Four Seasons Hotels Ltd. founder Isadore Sharp has dodged recessions, natural disasters and even the threat of Airbnb and rival hotel chains encroaching on a luxury market that was once sacrosanct.
But in the twilight of his career, he’s facing new challenges – and this time they’re political.
Saudi Arabia is in the midst of a changing power dynamic within its ruling monarchy. One sign of that is the diplomatic spat between the Saudis and Canada over the Trudeau government’s criticism of the kingdom’s human rights record. But there are complex internal politics as well.
Last fall, in what was described as a crackdown on corruption, Saudi officials detained Prince Al-Waleed bin Talal -- one of three men who, together, control Four Seasons. Mr. Sharp and Microsoft Corp. founder Bill Gates are the others. The Prince’s situation threw the luxury hotel company’s ownership into question, until he was released in late January after more than two months in detention.
So Four Seasons is carrying on, with Mr. Sharp, its chairman, still involved at the age of 86 and still speaking out. When asked about the recent diplomatic dispute, which saw the kingdom expel Canada’s ambassador, he says he believes Ottawa may have stepped out of line. The war of words began in early August with a Foreign Ministry tweet that said Canada was “gravely concerned about additional arrests of civil society and women’s rights activists” and called for their release. That raised the ire of Crown Prince Mohammed bin Salman, resulting in a suspension of new trade ties and other economic retaliation.
“I think it was misplaced. … Sometimes you want to discuss things in private, not in a public forum,” Mr. Sharp said during an interview this week at his home in Toronto. “I think maybe Canada stepped out of line initially. When you are dealing with a monarch, he’s the law. He is making sure everybody knows it. I don’t think you mess with somebody like that.”
It’s rare for a business leader to speak out against the foreign policy of their own country, especially a seasoned executive like Mr. Sharp, but his experience dealing with Saudi Arabian interests makes him more qualified than most to discuss the Canadian government’s approach.
Mr. Sharp’s relationship with the Kingdom of Saudi Arabia began in the mid-1990s, when Four Seasons was under pressure to reduce its debt. He met with Prince Al-Waleed on a yacht on the French Riviera, and the Saudi investor agreed to come to Mr. Sharp’s rescue and take a 25-per-cent stake in the company and allow the hotel founder to keep a controlling position.
InPrince Al-Waleed, Mr. Sharp saw someone who would uphold the Four Seasons name – a brand he has made synonymous with luxury and impeccable service. “I knew what the Prince’s objectives always were. His ownership in Four Seasons is sacrosanct,” Mr. Sharp said.
Just over 10 years ago, Mr. Sharp took Four Seasons private in what he said was a bid to maintain the company’s strategy and direction, selling the majority of the company to Prince Al-Waleed and Microsoft Corp. founder Bill Gates.
Prince Al-Waleed owns a 47.5-per-cent stake through his publicly traded investment company Kingdom Holding Co. Mr. Gates owns an equal stake through his personal investment firm, Cascade Investment LLC.
“I don’t see any one of them divesting their interest. These are two companies that never have to sell,” Mr. Sharp said. “My relationship with the Kingdom and Cascade is golden."
Prince Al-Waleed’s stake, along with his other investments, were thrown into the spotlight with his detention and that of 11 other Saudi princes in a Ritz-Carlton in Riyadh for nearly three months.
Mr. Sharp, who said the Prince “understands politics and business," chalked up his arrest to politics, as Prince Mohammed , heir to the country’sthrone, moves into power. “They are not going to do something that will keep him in jail. It was a pressure play to raise money, they probably succeeded in doing it,” he said.
The Prince was released in late January and told Reuters everything was fine. After he appeared on Bloomberg TV to say he was not tortured, that the detention was a misunderstanding and that his life was back to normal, Mr. Sharp sentPrince Al-Waleed an e-mail essentially saying, “Let’s talk.”
Mr. Sharp said he has not heard back from Prince Al-Waleed , but he said that was not unusual. “I am sure if I called him, he would pick up the phone. We, over 20 years, have created more of a personal friendship.”
Mr. Sharp’s Four Seasons colleagues in Riyadh have seen Prince Al-Waleed and have told Mr. Sharp he “was his normal self, and that there was no sense that anything was wrong.”
As for the recent diplomatic spat, Mr. Sharp says he doesn’t expect it to affect Four Seasons business at all. “I think it will slowly get below the radar screen and people will find a way to say, ‘Okay, we will come back together.’"
At 86, Mr. Sharp is pulling way back. He believes he has now set up his company in such a way that it can prosper after he’s gone. The Prince and Mr. Gates can own it forever as far as he’s concerned. He’s still involved and owns 5 per cent of the business, but he rarely goes into the office and works from his home on the edge of a golf course, where the buzzing of what sounds like cicadas permeates the ground floor on a hot summer day.
