Seasons is committed to its core principles which underscore its dedication to service excellency. According to Talbot (2006), in recent years, with the advance of technologies and the leveling of global playing fields, various barriers have been removed and differentiations have converged. As customers increasingly value their time and prefer experience over tangible materials, service plays an ever-important role in driving travelers’ choice of lodging. Four Seasons Hotel staff are guided to go beyond their ways to serve their guests. In an extreme example, after a tsunami destroyed a considerable part of the Four Seasons Resort Kuda Huraa in Maldives in December 2004, the hotel staff even risked their lives to save and shelter their guests. Many guests later attributed their survival to the prompt, generous and courageous response of the hotel staff in the face of hardship (Talbot, 2006).

Four Seasons Hotel Washington, DC Spa

Four Seasons Hotel Washington, DC Spa

- Cultural adaptation: While fastening on its core values and principles, Four Seasons Hotel managers also appreciated cultures of the area where their hotels are based at. For example, in managing Four Seasons Hotels in Paris, France, a city known for its distinctive, extreme, and powerful culture, Four Seasons hotels executives tactfully upheld some elements of the company’s organizational values while flexibly implemented some changes in employees’ codes of conducts, manager practices, new hiring requirements, and approaches to the media (Hallowell, Bowen, & Knoop, 2002). To do so, Hallowell, Bowen and Knoop (2002) also pointed out that the company ensured that the top managers were highly experienced in working in the globalization contexts and familiar with various cultural norms and expectations.

Although at the moment most of Four Seasons’ new ventures in foreign markets maintain to grow robustly, it is important to note that the international market is highly dynamic and volatile, the company needs to modify its strategies, modes of entry, target markets accordingly to avoid disastrous results (Aliouche & Schlentrich, 2011).