Service Showdown at the Four Seasons

The NYT described some recent challenges at the Four Seasons.  Among them is healthy tension in the underlying business model, which separates asset ownership from service management.  The Four Seasons — a management company that owns none of  its hotels – has expensive tastes.  And some owners’ appetite for excellence is being suppressed by the recession.

Four Seasons managers want to keep the flowers fresh and the payroll fat to protect the brand and its future.  But the incentives of individual property owners aren’t necessarily aligned with this strategy.  Owners are ready to trade off on some aspects of the service experience to weather the economic storm in their particular markets, and managers are systematically refusing.  Things have gotten so bad in San Diego that the owners of the Aviara Resort and the Four Seasons are now suing each other — after a showdown that included locked doors and accounting ledgers being forcibly removed.

One source of the animosity is that some property owners are pressuring Four Seasons managers to drop their prices.  Managers are pushing back, arguing that once customers are trained to expect price breaks, it’s almost impossible to get them to pay full fare again.  And these managers are right.  If your service model depends on high prices, then it’s risky to give up ground.  But it takes a strong stomach to execute, particularly when you’re feeling quite a bit of financial pain.  As one airline manager said to me, “we need to tie one hand behind our back so that we stop giving discounts.”

The brand’s ownership structure, which gives most owners a a deep view of only one property, may also be obscuring the true source of the Four Seasons’ advantage.  The company competes on standardization and scale, not words we usually associate with luxury.  But impeccable service comes from exquisite attention to the details of an experience, and that experience isn’t necessarily diminished by the fact that it’s being replicated all over the world.  In fact, companies like the Four Seasons achieve excellence because of — not in spite of — a high degree of standardization.  Standardization of operations frees up the time, space and money to compete on a main driver of excellence in hospitality industries:  personalized, detail-oriented interactions with guests.

Prince Walid bin Talal, one of the majority owners of the Four Seasons, described the strategy this way:   “It takes a lot of effort, a lot of perseverance and a lot of consistency to reach the stage that [the] Four Seasons has.”  Consistency is probably a more palatable word than standardization for the luxury market. Now we need a new word for litigation.

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