1997 Annual Report - Four Seasons Hotels and Resorts

FOUR SEASONS MANAGEMENT COMMITTEE ROUND TABLE(continued)H. Roger GarlandVice ChairmanAntoine CorinthiosPresidentEurope, Africa andMiddle EastWolf H. HengstExecutive Vice PresidentOperationsDouglas L. LudwigExecutive Vice President,Chief Financial Officerand TreasurerAnthony SharpVice PresidentVacation Ownershiphotel management provide a buffer, in that it is not capital intensive and the revenue stream is based, to a large extent,on the gross operating revenue of hotels under management. As a result, even in a downturn, we believe that earningsfrom our hotel management business may not be subject to large negative swings. Also, the diversity of our managementoperations, covering 36 different markets and 17 countries, helps to shelter the Corporation from negative regionaleconomic effects. 1997 was a good example of a regional economic downturn, in Asia, which did not have a material effecton the Corporation’s management business.QHow many hotels can Four Seasons operate and continue to maintain its service standards? Is there a limit to thenumber of markets in which Four Seasons can operate a hotel?AThe Corporation’s continued success is dependent on the Four Seasons brand being recognized by hotel guests and hoteldevelopers as the preeminent brand in the luxury sector. Maintaining the highest service standards in each Four Seasonshotel, and ensuring that the quality of guest experience is consistent across the portfolio, is essential to that continuingrecognition. As a result, the Corporation is careful about the pace of adding new hotels and resorts to the portfolio. It isextremely important that we have access to experienced hotel operations personnel to staff key positions in new hotels.A significant portion of our corporate resources are focused on the development of new managers to allow us to meetour growth objectives.In fact, as the Corporation has grown and the culture has been absorbed by a larger group of hotel professionals, expansionhas in some respects become easier. The availability of experienced hotel operations personnel should not be a constraining factor asthe Corporation has a large and growing group of talented and highly motivated hotel managers. At the corporate level eachdiscipline has strong representation and support, and the depth of resources required to ensure the Corporation can largely growfrom within.The number of markets that can support a luxury hotel will also continue to grow as cities in emerging marketsestablish themselves as business and financial centres. The Corporation believes that it could double the number of hotelsand resorts under its management within the next 10 years.QAHow is Four Seasons’ new vacation ownership project being received and what are the Corporation’s long-term plansfor this business?Four Seasons first vacation ownership project, built adjacent to the Four Seasons Resort Aviara in Southern California,started sales in mid-1997. The Corporation is pleased with the response to the product, as both the pace of sales and theselling prices are meeting expectations. Sales of the vacation ownership units at the new Four Seasons resorts in Punta Mita,Mexico and Scottsdale, Arizona are also scheduled to begin within the next 12 months.Looking beyond these projects, the Corporation is considering a vacation ownership component in virtually all newresort properties and in certain of its existing resorts. Four Seasons is also considering the benefits of developing “stand6Four Seasons Hotels Inc.