HOTELS Magazine recently conducted the first interview with Allen Smith since he started his new job on September 23 as president and CEO of Four Seasons Hotels and Resorts, replacing Katie Taylor, who left the Toronto-based company in February.
Smith, formerly the CEO of Prudential Real Estate Investors, won the search overseen by the private company’s long-term shareholders, Kingdom Holding Co., Cascade Investment and Triples Holdings, and is now charged with growing the brand while maintaining the integrity of its performance standards.
Under Smith’s leadership, Prudential expanded its global presence, which today consists of 23 offices worldwide and US$53 billion in real estate assets under management, including many hotels.
Having only spent a month on the job at the time of his interview with HOTELS, Smith, who actually interned in 1985 at a Four Seasons hotel in Chicago while attending the Cornell hotel school, was expectedly guarded with his comments. However, he did share several insights about his plans, as well as his point of view about how to best take the luxury brand with 92 hotels today into its next era.
To read beyond the excerpt from the Smith interview, look for the December cover story in HOTELS’ Investment Outlook, as well as the opening story in the December issue of HOTELS Magazine.
HOTELS: Tell us about the interview process.
Allen Smith: As I engaged with the shareholders and came to understand what they were looking for, it was clear they were looking for someone who could think like an investor, someone who had experience managing and growing a business globally, and someone who could fit culturally with this very unique company.
HOTELS: Beyond immersion, what is job number one walking in the door?
Smith: When you think about the competitive advantage of the business, namely its culture and people, clearly one of my priorities is to protect that, to nurture it and strengthen it. When you talk about how to manage the global expansion of the company what underpins that is the integrity of the culture and strength of the people we have. Certainly that is number one.
Extending from that is the need to for us to always be focused on delivering exceptional value to hotel guests and property owners. In my mind, if we are in a position to do that, we will be in a position to generate long-term sustainable growth, and I say sustainable growth because I think of that as growth more within our control because we will have met the needs of these important constituencies, and they will want to do more business with us. Clearly there is a mandate for growth, but within that context that I just described.
HOTELS: What does this change at the top signal to the industry?
Smith: There is a very keen awareness among the shareholders of that which makes Four Seasons strong and a very genuine commitment that those attributes are protected and grown. There is a clear desire for a purposeful and thoughtful approach to growth that isn’t driven by any absolute numbers. There is no thought that we have to double our unit count in a fixed period. We want growth in keeping with the quality of the brand and that continues to strengthen its market position.
HOTELS: What is the current philosophy about owning versus managing assets?
Smith: In terms of Four Seasons as a corporate entity, I don’t anticipate a dramatic change to owning versus managing assets. Having said that, will we consider approaches to more fully utilize our balance sheet to get involved in transactions that are of strategic importance to us? Yes, but that doesn’t mean we have to own the asset outright.
HOTELS: Some industry experts have said it is hard for Four Seasons owners to make money. How would you respond?
Smith: We have to be always mindful of the fact that ultimately our owners are in this to make a rate of return. We have to be prepared to challenge ourselves where appropriate to be flexible in ways we can be without compromising what the brand stands for. We have examples of where we have worked very constructively with owners to find solutions – both capital and operating – that have addressed their needs. But there is more that we can do. I think there is a degree to which we can introduce more of an asset management mentality to some of what we do. But that is in the context of this is one of the leading luxury hotel companies in the world, and we will continue to focus on being that.
HOTELS: Four Seasons has 60 deals under development, based on market conditions, how do you get more of those deals to the finish line?
Smith: A lot has to do with human resources and having people on the ground engaged in doing these deals, and then having the capability to run these properties. We are blessed with a deep bench of talent and have a lot of Four Seasons-ready GMs who are in position to move in. That is very important. The organic growth that we will generate – there are some limitations on how fast we drive that. Now I am talking about the literal real estate development cycle. There will be opportunities to evaluate conversions to Four Seasons where there is physical product we can bring up to standard. There are a variety of tactics.
HOTELS: Will Four Seasons consider a brand extension?
Smith: I don’t think right now it is a key focus as we don’t lack for opportunities with what is our core strength. Having said that, any company needs to be prepared to be innovative, open minded, stay very close to the markets and its customers, and how it can continue to serve them in different ways. There has been nothing ruled out in that regard, nor has there been anything ruled in. As I come in at this point in the company’s life, it is not a priority for me.
HOTELS: Is the endgame an IPO for Four Seasons?
Smith: The end game for me is to focus on continuing to strengthen the brand and grow the company. There has been no discussion with me about an IPO and it’s not in and of itself an objective I have been told I need to achieve. Anytime a company is private there is always speculation about when it will go public. But it is not part of what I am focused on and there is no horizon associated with that I am trying to address.
HOTELS: What can you tell us about you, personally?
Smith: I have been a husband for 24 years and we have four children. I enjoy cooking and even studied it at one point. I am also an avid cyclist and enjoy fly fishing. I don’t have as much time as I would like, but I am not lacking for things I enjoy.
HOTELS: How does it feel to have this job?
Smith: As I have told my former colleagues and people at Four Seasons, it is really a commentary on how compelling this opportunity was, this company is and the people in it that I would choose to leave where I was. It is very humbling to be in a position to lead this company. I had always admired Issy (founder and current shareholder Isadore Sharp) to the extent I knew of him. Having the opportunity to meet with him only reinforces that. This is very exciting for me. It allows me to leverage many things I had done in my career and introduces many new elements that are very invigorating.