Interview with Wolf H. Hengst, President Four Seasons Worldwide Hotel Operations : Reaching 100 hôtels by 2009

6 min reading time

Published on 05/10/04 - Updated on 17/03/22

Determined to remain only on the very upscale hotel sector, Four Seasons has shifted into high gear and announces an ambitious growth target for the next five years, completing its global implantation and growing its presence on the resort niche.

HTR Magazine: How do you see the situation for luxury hotels in 2004?

_ Wolf Hengst: After a difficult 2003, for eight months, in the 29 countries where we are established, we are experiencing a, sometimes spectacular, recovery of the upscale market, even at destinations such as Bali, Singapore or Shanghai which have been hit by SRAS or terrorism. For the same perimeter, our gross operating margin rose by 3.8% in the second quarter 2004 as compared to 2003, to surpass 31%, and the RevPAR rose by 22.7%, in US dollars.Four Seasons is curently managing 63 properties in 29 countries, ie 16,203 rooms. There are 24 hotels in the US (7,145 rooms), 10 in Canada & the Caribbean (2,112 rooms), 11 in Europe (1,990 rooms), 4 in the Middle-East (847 rooms) et 14 in Asia- Pacific (4,109 rooms). _ For six months of activities, ended at June 30, revenues under management reached can dollars 1.475 bn (approx. euros 940 millon) Summary of hotel operating data - same perimeter - Occupancy: 67,3% (+8.6 points), Average daily rate: 332 US$ (+7.3%) ; RevPAR: 210 US$ (+18.4%) :Gross operating margin: 29.7%.HTR: Does this give you the confidence you need to pursue steady development? _ W.H.: Today we operate 63 properties in thirty or so countries around the world and our goal is clear: we want to manage a hundred hotels by 2009. Twenty projects are already at a very advanced stage.HTR: Is it your intention to achieve greater internationalisation? _ W.H.: In 2003, for the first time, the number of hotels outside North America surpassed the number of American hotels. With a majority of our properties on United States territory, we were seen as an American group (not even Canadian, which we are) and people believed we shied away from international development. This is definitely not the case.HTR: And yet you have made a major move with the acquisition of Regent hotels… _ W.H.: The buyout of the brand Regent with 13 hotels in 1992 marked the beginning of our internationalisation. Well-established in Asia on the luxury niche, our President and CEO, Isadore Sharp, saw Regent as a fine complement to our brand and territories. But the situation has not been what we thought. We are a hotel management company that is known for its performance. By contacting investors, including in Asia, we observed that they preferred to rely on the Four Seasons brand. Several Regent hotels have shifted under this brand and we have finally turned the rights to the Regent brand over to the Carlson Hotels group.HTR: This is cause for a certain amount of confusion, even in your hotel guide… _ W.H.: It is true that there are still four Regent properties in our portfolio, including three in management contracts in Los Angeles, Kuala- Lumpur and Singapore. In Taipei, we have a marketing agreement. At the end of the contract with the current owners, these hotels will either change brand or leave our inventory, and the confusion will disappear.HTR: How would you explain your development strategy for the coming years? _ W.H.: Our development plans for the next few years include 22 projects: 4 are located in Asia, 6 in the Middle-East, 4 in Europe, 3 in the Pacific, 4 in Northern America and one in the Caribbean. It is indicative of our overall growth strategy. We have a significant opportunity to increase our presence in all of the regions mentioned above and we continue to pursue opportunities to do so. China, for example, is the world’s fastest growing economy and the opportunities to locate there are many. We’ve established our brand in Shanghai and look forward to solidifying our presence by adding properties in Beijing and Hong Kong in the next couple of years – covering the three most important markets in the country. There are also many important prospects in Europe for both urban and resort properties, so we look forward to reinforcing the brand in this part of the world. And even though we have a significant presence in North America, there continues to be a desire for more resort experiences here and in the Caribbean.HTR: Are there any specific areas that you would target as a priority if an opportunity should arise? _ W.H.: Our development team is constantly seeking new opportunities in destinations all around the world and generally, our priority is to locate in the places we know our guests want and need to travel for leisure and business. For example, one day we would like to have a hotel in Moscow, or a resort in Tuscany.HTR: A majority of the new developments seem to enter the “resort” category of your portfolio… _ W.H.: As we enter new markets around the world with business hotels, we find that people want us to deliver a leisure experience with the same flavour, so wherever we can and where it makes sense, we will fulfil that need. The overwhelming response to our most recent resorts openings in Provence, Whistler, Costa Rica, Jackson Hole and Great Exuma, indicate the demand for Four Seasons Resorts is almost insatiable.HTR: You are a leading operator in the luxury end of the hotel market, a segment very sensitive to political instability and to the disruptions in the world economy. Have you ever considered acquiring or launching another brand, targeting the mid-market, to balance the risk? _ W.H.: No. Our strategy has long been to focus on managing mediumsized hotels of exceptional quality and we will never stray from it. Over the past 43 years, we have established ourselves as specialists in providing a luxury hotel experience. That singular focus has been one of our greatest strengths as a company. In fact, it enabled us to come out of the past three years – the most difficult period in the history of our industry – stronger than ever.HTR: Kingdom Holdings is a major shareholder of the Four Seasons Company, as it is in Fairmont Hotels and in Mövenpick Hotels & Resorts. Does this represent an obstacle in terms of defining your development strategy? _ W.H.: The fact that Kingdom Holdings is a major shareholder in Four Seasons has little effect on our development strategy. Our development partners are drawn to Four Seasons because of our strong financial performance – we have the strongest balance sheet in the history of our company – and because of our proven track record as the best luxury hotel management company in the world.HTR: How would you describe the evolution of the relations between a management company and owners? It seems that the contracts are increasingly difficult to negotiate, that the demands in terms of performance and return on capital are higher than ever. _ W.H.: We have strong and, in many cases, longstanding relationships with our owners, many of whom own more than one Four Seasons property. The strength of our relationships goes a long way towards bringing efficiencies to the negotiation process. However, there is no question that owners have high expectations. Our financial performance over the past few years, including our industry leading RevPAR, occupancy and market share numbers, show that our owners are getting a significant return on their investments.HTR: What is your view regarding the trend towards the “boutique hotel” concept, involving increased interest in design, and labels from the “fashion world” such as Bulgari, Cerruti or Armani? _ W.H.: Hotel design has certainly been in the spotlight lately – in fact, many of our hotels have been lauded for their design. The main difference between the trendy “boutique hotels” and our hotels is a matter of service. There is no question that our guests appreciate unique and cutting edge design, but to them the most important aspect of a hotel stay is that their every need will be met…that their stay will be worryfree. The fact that we can offer unparalleled service in beautiful surroundings in so many places around the world, gives us a distinct competitive advantage over other brands in the luxury segment, including the signature “fashion brands.”Four Seasons: facts & figures

Four Seasons Hotels & Resorts

Four Seasons Hotels & Resorts

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