Mini-Case: The Next Big Place

September 9, 2012

Glenn Okun passes on this ready-to-go case:  What locations should Four Seasons Hotels & Resorts consider for expansion?

From the WSJ, Sept 5, 2012:

Rebounding nicely from a drop-off in demand for luxury travel during the recession of the late 2000s, Four Seasons Hotels & Resorts now is looking for the next big thing. Or rather, says president and CEO Katie Taylor, the next big place.

Toronto-based Four Seasons operates 90 hotels world-wide (30 in the U.S.), including two that opened on Tuesday in China and Azerbaijan, and has more than 50 additional properties in development—most of those overseas as well. Among its planned destinations: Serengeti National Park in Tanzania and Indian technology hub Bangalore.

If you were a consultant to Four Seasons, what locations would you recommend?  More concretely:  (a) What criteria would you use?  Looking at its current locations, what criteria does Four Seasons seem to use?  (b) What kinds of information would you need to assess whether a given location fits these criteria?  Where would you find this information?  (c) What locations would you recommend?  Why?  

Post answers in comments.  Best one gets some kind of prize, to be negotiated.


2 Responses to “Mini-Case: The Next Big Place”

  1. Apoorva Vadi Says:

    a) I would look at incomes in developing countries whose manufacturing or technology sectors have expanded in the last 10 years, thus lowering the income gaps between the upper-middle class and the upper class. I’d also consider labor rates in countries which are developing their tourism. Looking at it’s current locations I think they are doing something similar. They are also considering business centers in the east visited often by business partners from the west.

    b) I would use past 10 years of economic income data of emerging economies and look at the change in incomes of middle class and the upper middle class as these categories of consumers in emerging markets tend to have high ‘aspirational’ desires and have a greater tendency for discretionary spending and luxury travel. It’s human psychology to display/express our newly acquired economic status to attain higher social status.
    I’d also look at labor rates data in emerging markets that are promoting tourism, since opening hotels in these locations would lower the hotel room rates and thus attract more customers to choose luxury hotels. (I think all the above mentioned data is available for free as part of census data.)

    c) I would recommend opening hotels in cities in India, China, Thailand, Korea and some East European emerging markets such as the Czech Republic. I’d also recommend popular vacation spots in Africa and the Middle East.

  2. David Backus Says:

    As often happens, the more I think about this the more issues pop up. One thing I’d like to know is the customer base. Business or pleasure? Does it vary by location? Also, where do the customers come from? If anyone knows how to get information like this, even fuzzy information, please pass it on.

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