Four seasons hotel case

2015 年“毕马威杯”管理案例分析全国十强邀请赛

Case study Four Seasons Goes to Paris:

“53 Properties,24 Countries,1 philosophy”

The report is prepared by Team: Duang Duang

From: Nanjing University Business School

Team member:

Team leader: 袁方奇

Team member 1：黄淑琳

Team member 2：孙啸博

Team member 3：王嘉珺

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Four Seasons Goes to Paris

CCCCCCCONTENTSTTTssssTT

1.Background ................................................................... 3

2. Issue ............................................................................. 3

3. Analysis........................................................................ 5

3.1 PEST Analysis........................................................ 5

3.2 Corporation‟s strategy Analysis ............................. 9

3.2.1 Internationalization ....................................... 9

3.2.2 Human resource management ..................... 10

3.2.2 Financial performance ................................ 11

3.3 SWOT .................................................................. 13

4. Suggestions ................................................................ 15

5. Forecast ...................................................................... 16

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1. Background

The founder:

Isadore (Issay) Sharp was born in Toronto as the son of a family of Polish Jewish immigrants.

He excelled in sports during his high school years. In 1952, he graduated with high marks

from Ryerson Institute of Technology with a diploma in Architectural Technology.

After graduation, Sharp went to work for his father‟s company full-time as an architect and

real estate developer, building apartment buildings and houses.

He founded the Four Seasons Hotel in 1960 and opened the first hotel on Jarvis Street in

downtown Toronto in 1961.

1970s:

Isadore (Issy) Sharp founded the first Four Seasons Hotel in London, which set the tone for

the future direction of the company and pioneered many of the signature Four Seasons

services.

1980s:

The 1980s unveiled flagship hotels in a dozen US cities. Four Seasons as a distinct brand

name was coming into its own.

1990s:

The company focused on expanding its portfolio of resorts, and it also introduced Four

Seasons experience to a significant number of destinations in Europe and Asia.

2000s:

Four Seasons Hotel entered France, and its first French property, by renovating and operating

the Hotel George V, a historic Parisian landmark.

2. Issues According to the case, we summarize Four Seasons George V (hereafter “F.S George V) situation

into the following issues. This means we think they are the most important problems to the

development of F.S George V, and these problems should be paid more attention if F.S George V

tends to run well.

2.1Culture effect

2.1.1 National and organizational culture

Problem 1:In France, it is very important to save face and preserve the dignity of the person

being reviewed. Due to it, the manager needs have good leadership and take care of every details

http://en.wikipedia.org/wiki/Polish_Jewish

http://en.wikipedia.org/wiki/Ryerson_Institute_of_Technology

http://en.wikipedia.org/wiki/Jarvis_Street

http://en.wikipedia.org/wiki/Toronto

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of their own behaviors in case of hurting the ego of the employees.

Problem 2: Middle and front-line managers aren‟t accountable.

Problem3:Managers have poor understanding of human resource issues.

2.1.2 Doubt and belief

Many employees in France won‟t follow the movement until they see that something

works.The workforce even doubt whether Four Seasons were serious about the Golden Rule and

think it is too American. This kind of attitude can influence the atmosphere of the working

environment. Employees may become relaxed and disobeying orders, and it will increase the cost

of operation because Four Seasons needs to spend more money and time making the employees

adapt their belief.

The French also have a very emotional way of doing things which can be good and bad. For

sometimes the French temper lashes out. French were said to be “polychronic”.They are

capricious and do not have clear aims. What‟s more, they care about their close friends and

relative. It takes a lot of trouble of managing.

2.2Policy risks

France‟s leaders maintained social equity with local laws , tax politics, and social spending

that reduced income disparity and the impact of free market on public health and welfare which is

quite different from America.

2.2.1 High tax burden

France‟s tax is much higher than that in the US, which could increase cost of operating.

2.2.2 Workweek of 35-hour

This institution forces corporation to recruit more employees to serve, which could raise

financial pressure of Four Seasons Hotel.

