Head Hotelier in the Making: The Early Years of Isadore “Issy” Sharp
He was just 29 years old when he launched what has become the internationally successful Four Seasons luxury hotel chain. Today, Isadore “Issy” Sharp is recognized as one of Canada’s most successful businessmen, having been inducted into the Canadian Business Hall of Fame and made an Officer of the Order of Canada. Consistently ranked among the best hotels in the world, the Four Seasons earns annual revenues in excess of $200 million. That is no small achievement for a man who knew little stability as a boy, moving 15 times in his first 16 years.
Isadore “Issy” Sharp was born on October 8, 1931. His father, Max, was a Polish Jew who emigrated from Poland to Palestine in 1920, and finally to Toronto five years later. He worked as a plasterer until his family began to grow with the arrival of Issy and three daughters. Using his knowledge of home renovation, Max began purchasing houses throughout the 1930s and 1940s, repairing and renovating them, and selling them at a higher price; this was what forced the young Sharp to move so frequently in his youth.
In his early years, Sharp admits he was less than interested in academics. “My life in high school revolved around sports,” he recalls. “Partying became my priority.” That all changed when Sharp was accepted into the architecture program at Toronto’s Ryerson Polytechnical Institute. Sharp began to earn high marks for his work, and also stood out as a top athlete. In the summers, Sharp gained experience in the construction business by working for his father. After graduation, Sharp went to work for his father’s company full-time, building small apartment buildings and houses.
It wasn’t only Sharp’s father that would serve as an important family connection in the young architect’s life. One of Sharp’s sisters had married Eddie Creed, the owner of a large fashion emporium in Toronto. Creed’s best friend, Murray Koffler, would later go on to found Shoppers Drug Mart. The three budding entrepreneurs became fast friends and decided to form a partnership that would last for decades.
“Eddie and Murray had always told me that if I ever had a real estate venture, they would like to invest in it,” Sharp says. After five years of working for his father, Sharp decided it was time to branch out on his own. It was in the 1950s when he began to seriously ponder the idea of building a hotel. “A hotel seemed to me to be a more interesting structure to build because it would be a more active kind of building than either a factory or a house,” Sharp says.
He decided to try and make a go of his dream, but first he needed to find the money. After spending years “knocking on a lot of doors” trying to convince banks and venture capitalists that his business could be a success – to little avail – Sharp finally decided to take his brother-in-law and Koffler up on their offer from years before. He was going to go into business and he wanted their help.
His Finest Season: Sharp Creates a Life of Luxury
After borrowing $300,000 from his two friends, Sharp still needed over $700,000 in capital to begin building his dream hotel. Once again, he turned to a family connection. Cecil Forsyth was a friend of Sharp’s father; he also happened to be the manager of the mortgage department at Great West Life Insurance Company. Forsyth initially refused Sharp’s mortgage application, doubtful of the young builder’s business know-how, but Sharp was persistent. Eventually, Forsyth gave in and provided Sharp with the rest of the money he would need for his project.
$1.5 million and 126 rooms later, the Four Seasons Motor Hotel opened on the first day of spring in 1961. It was an immediate success, despite being located in a downtown area of Toronto well known for the prostitutes and homeless that also called it home; customers didn’t seem to care. Sharp’s hotel was casual, but had an upscale atmosphere; a swimming pool surrounded by a unique courtyard was a major drawing point. It was also located across the street from the Canadian Broadcasting Corporation, whose employees soon began to frequent the hotel after hours. It would be the beginning of the hotel’s association with celebrities and those with influence.
In 1963, Sharp approached Cecil Forsyth again for a $1 million loan in order to launch his second venture in the hotel industry. It was a riskier proposition than his first; this time, Sharp wanted to build a hotel on 17 acres of land in a remote part of Northern Toronto, where the only business nearby was a local garbage dump. But, Forsyth had been impressed with the success of the Four Seasons Motor Hotel and agreed to give Sharp the loan. In little time, the 569-room resort hotel proved to be a similar success, and spawned the development of a new suburbia.
It was business as usual until Sharp took a trip to Europe. “My wife and I stayed at the Dorchester in London,” he recalls. “It was a wonderful hotel and it started me thinking that there is a real style in hotels that must be appreciated, since hotels like the Dorchester have gone on for so long.” Sharp returned to Canada with a better understanding of what it would take to succeed in the long term: excellence.