When he is in Toronto, Mr. Sharp and his wife Rosalie will host dinners at their elegant mansion on a quiet dead-end street with a Fernando Botero sculpture on the front lawn. Mr. Sharp estimates they have hosted hundreds of business associates, Four Seasons owners and other luminaries. The walls of his house are adorned with paintings and shelves of porcelain dishes Rosalie has curated.
At the dinners, he tries not to talk about business. He wants to know more about his guests, who they are, what are their stories?
Mr. Sharp conducts business face to face. Not on a smartphone, and definitely not on a computer.
He does own a smartphone, which he takes with him when he travels, but he doesn’t turn it on, even when he knows colleagues may be trying to reach him. Instead, he uses it to listen to audio-books when he exercises. He uses his iPad to check his calendar. As for texting, emailing and googling? No. Surfing the web? Facebook? Nope.
“If the phone rings while we are talking, I am not going to answer the phone. There will be a message,” said Mr. Sharp, whose voice is so soft it is occasionally drowned out by the buzzing outdoors.
Technology connects people. But the value of in-person meetings is one important reason Mr. Sharp believes there will always be demand for Four Seasons.
Motel to five stars
Mr. Sharp started Four Seasons in 1961, building a small hotel with his father in a seedy part of Toronto.
Four Seasons now manages 111 hotels and resorts, and 39 residences in 46 countries.
For Four Seasons to provide luxury service, it has to charge high prices. In Toronto, a room with a king-size bed is listed for nearly $800 a night this October. It’s a steep rate, but Mr. Sharp says in all his years at the helm of Four Seasons, he has never received a complaint about pricing.
“Ever,” he said. “It may be, ‘We didn’t get what we ordered.’ I may get a complaint about something that went wrong.
“Price is only about value. People buy Four Seasons because it is the value to them.”
Four Seasons is selling “what I call an effective use of people’s time,” he said. “In order to do that, you have to make sure you cover all your bases.”
On the rare occasion Mr. Sharp travels for pleasure – bridge tournaments with Rosalie – he has stayed at other hotel chains, including the Holiday Inn and Marriott. “They are fine,” he says. “We were there to play bridge, it served our purpose. It was convenient.”
But he has no plans to take Four Seasons downmarket into other price points, as other chains such as Marriott International Inc. have done, with five-star brands such as St. Regis and Ritz-Carlton, as well as budget accommodations such as Courtyard Marriott.
“The business model is intact and will stay that way,” Mr. Sharp said. “It’s not like we have to diversify to become financially profitable. The course is set. There is adequate growth to make this a very profitable business.”
Part of that course is expansion. The Four Seasons used to be predominantly in North America and Europe. Now there are Four Seasons properties across Asia, , the Middle East, Africa and Central and South America.
Mr. Sharp estimates that between eight and 10 business deals are signed every year. He calls it a natural progression of growth.
“Over time, we will become 150, 200, 250,” he said. “We are not going to change the company. It is not going to come through major acquisitions.”
Four Seasons is on track to open up to five hotels and resorts this year, including in the Seychelles and Kuala Lumpur. There are about 30 hotels under construction and approximately another 30 under development. Soon, there will even be a Four Seasons in Mecca, although Mr. Sharp notes he will never get to see it, as non-Muslims are not allowed into the holy city.
But what about all those new boutique hotels and Airbnb, now the largest accommodation company in the world?
“They are not a competitor to us,” he said. “People who travel at the high end pay a premium because of the services. It is pretty hard to check into a fancy home, rent a room and expect the person who owns the house to get up at 5 o’clock in the morning to give you breakfast.”
Four Seasons is expanding as more accommodation companies are getting into the luxury-hotel business. In Toronto alone, there are now six five-star hotels, including the Shangri-La and Ritz-Carlton. The city is soon to have a St. Regis, as well.
Four Seasons puts prospective employees through a rigorous hiring process – any position, from the dishwasher to the front desk to the general manager, will go through about five rounds of interviews for a position. When Mr. Sharp opened a Four Seasons in New York, 15,000 people were interviewed for 400 positions.
The hotel’s golden rule “is to treat others as we would have them treat us.” That includes allowing all hotel employees, regardless of seniority, complimentary stays at any Four Seasons, so they can experience the hotels “like guests do.” Mr. Sharp says Four Seasons has the lowest turnover in the industry.
Mr. Sharp is no longer involved with the nitty gritty of hiring, although he will help choose a successor to chief executive Allen Smith, who is leaving after his five-year term ends in December.
In interviewing candidates, Mr. Sharp said he would always delve back into the character of the person’s past. “Explain to me the hurdles you had to get over,” he said.
The beauty of having a single brand is that employees can easily move around the Four Seasons empire. That allows Four Seasons to expand without the growing pains of bringing people up to speed and melding various corporate cultures.
The approach has helped establish Four Seasons as the luxury brand that’s most reliable. “We all aspire to do the same. It is question of who does it more consistently,” he said.