Four Seasons' Taylor Rises to Top of Sharp's Secret Letter
The sealed document described Sharp’s vision for the Four Seasons should he die. Only his secretary knew of it and before every plane trip, Sharp revised the notes as needed, he said in a June 30 interview at his Toronto office.
Known as “Issy,” Sharp founded the company in 1961 with a 125-room Toronto motor hotel and built the luxury chain to include 82 properties across 35 countries. In Manhattan, $35,000 buys a night in the 57th Street penthouse I.M. Pei’s architectural firm helped design. Walls are inlaid with mother of pearl, fabrics woven of platinum and the televisions receive every channel in the world. Taylor’s job is to oversee 50 new projects within seven years, the biggest growth spurt in Four Seasons’s history.
“My responsibility is that this company can sustain its greatness past Issy, past me and past the next man or woman at the helm,” said Taylor, 52, whose appointment was announced June 25. “That’s all about reinforcing the idea that the hotels need to stand on their own and have local leadership.”
She’s taking the job as luxury hotels are working to emerge from a recession that hurt expensive chains more than cheaper competitors. Average daily room rates at high-end U.S. hotels slipped to $246.14 from $255.15 this year through May, according to Smith Travel Research Inc. in Hendersonville, Tennessee.
Hongkong & Shanghai Hotels Ltd. CEO Clement Kwok is focused on opening more hotels under its Peninsula brand in China, just as Four Seasons plans to do. And Starwood Hotels & Resorts Worldwide Inc. expects China to become its second-largest market in the next couple of years, Chief Executive Officer Frits van Paasschen has said.
Sharp, the 78-year-old son of Polish immigrants, will remain Four Seasons chairman and retain his 5 percent stake in the company. The remaining 95 percent will continue to be held evenly between Prince Alwaleed Bin Talal and Bill Gates’s personal holding company, Cascade Investment LLC. Both were investors who helped take Four Seasons private in 2007 in a $3.37 billion sale.
“I have a financial investment in this company, so I needed to make sure that this transition is the right one,” Sharp said. “I got all my eggs in one basket, and now I am giving the basket to somebody else.”
Taylor impressed Sharp each time she addressed the company’s board of directors and often people in attendance approached him to praise her.
“It’s that endorsement of how other people responded to her that was the affirmation I was looking for,” Sharp said. “She knows how to communicate well. She can talk about unpleasant things without being unpleasant.”
Taylor started her career at the Toronto-based law offices of Goodman & Goodman. There she met David Mongeau, who left the firm for Four Seasons and offered Taylor the post of corporate counsel to the chain in 1989.
She became the first woman to join the company’s executive management team and said she thought she’d stay two years.
“A guy I knew offered me a job and a pay raise,” Taylor said. “If David had stayed, I would have gone to another company very shortly.”
Mongeau didn’t stay and Taylor took his position as senior vice president in 1993. She calls it her “seminal moment” professionally.
“Katie has a real practical business sense,” Mongeau said in a telephone interview from London, where he is chairman and founder of the investment banking firm Avington Financial Ltd. “A lot of people who come from a professional background can often be too theoretical.”
The new CEO said she plans to hire “the best and the brightest” staff while minimizing layers of supervision. Both corporate executives and hotel general managers can expect the company to invest more in developing leaders. She points to Hewlett-Packard Co. and Hilton Worldwide as companies that succeeded beyond the departure of their founders.
Taylor faces the additional challenge of fallout from a worldwide recession that curbed travel. The average daily rate among hotel chains with the costliest rooms fell 16 percent to $242.99 in 2009 from a year earlier, according to Smith Travel.
Heading for Rebound?
Occupancy is beginning to rebound, climbing to 65 percent at high-end U.S. hotels through the end of May from 59 percent a year earlier, Smith Travel Research said.
Four Seasons countered by cutting expenses in the past 20 months. Job sharing became common to avoid layoffs, Taylor said in an e-mail. Renegotiating supplier contracts and deferring some technology investments also helped the company curtail expenses without diminishing the experience of guests.
“Many of these measures have been temporary,” Taylor wrote.
“The challenge ahead for all top-tier brands is not business as usual, but how to excel in an era where the array of high-quality service hotels and resorts has expanded,” said Lewis Wolff, whose Maritz, Wolff & Co. owns the Four Seasons hotel in Houston.
“Katie’s elevation comes at the right time for her and Four Seasons,” he said.
A new 259-room Four Seasons, which will feature an additional 204 private residences, is under construction in Toronto and scheduled to open in 2012. It will replace the current hotel.
Much of the company’s coming expansion will be in China, where it’s looking to increase its three locations to 14 in the next few years.
China is the world’s fastest-growing major economy.
“In China, at the high end of lodging, there is a lot of competition,” said William Marks, San Francisco-based senior analyst at JMP Securities LLC.
“One challenge is to make sure all development partners are on board to invest the money to keep the Four Seasons standards,” he said. “High costs can get in the way of profits.”
Taylor’s life travelling the globe as much as half the year contrasts with her middle-class upbringing. The first plane she boarded was for a family vacation to Fort Lauderdale, Florida, when she was a 20-year-old university student.
She studied political science and economics at the University of Toronto, then added a joint master’s in business administration and law from York University in Toronto.
Childhood summers were spent at her parents’ small cottage at Balm Beach, Ontario, about two hours north of Toronto, where she and her four siblings swam, bicycled and sailed.
Taylor still enjoys the outdoors, skiing and biking with her husband Neil Harris, a lawyer; their teenage son and daughter and Harris’s 38-year-old daughter from his first marriage.
A turning point in Taylor’s life came early, when her 17- year-old brother Chris died of cancer. Taylor was 26 and said the experience eventually helped her put business into perspective.
“It’s maybe a bit too simplistic, but after that I often would ask myself, ‘Is somebody going to die?’” Taylor said. “And if the answer was no, there was no reason to go crazy.”
Taylor’s approach is also reflected in her management style.
“Katie is direct,” said Michele Sweeting, senior vice president of capital planning and procurement for Four Seasons. “You know exactly what she wants.”
Taylor will be the only female CEO among at least the world’s top 10 hotel operators by revenue, according to data compiled by Bloomberg. Flower bouquets grace her office, many sent by women to congratulate her.
Women represent 54 percent of senior management at Four Seasons, the company said in an e-mail.
While Taylor never experienced much resistance from her male colleagues or business partners, she said she knows her position is symbolically important.
“There aren’t enough hospitality organizations run by women at this point,” said Betty Spence, president of New York- based National Association for Female Executives, an organization for women with 20,000 members. “Executive positions are the last bastion women need to break into.”