Using what he had learned in Europe, Sharp decided to create a new luxury hotel in London’s Hyde Park. Market research told him it would be difficult to compete with the already established luxury hotels in that location, but Sharp didn’t listen. In 1970, he opened the 227-room Inn on the Park; it quickly became one of the most profitable hotels in the world. It was small, luxurious, and had excellent service – customers were willing to pay the hotel’s higher rates.
Throughout the 1970s, Sharp began developing hotels in smaller, more rural areas of Ontario, as well as a luxury condo hotel in Israel. Plans to build in Europe were harder to realize; in Rome, for instance, workers kept uncovering Roman artifacts which blocked further construction. A 1972 partnership with Sheraton also went sour due to cost overruns and Sharp’s inability to make real decisions. He sold his 49 percent stake in the Toronto Four Seasons Sheraton and instead, invested in his first property in the U.S.
Sharp continued to expand his operations throughout the 1980s with mixed success. By 1982, he had accumulated $116 million in long-term debt. He began selling some assets, while still continuing to manage the hotels under long-term contracts. With Creed and Koffler, Sharp also created a new company to manage non-hotel assets such as laundry and development property.
Money raised from a stock offering was the last step in reducing the company’s debt. The first Four Seasons public stock offering came in 1969, but after a significant decline in value, Sharp and his partners took the company private. In 1985, it again went public, but Sharp retained 83 percent of the votes.
In the 1990s, Sharp embarked on another period of rapid expansion, primarily into the financial centres of the world, including Tokyo, Paris, and Frankfurt. After purchasing Regent International Hotels Ltd. in 1992, Sharp had created the world’s largest network of luxury hotels; he owned and operated 45 luxury properties in 19 countries. That number grew as Sharp expanded into Singapore, New York, Mexico City, Paris, Prague and more.
The first room rate at the Four Seasons Motor Hotel was $9 per night. By 2000, the hotel was charging up to $750 per night for a basic room, and up to $5,200 for a presidential suite, and $11,000 for a royal suite. In 2006, Microsoft founder Bill Gates and Saudi Prince Al-Waleed bin Talal bought the Four Seasons for $3.4 billion, but Sharp has remained on as Chairman and CEO. Today, Sharp’s net worth is an estimated $370 million.
Seasons of Success: How Sharp Took His Hotel To The Top
“I started just from building one [hotel], it worked so let’s build another, and it worked so three went to four,” recalls Sharp. “It’s a matter of what I call stepping-stones.” He may not have set out to create the world’s largest network of luxury hotels, but that is exactly what happened. In the over forty years since he first entered the business, Sharp has taken the hotel industry by storm, transforming the idea of service and quality, and doing things on his own terms. What were the factors that helped this Canadian hotelier succeed?
Leadership: “Leaders have to set a pattern of behaviour for others to follow,” says Sharp.
He believes that trust – in integrity and openness – is the measure of a good leader. He thus strove to cultivate these qualities in himself in order to motivate and bring out the best in his employees. “By nurturing the full potential of every willing worker from top to bottom,” says Sharp, “I believe that businesses can tap a unique source of leadership and success for the 21st Century.”
Focus: In his early days, Sharpe was faced with many skeptics. For almost five years, he knocked on door after door looking for investors, with no success. It was the determination with which Sharpe wanted to achieve his single goal of building a hotel that kept him going. “If someone had told me ‘Look, you’re going to start today and spend the next five years wasting your time trying to get this thing start’, I would have said I can’t do that,” says Sharp. “But you never think about what it’s going to take of you. Think: I’ve got it now.”
Service: “With China, India, Russia and other developing countries growing in market importance, recognition and appreciation of a brand name will not only help gain market share but also open up many, many opportunities for development,” says Sharp. Throughout his career, Sharp has striven to ensure that his brand name is synonymous with quality. From the interlocking bricks of the driveways at Four Seasons hotels, no detail was too small for Sharp in his goal to provide the highest quality service possible to his guests.
Consideration: “Do unto others as you would have them do unto you,” says Sharp. “That set in place the culture of the company, which gave us service, which allowed us to become the best.” Whether it was helping his employees after the Asian tsunami or refusing to fire his staff when business went bad after 9/11, Sharp was able to rise to the top on a platform of having treated others as he would want in return.
Management: Sharp’s vision had to do with service. He didn’t want to get involved in the ownerships issues surrounding his hotels; he just wanted to run a high-quality hotel. By refusing to follow the path of his competitors, and developing his own unique management schemes, Sharp was able to develop his comparative advantage and rise above the rest.