2.2.3 The power of unions

In France, the political party of the union has a massive power to affect the antagonism

between employees and management, and even it may help employee fight the boss in some cases,

which is a risk for the corporation to handle the relationship with the union.

2.2.4 Elasticity of work time

In France, the labor law gives more flexibility and elasticity to employees, which means that

employees could work on the seasonal basis, and the corporation allows them to work a little more

during peak business periods and less during a lull, but Four Seasons management was not

familiar with this labor-oriented policy.

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2.2.5 Terminations

Termination is a particular tricky area of labor management in France, because it stipulates

the corporation has no rights to fire employees at will, except to have a very good cause and to

document everything carefully, so it means that even if the employee is remiss, Four Seasons

Hotel cannot fire him easily.

2.3 other issues

2.3.1

Many of the best employees easily found other jobs, while the most disruptive were still there

when the hotel reopened, which means that the quality of employees cannot be guaranteed. As we

can see, the number of people the hotel did not want was somewhere in the region of 40 out of 300

coming back on reopening.

2.3.2

When entering a new city like Paris, the old culture either wears the hotel down or the hotel

wears it down, considering these effects, the hotel has to make adequate preparations for strong

tides including culture difference and many other potential elements. The risk of dealing with a

strong tide should be laid emphasis on.

2.3.3

In Paris, it is common that six palaces compete for the same clients, what‟s more, guest

expectations are so high that the hotel must provide higher staffing、food and beverage. Severe

competition pushes the hotel to increase the cost on the quality of service, which brings more

financial burden.

2.3.4

Instead of hiring from the other palaces, the hotel are individuals who are still open and tend

to be much younger than usual for palace hotels and then bet on training. It takes both much more

time and money to train for skills, which is unable to ensure the quality of service and a large part

of expense.

2.3.5

The hotel hosted a lot of activities like an open event inviting employees and their families to

spend time at the hotel or special achievement celebrations. All these aspects increase the cost of

management.

3.Analysis

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Before giving solutions, we deeply analyzes the exterior environment and interior factors of

corporation that have large effects on what Four Seasons Hotel did and is going to do. PEST

analys is , corporation‟s strategy analysis and SWOT analysis are helpful tools to give a clear logic

to grasp F.S George V „s current situation. Here the derails.

3.1Pest Analysis

Macro environment analys is covers several factors that have influences on the enterprise.

These factors can be mainly sub-divided into 4 dimensions: politics, economics, society and

technologies. This report analyzes these aspects related to the development of Four Seasons Hotel

by using the PEST model in detail.

3.1.1Politics

Different laws

In France, the labor law stipulates that the labor management involves termination, so the

enterprise cannot fire anyone arbitrarily, meanwhile, the law gives employees flexibilities to allow

them to adjust their work time to the business periods.

What is more, when the enterprise do an acquisition, they cannot replace any employee, and

they must inherit all employees including their legal rights based on prior service on the basis of

case law.

So the special law may increase cost and affect revenues of Four Seasons Hotel, for they

must adapt to the new environment and policy, and they also put more early input for the human

resource management, and also they have to accept some not that good employees but have no

way to fire them.

3.1.2 Economics

High tax burden:

France‟s tax burden, 45% of GDP in 1998, was 3% higher than the European average, and 8%

higher than the OECD average, which is a gigantic threaten for Four Seasons Hotel, and the

enterprise may have a large extra expenses for the high tax.

Economic growth

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According to the data from World Bank, GNI in France increased slowly from $35400 in

2000 to $38400 in 2007, although the economy has slipped into recession caused by financial

crisis in 2008, it is also recovering from 2009 rapidly, and continued increasing till 2013.

Therefore citizens become richer and have more disposable money to enjoy their life, which is

good tidings for hospitality industry.

Labor forces growth

French labor forces keeps growing from 27300 in 2000 to 30200 in2013, indicating the

pressure of employment increasing, so it is a good opportunity for Four Seasons Hotel to look for

and choose the better staff. Here is the data:

3.1.3 Society

The need of respect:

2.73 2.74 2.77

2.83 2.84 2.88

2.89 2.92

2.94 2.97

2.98 2.99 3.01 3.02

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

（source：World Bank Database)

Labor force total

3.54 3.58 3.56 3.58

3.66 3.70

3.77

3.84 3.83

3.69

3.75

3.82 3.78 3.78

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

(source: The World Bank Database)

GNI per capita

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The French have a very serious need of respect, they cannot bear others talking about their

weakness in public, and it is very important to save face and preserve the dignity of themselves.

