News
Our Sir Laurence
May 16, 2012
| Strategic Hotels & Resorts CEO Laurence Geller was inducted into the UK’s Order of the British Empire two weeks ago to honor his philanthropy for children and chairmanship of the Churchill Center. He says the ceremony was “lovely” and the award “ill deserved,” but he’s not giving it back. | ||
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| Laurence grew up in a rough part of London, he tells us, and was a schoolboy jock but learned early that he was “pretty dumb.” (That’s what one says when they’re wildly successful.) At 15, he ran away to Switzerland to become a chef (which seems pretty romantic, except those Swiss are really fussy about their food). In ’76, he landed in the US to run Holiday Inn’s international operation and in ’86 became a Pritzker partner. Luck, Laurence says, “gets you places.” In ‘97, he launched Strategic, which ended ’11 with revenue of $763M and a gross profit of $374M, doing better than competitors but not as well as he would like, he tells us. | ||
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| US hotels are strengthening but not back to peak ’07 numbers, says Laurence who recently acquired a Four Seasons in Jackson Hole and another in Silicon Valley. He’s hunting for resorts to buy since he expects little new supply for 10 years. Last spring and summer, Strategic exited from Europe for better yields in London, the US, and Mexico. Chicago, where Strategic owns the Marriott Lincolnshire, and the Fairmont and Intercontinental downtown, is a relatively strong market, especially with the return of big conventions. Laurence predicts that there won’t be new big hotels developed here and that boutiques won’t work in this meat and potatoes city. | ||
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| With the help of staff like financial analyst Clay Thelen, in recent years Strategic has acquired rather than built new hotels. Laurence says why develop when they can buy for 50 cents on the dollar? (The age-old question: Why buy the cow when you can get the milk for half price?) He’s been lowering management costs by 21% and raising operating efficiency while maintaining quality service. He’s creating more non-room revenues, introducing meeting rooms, wine bars and retail. At the InterContinental here, he brought in a Michael Jordan steakhouse, investing just $4.5M but expecting a 25% return ($1M). Bottom line, he says, costs are lower and revenues higher. | ||
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| Technology has also proved to be a big draw but Laurence says most hotels just ignore the possibilities. In his Silicon Valley Four Seasons, he is removing the front desk. Instead guests will be greeted by a concierge with an iPad and interactive tables in the lobby. In his Four Seasons in Punta Mita (above), 45 minutes north of Puerto Vallarta, he says he’s “redesigning the meaning of resort.” He’s installing luxury tents that will have hardwood floors, four poster beds, outdoor pools, and decks. For children, there’s daycare; for teens playcare and for parents, the adults-only pool. (Don't worry, adults-only pools aren't anything like the ones in late night movies.) Mojito anyone for just $15k a day? | ||