“Every road will have a detour and bumps,” says Sharp. “The choices are the forks in the road. Usually when you understand something and feel good it gives you the will to persevere, overcome the skepticism and see through the negative side that people present.” Sharp certainly had many detours along the way, but because he had passion for what he was doing, he refused to give up. “Whatever you do, don’t ever use a crutch, and don’t ever think of having an excuse for not having said, ‘Yeah, I did my best.’”
Lesson #1: Leadership Is Not To Be Taken Lightly
“Long-term success is never achieved on our own,” says Sharp. “The phrase ‘a self-made man’ is a myth – all along the way we need support.”
Sharp didn’t become the leading luxury hotelier in the world all by himself. In the over forty years he has been in the industry, Sharp has developed a unique leadership style that has encouraged his employees to devote 110 percent of themselves to the company. By creating a working environment that is built on trust, credibility, and integrity, Sharp has inspired his team to work to realize their best efforts. In the end, he understood that this was the secret ingredient to helping the company realize its best results.
According to Sharp, the most essential quality of leadership – and the one most often overlooked – is responsibility. “Maybe it’s taken for granted,” he says. “Maybe it lacks pizzazz. In any case, it’s basic, the other side of the coin of authority.” As a leader, Sharp admits that his first responsibility if of course to be profitable and competitive in a global economy. But this, he says, no longer means just the creation of wealth through physical assets: “It calls for wealth creation through human resources – the continuous input of information, ideas, and enterprise from our employees.”
Sharp believed that by empowering his employees, his company would experience significant productivity gains. Thus, his first task was always to create a united purpose amongst his workers. “We do that, first of all, by establishing a meaningful goal, an overriding purpose that most people can relate to,” says Sharp. “If the goal is clear and the focus is sharp and constantly reinforced, we unify and energize through a sense of common purpose that inspires employees to ardent effort.”
While his competitors were downsizing in response to the pressures of various recessions, Sharp didn’t believe that the solution to their problems was cutting costs by cutting labour. This, he believed, only served to cut quality. Instead of “minimizing labour’s cost”, Sharp strove to “maximize labour’s value by convincing our employees that our purpose merits commitment.”
Sharp knew that the dedication of his employees was not something he could simply command, nor could anyone else. Leadership, for Sharp, requires persuasion to follow the common vision that he had established. That persuasion was to be built upon a foundation of credibility and trust. Echoing the words of Edward R. Murrow, Sharp suggests, “To be persuasive, we must be believable. To be believable, we must be credible. And to be credible, we must be truthful.”
Throughout his career, Sharp strove to earn that credibility. It was never something he took for granted. “We earn credibility only when employees see that what we say is confirmed by what we do, and when our actions consistently further our stated goal,” he says. “We have to share information truthfully, openly and fully. And we have to earn trust before a sense of common purpose can emerge.”
Sharp’s three cardinal qualities of leadership were the ability to unify, to direct and to motivate. Through a combination of mental toughness and enthusiasm, Sharp was able to bring out the best in his people, which is, after all, the ultimate goal of leadership.
Lesson #2: Success Comes From Pursuing A Single-Purpose Goal
Sharp says he is often asked what his overall vision for the Four Seasons was when he first began pondering the idea in the late 1950s. “What was my grand dream?” he asks. “Well I can say with a great deal of certainty and truth that there was no vision, there was no grand dream. The fact is I was just trying to do one small hotel deal. One deal – not a company.”
Despite not having a dream or envisioning the possibilities of the luxury hotel chain he has created today, when Sharp first got started in the industry, he did in fact began with one clear goal. The very first decision he made in the business was, he says, to establish a single-purpose; wherever he set up shop, Sharp was going to create the best hotel he knew how to.
“We set out to redefine luxury as service, and to provide a support system at our hotels to replace the one left behind at home or at the office,” says Sharp. It was to this end, to the goal of being the best, that Sharp began upgrading his hotels to Five Star standards. He installed the quietest plumbing systems he could find, the softest towels, and – for the first time in a hotel – shampoos in their bathrooms. Over time, Sharp also began accommodating business requests in his rooms. From installing two-line jacks for both phone and computer work, to having well-lit desks, and other amenities such as irons, bathrooms, and a free shoeshine service, Sharp was making sure all his bases were covered.