And also, the French have a very emotional way of doing things, which has two sides. So it must

be cautious for Four Seasons Hotel to manage the relationship between staff and employers, in

case of leading the emotional tension of staff.

Strong hierarchical system:

The French all have a strong hierarchical perception, so there is a tendency to refer anything

to the boss, and the boss should be accountable in French culture. This leaves a serious

problem to the manager in Four Seasons Hotel, and how to deal with the employees‟ things is still

worth discussing.

Nature of skeptic:

The French are accustomed to doubt anything they do not see, and they all tend to wait on the

sidelines. They do not follow the movement until the things do work. So this may cause some

annoyance to the managers, especially when they claim some new plans and institutions at the

beginning.

Perception of time

The French attach importance to polychronic meeting or appointment and arbitrary

interactions rather than formal and monochronic meeting, to value relationships, so the

management should pay more attention to this feature, when they communicate with their

employees.

Abuse of privilege

In France, it is common to use privilege, while Four Seasons Hotel forbid this convention and

they insist the guests should come first, but whether this action makes orthodox French satisfied is

not known.

3.1.4Technologies

Development of internet

Internet technology offers more benefits and convenience for both companies and customers.

For instance, customers could book room on the internet at any time averting the lack of room,

and also the Hotel could know about the needs and requirement of customers betimes. Here are

the data:

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3.2Corporation’s strategy analysis

The corporation‟s strategy which comprises the analysis of internationalization,human

resource management and financial performance, offers a strategic view of the key factors to

the success of the company.

3.2.1 Internationalization

Diversity

For Four Seasons, each hotel is tailor made. In the different areas, Four Seasons has different

characteristic. Four Seasons is good at incorporating indigenous elements with their own features.

Four seasons is different from Disney, its brand is associated with intangibles. Four Seasons‟s

diversity can appeal to guests from all over the world. It makes Four Seasons achieve success in

the world.

Globally Standards

Four Seasons has globally uniform standards.At the same time,Exceptions to the standards

were permitted if the local Four Seasons made local sense.It makes Four Seasons become more

integral and specialized.What‟s more,Four Seasons used both external and internal auditors.This

kind of rules can make the quality of service keep on a high level.Over time,the standards help to

sharp relationships between people,and those relationships contribute to building our culture.

Different productions

14.31

26.33 30.18

36.14 39.15

42.87 46.87

66.09 70.68 71.58

77.28 77.82 81.44 81.92

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

（source：World Bank Database）

Internet user（of 100 people）

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Four Seasons provides different productions and service to meet the needs of different people

according to different culture.

The 35-hour Workweek

Four seasons always obey the rules in the different areas and try to create a harmonious

international environment.Four Seasons managers implemented the 35-hour workweek at the F.S

George V in order to meet the letter and spirit of French law.

3.2.2 Human resource management

Distinguished employees

The employees are as distinguished as their guests.If employees are going to adapt,to be

empathetic and anticipate guest needs,the distance between them has to be small.

Golden Rules

At Four Seasons,Human resource management started and ended with “The Golden

Rules”,which stipulated that one should treat others as one would wish to be treated.This is the

key to the success of the firm.

And Four Seasons always put what they all believe in into practice.They really treat the

employees as they once promised.

The task force

Four Seasons has the strong task force.When one of the hotels has some troubles,the head

office can send the task force to help the local hotel‟s manager to achieve their goals.

Recruitment and Selection

Four Seasons wanted to be recognized as the best employer in each of its locations.Every

potential employee was interviewed four times,the last interview being with the general

manager.They pay a lot of attention to the attitude of the employees,hiring the open-minded and

national employees.

1) Motivation system

In France,the team launched an employee-of-the -month and employee-of-the-year program to

make colleagues tell who is good at their job.

