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Two VIP Billionaires Teamed Up to Run Luxury -2-

16 Jul 2017 5:41 pm

Four Seasons also has sometimes opened a second hotel in a city, such as New York and Boston. Traditionally, it avoided doubling up for fear of angering an existing owner. Mr. Smith said the company pursues the strategy "judiciously" and "with sensitivity to the owners involved."

It has become more ambitious globally, opening hotels in emerging markets. The company recently expanded its board to include younger representatives as it tries to woo millennials and engage guests using technology and apps.

Some new Four Seasons properties, such as a 77-room hotel in Miami Beach, have opened to strong reviews. Nadim Ashi, whose investment firm owns the property, said room rates are averaging $1,000 a night.

Four Seasons decentralized some functions last year after listening to some hotel owners' complaints. They no longer have to buy supplies such as light fixtures from the company, giving them more control of costs.

Some of the changes risk Four Seasons' reputation, said Piers Schmidt, founder of Luxury Branding, a U.K. consultancy. In a survey his firm did in 2015, based on analysis of hotel reviews on travel website TripAdvisor, Four Seasons ranked 13th. Other surveys rank Four Seasons higher; a 2017 J.D. Power study about North American hotel guest satisfaction that was just released) ranked Four Seasons third in the luxury segment, behind JW Marriott and Ritz-Carlton.

Mr. Schmidt said luxury brands that expand rapidly risk diluting their culture by hiring staff too quickly or promoting managers too fast, and "I do believe that's the case with Four Seasons."

Four Seasons spokeswoman Sarah Tuite called the results from Luxury Branding's study "inconsistent with what we see in multiple third-party tracking sources."

Four Seasons has seen an exodus of veteran executives in recent years. Mr. Smith said that "invariably, changes ensue" when a company shifts from founder-led to a more corporate structure.

A rapid expansion of this sort raises a different concern to Ellis O'Connor, co-head of MSD Hospitality, a unit of Michael Dell's family office that owns two Four Seasons hotels. "With luxury hotel operation, scarcity is part of the allure," Mr. O'Connor said. "You can't turn it into a commodity and get above-market rates."

People familiar with the Four Seasons operation said Cascade and Kingdom appear determined not to weaken the chain as it grows, and have broken off 14 partnerships with hotel owners whose properties weren't up to standard.

That is a "clear indication we are striking an appropriate balance between growing the brand and actively managing the quality of our portfolio," Mr. Smith said. "We will never compromise quality for the sake of growth."

(END) Dow Jones Newswires

July 16, 2017 13:41 ET (17:41 GMT)

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