Four Seasons, perhaps the most successful upscale hotel brand in the world, held an investor presentation day last week that demonstrated just how far behind most of the competition are.
Despite having a difficult third quarter, in which it lost US$11.4m, the company still claims to generate the highest corporate profit margins in the hotel industry.
The key appeal to investors in Four Seasons is the secure and stable management contracts. The average remaining life in its contracts is nearly 60 years compared to around 10 years for the industry average. In addition, the company has non-disturbance agreements in place on most of its properties.
The typical base fee is 3% of gross revenue of the hotel coupled with an incentive fee that is 5% of gross operating profits. On top of this there are fees for pre-opening and development, sales and marketing, and residential or residence clubs.
Isadore Sharp, chairman and CEO, said that the power of a global brand name is more important and valuable today than ever before.
\With China, India, Russia and other developing countries growing in market importance, recognition and appreciation of a brand name will not only help gain market share but also open up many, many opportunities for development,\ added Sharp.
The brand is a barrier to entry for competitors alongside the company's 'intuitive personal service'.
Four Seasons announced four new hotels: in Barbados, Shanghai, Taipei and Macau.