2) Communication

Once a month the general manager met with employees, supervisors, and managers in groups

of 30.The groups met for three consecutive months so that issues raised could be addressed, with

results reported to the group.

Every morning the group management team gathered to go over glitches.

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Finally, about three times a year, the team hosts an open door event inviting employees and

their families to spend time at the hotel.

3) Chef

In France，Four Seasons hires serious chef. They attain the importance on the food and try to

meet the different needs of the customers.

Enterprise culture

1) Four Seasons always put what they all believe in into practice.

2) The F.S. George V is not only a French hotel-it is French,but it is also very international.They

want to be a symbol of a France that is in the movement.

3) Delivering “Intelligent, Anticipate,and Enthusiastic Service” worldwide

4) Four Seasons pays close attention to their employees.From recruitment and selection to the

\salary and benefits of employees,Four Seasons always do the best.

5) As for the rules,Four Seasons has their own standards,but at the same time,they combine the

local situations into the standards and form their enterprise culture.

3.2.3Financial performance

We can get the fact from the context that Four Seasons revenues increased at a compound

rate of 22.6% per year from 1996 through 2000 and operating margins increased from 58.8%to

67.9% during the same period. According to the data offered in the Exhibit 2, we can get insight

into the operation quality of Four Seasons at 2000 and 2001.

We use the data in the Consolidated Balance Sheets and Consolidated Statement of

Operations as followings:

Consolidated Balance Sheets:

assets 2001 2000

Current assets:

inventory 3,074 2,806

294,437 316,670

Fixed assets 50,715 46,342

Investment in management

contracts

201,460 189,171

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Total 980,381 984,397

Liabilities and shareholders equity 2001 2000

Current liabilities 52,001 72,497

Long-term obligations 118,244 203,736

Shareholders’ equity 801,136 708,164

2001 2000

Consolidated revenues 303,106 347,507

General and administrative expenses (65,416) (59,532)

Net earnings 86,486 103,074

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These sheets told us that the Four Seasons‟ “investment in management” in 2001 is

outweigh the counterpart in 2000, it is the same with “general and administrative expenses”. So,

we can come to the conclusion that the Four Seasons did spend a lot of money on administration

in order to attain the so-called Culture Cocktail in France, as mentioned in the context.

Well, the administrative level improved gives the Four Seasons more profitability. We can get

that information through these two years‟ shareholders‟ equity.

In the 2001, the Four Seasons‟ current liabilities and long-term obligations are all less than

that of 2000‟s. We assume this is because the improvement of administration makes the hotel

better operation, hence improve the debt paying ability.

Now, let us go into more details. Allow me put forward some terminologies and formulas.

ROE=𝑟𝑒𝑡𝑎𝑖𝑛𝑒𝑑 𝑝𝑟𝑜𝑓𝑖𝑡

𝑒𝑎𝑟𝑛𝑖𝑛𝑔𝑠×

𝑒𝑎𝑟𝑛𝑖𝑛𝑔𝑠

𝑎𝑠𝑠𝑒𝑡𝑠×

𝑎𝑠𝑠𝑒𝑡𝑠

𝑠𝑎𝑟𝑒𝑜𝑙𝑑𝑒𝑟𝑠 𝑒𝑞𝑢𝑖𝑡𝑦

ROA= 𝑛𝑒𝑡 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑝𝑟𝑜𝑓𝑖𝑡 𝑎𝑓𝑡𝑒𝑟 𝑡𝑎𝑥

𝑎𝑠𝑠𝑒𝑡𝑠

TURNTA=𝑒𝑎𝑟𝑛𝑖𝑛𝑔𝑠

𝑎𝑠𝑠𝑒𝑡𝑠 (turnover of total capital)

EM=𝑎𝑠𝑠𝑒𝑡𝑠

𝑠𝑎𝑟𝑒𝑜𝑙𝑑𝑒𝑟𝑠 𝑒𝑞𝑢𝑖𝑡𝑦 (equity multiplier)

2001 2000

TURNTA 0.309 0.353

EM 1.21 1.39

ROE 0.107 0.146

ROA 0.294 0.325

After our calculation, we know that 2001‟s TURNTA is lower than 2000‟s. We reckon that

this is because the hotel spent more money on the administration.

