Making Room

The new CEO at Four Seasons follows the founder. It's the most dangerous seat in business

By Kathleen Kingsbury / Toronto Monday, Nov. 29, 2010
    • Four Seasons

    Asian Expansion: The Four Seasons Mumbai. More projects are underway in China and India.

    Kathleen Taylor likes to say she's a joiner, a woman of the people. Growing up in eastern Ontario, Canada, young Katie played sports, ran for student council, pledged a sorority. "I've always really liked people," she says. "I like working with people, like being around people from all backgrounds."

    Of course, that makes Taylor's 21-year career at Four Seasons, one of the world's elite brands, a bit ironic, and in August she gained the even more exclusive title of chief executive, only the second in the company's 49-year history. "I started here as the No. 2 in a two-person general counsel office," she recalled recently. "Did I think someday I'd run the company? Never."

    Taylor, 53, is warm and down to earth, in addition to being a problem solver. These are all reasons Four Seasons founder Isadore Sharp (legendary is not an inappropriate adjective for him) tapped the young lawyer as his CEO heir apparent more than a decade ago. These traits also made her, three years ago, the ideal choice to guide the hotel company as chief operating officer through one of the most hellacious downturns it had ever seen. "We couldn't have gone through a more difficult time," Sharp said in June. "Clearly she was on the front line and having to be the spokesperson for the issues we faced."

    Today, however, the luxury segment is reawakening. Four Seasons is expanding more rapidly than ever, but Taylor has to navigate her way amid scarce financing, crowded emerging markets and, not least, an omnipresent founding CEO. Says Susan Helstab, head of marketing at Four Seasons: "She's clear that our values, culture and superior quality won't change. But she's also not afraid to innovate."

    Luxury encompasses only a sliver of the $950 billion hospitality industry, amounting to fewer than 400,000 rooms out of 13 million worldwide. Yet it was by far the hardest-hit hotel segment during the financial crisis. It wasn't just economics. Thanks largely to the so-called AIG effect — a reference to the bailed-out insurer's $400,000 executive retreat — corporate and group bookings dried up. "Clients were telling businesses, Don't pass along the bill for luxury travel," says David Loeb, an analyst for Robert W. Baird & Co. "The question became, Is luxury dead?"

    Room rates and occupancy figures crashed. New construction was halted. Even the most prestigious brands cut back on everything from floral arrangements to towels. As industry consultant Rick Swig puts it, "It was the little things that were the first to go."

    Four Seasons proved no exception. Taylor remembers the period with anguish. "We solicited creative ideas for cuts from all our staff worldwide," the mother of three says. "If it didn't affect customer service, we said go for it." Art replaced fresh flowers in elevator lobbies. Restaurants and spas staggered hours to reduce staffing. Doubling up on jobs became common; still, there were layoffs. "I met one young man at our Scottsdale, Ariz., property who had 10 uniforms for all the jobs he did to keep up his work hours and meet the hotel's needs," Taylor says.

    The trick for Four Seasons was to do all this cutting and not reduce service noticeably. The determination to keep up appearances set off a war with some of the company's increasingly stretched hotel owners. Four Seasons is a management company; it doesn't own the properties that bear its name. Investors put up the money to build a property and sign long-term management contracts with Four Seasons to handle operations and upkeep. They expect a return on investment. Normally that isn't a problem, but as the recession unfolded, many properties found themselves underwater.

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