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Analysis Of The Four Season's Hotel And Its Business Strategy In The Luxury Hotel Industry

7663 words - 31 pages

INTRODUCTIONMethodology of ReportThe following report was derived from the primary use of secondary sources, in addition to telephone contact with hotel representatives. Secondary sources included research from the Internet, industry books, company marketing communications, trade and general business newspapers and magazines, among others. Through all the sources, relevant data and information was extracted into the report's appendices. After individual analysis and group discussion, the following report was devised. The mandate of this report is to provide a macro examination of the luxury hotel industry and specifically the future outlook of Four Seasons Hotel and Resorts, Inc.Company History and BackgroundThe vision for Four Seasons Hotel and Resorts (FSH) began back in the 1960's when current chairman and CEO, Isadore Sharp, envisioned a luxury lodging chain that was able to set itself apart by focusing on personalized and quality services. This has proven to be a fruitful strategy as FSH's success has placed it as one of the world's largest luxury hotel chains and has earned a 5-year return on equity of approximately 19-20% (Refer to Appendix 16). Today FSH has expanded from being a single hotel operating in one country to having 55 properties in 25 countries. FSH is mostly involved with management operations in hotels and resorts, however, it has recently ventured into non-hotel endeavours. The firm is currently involved in 3 lines of businesses, ranging from hotels to resorts to residential condominiums all around the world (Refer to Appendix 9).The origin of FSH was rooted in ownership operations, whereby the corporation owned both the real estate and the building. In addition, the firm would manage the hotel or resort's daily operating activities. In more recent times, FSH has realized that management operations is actually a more lucrative business model that also minimizes risk levels. Through this separate form of business, revenue is only generated from the management operations that FSH would provide. Thus, the firm does not own the building or the real estate, but is solely responsible for the operating activities. Since fiscal 1998, revenue from management operations has actually exceeded revenues from its ownership operations (Refer to Appendix 19). Part of the firm's current growth strategy includes international expansion, with more than 20 new properties currently under construction. Therefore, as FSH expands, the firm is seeking management operation alliances rather than ownership ones.Furthermore, FSH is clearly an industry leader, as it has accumulated the most AAA Five Diamond Awards in the last 20 consecutive years and was ranked by the Zagat survey as the "Top Hotel Chain in the US" and the "Top Hotel Chain Internationally" . FSH was also a leader in pioneering many "firsts" within the hospitality industry (Refer to Appendix 13). These accolades, along with many others, have benefited FSH in creating a strong brand name...

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