EM is in proportion to the debt ratio. This is exactly the same with our former discussion.

From TURNTA, ROE, ROA, we can tell that the Four Seasons‟ ability to get profit dropped

between 2000 and 2001.

3.3 SWOT Analysis

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SWOT Analysis

Strength Weakness

• Policy that adjust measures to local

conditions

• Strong allegiance to the firm

• Globally uniform standards

• Exceptional、personal、prior service

• The golden rule that one should

treat others as one would wish to be

treated

• Efficient communications and

teamwork

• Effective incentive mechanism

• The tendency of passing the

buck

• Poor understanding of human

resource issues

• The remaining employees‟

poor performance

• Much more time and money

spent on training new staff

• Inability to apologize or

empathize

• Have difficulty in selling

• Rules and policy oriented

Opportunity SO WO

• Take the advantage of the

former George V

• International reputation

• Stimulate the motivation of

staff to provide high level

service

• Make the hotel both

international and French

• Take measures to retain former

talented staff

• Encourage the communication

between old and new staff to

alter their attitudes

Threat ST WT

• Local constrictions including

standards、laws and so on.

• Tax burden and reduction of

the workweek

• Strong tides brought by old

culture

• Severe competition and

consumers‟ high expectations

• Make adjustment on uniform

standards according to the

local constrictions

• Arrange the work time

reasonably

• Ensure the quality of service to

meet guests‟ satisfaction

• Cut cost on the management of

staff to some degree

• Make adaptations to the local

culture

• Transform the conventional

perspectivies

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3. Suggestions

Based on the details analysis in the front part, we come up with the following solutions from 5

parts: More communications between and employees, Be cautious of acquisition and hir ing, Pay

attention to rules, Pay enough attention to service quality, Control the cost on staff management.

4.1More communications between and employees

As is analyzed before, the French live in quite different cultural and social background, and

they are more sensitive, emotional and doubtful, so the relationship with them is more tricky and it

is difficult to gain their identity entirely. If the managers tend to make them work carefully and

give service by heart, they must pay more attention to the communication with staff, and know

about their real thought and need.

4.2Be cautious of acquisition and hiring

For the labor law and case law claim the protection of employees excessively, the enterprise

should make discreet enquiries about the acquisition, in case of spend too much expenses.

Meanwhile, the human resource of Four Seasons Hotel should not hire anyone until he passes the

serious examination, because they cannot fire him once he is hired.

4.3 Pay attention to Rules

Four Seasons can use the motivation system to encourage the employees to do things faster

and efficiently.

The recognition of the spirit of enterprise：The management have to emphasize the ideas of

the Four Seasons and give a good example to make their staff believe that Four Seasons obey their

rules seriously.

Training：The managers have to undergo training before induction. Four Seasons can hire

special teachers to teach the mangers how to communicate with the employees and control their

tempers.

4.4 Pay enough attention to the service quality

To ensure the quality of service, the hotel had better take some measures to retain talented

employees. For examples, employees who have worked in the hotel for a long time deserve to be

rewarded to increase their allegiance at the same time, those who perform poor should be trained

or make some regulations to eliminate those who have the worst performance. It also cannot be

ignored that the severe competition calls for perfect service catering to guests‟ expectations, so the

hotel need continue improving their both tangible and intangible service.

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4.5 Control the cost on managing staff

At the present, the cost on training of new employees and holding activities to break down

barriers account for a large part of expense. To ease the problem, we suggest that the hotel can

train employees in large scale or invite those who are experienced in the hotel to cut cost.

Meanwhile, the amount of activities can be cut to some degree or replace those activities with

detailed and considerate care or welfare.

5.Forecast

Following these suggestions above, Four seasons George V is expected to achieve these goals

much better:

Use more motivation system to inspire staff to work harder and better.

Be cautious to select more experienced and higher quality staff to give better service.

Control the cost of staff hiring and training.

Four seasons hotel case

Business

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