When Sharp first started to expand his hotel chain, he knew that there were other bigger competitors out there. Nevertheless, Sharp paid no attention. The goal he had established at the very beginning of his career was not to be the biggest and the best hotel in operation; it was simply to be the best. Thus, Sharp focused on operating medium-sized hotels of the highest possible quality.
Having a single goal at the heart of his operations was not a tactic Sharp limited just to his business. In 1978, Sharp’s 17 year old son Christopher died of melanoma cancer. It was a devastating blow to the Sharp family. So, when Sharp first caught sight of 21 year old Terry Fox on TV as he began his cross-country run to raise money and awareness for the disease, Sharp knew this was his chance to take action.
Not only did Sharp pledge money and offer free night’s lodging to the Marathon of Hope team at Four Seasons hotels, but he also developed a close relationship with the young runner himself who would often call Sharp from roadside phone booths along his way. “No one seemed to be taking him seriously,” recalls Sharp. “I mean, a kid with one leg, running all the way across Canada? It seemed to far-fetched. People were cutting him off with their cars on the highway.”
When Fox’s cancer returned and the marathon was cut short in Thunder Bay, Ontario, Sharp knew he had to take action. Fox’s goal had been to raise a dollar from every Canadian, or what would amount to roughly $25 million. Sharp took up that goal, and by promoting the event into what has become an annual worldwide phenomenon, Sharp has been able to raise over $400 million for the cause. That is what can happen when the mind is focused on and dedicated to a single goal.
Lesson #3: Take Care Of Your Customers And They Will Take Care Of You
More than anything else, the Four Seasons chain of luxury hotels is known for exactly that – luxury. But, it isn’t luxury in the normal sense. “Our competitors interpreted luxury chiefly as dazzling architecture and décor, but how important is that to our customers?” Sharp asks. “They are mostly executives, often under pressure, fighting jet lag, stress and the clock. We decided to redefine luxury as service.”
In each and every one of its worldwide locations, the Four Seasons tends to set the top hotel price for the area, and it is usually about 20 percent higher than its closest competitor. How can Sharp risk such a pricing policy? He guarantees that “guests get a fail-safe experience so that a company is eager to pay the extra $50 to ensure a hassle-free trip for an executive who might be working on a $50 million deal.”
To this end, Sharp has initiated a quality of service that goes almost unmatched in the industry. From offering large bars of soap and shampoo in every room, to non-smoking floors, to fitness rooms, and real live people who answer the phones, Sharp has striven to ensure that each Four Seasons hotel is equipped with whatever it needs to make its customers happy. After all, happy customers come back, and they bring their friends with them.
When he opened his first Four Seasons in Toronto almost half a century ago, Sharp might not have had a grand plan, but he did have a consistent thread, which was to provide great service. “The essential question for us in the early days was: ‘What did guests value most?’” says Sharp. “Market research said luxury, not necessarily elegant surroundings and gourmet meals. The greatest luxury is time, and service can help you make the most of that. Give greater productivity, greater enjoyment – what better luxury can there be?”
Of course, Sharp knew that designing service was no easy task, especially in the hotel business where it is generally just a few moments of service delivery that Sharp calls the “make or break point, when reputation is either confirmed or denied.” In order to ensure that the employees at the very front of that service delivery were motivated and committed, Sharp implemented a number of initiatives, such as a profit-sharing plan and two “stress breaks” every day.
“Whether purchasing a yacht, a diamond, a sports car or a handbag, luxury consumers expect the experience of making the purchase to be as rewarding as the purchase itself,” says Sharp. “A company's ability to provide that kind of experience depends on its employees.” To this end, Sharp also paid his front desk clerks twice the average rate; he knew that unsatisfied employees would almost guarantee unsatisfied customers.
In 1967, one Four Seasons employee went to the extreme in demonstrating the kind of service Sharp was trying to encourage. A bellboy for the hotel, Roy Dyment discovered that a dignitary guest had left his briefcase behind after checking out. The guest soon called from Washington stating that the contents of the briefcase were essential for an upcoming meeting. Feeling responsible, Dyment bought a plane ticket at his own expense and personally delivered the briefcase to the former guest.
Today, the Four Seasons name has become synonymous with service, and that is where its true value is found. “Profit directs our focus toward short-term market gains,” says Sharp. “As long as we can keep on creating customer value, profit is unlikely to be a concern.”
Lesson #4: The ‘Golden Rule’ Is Your Golden Ticket To Success
There are some who would argue that there is no such thing as ‘business ethics’. Sharp is not one of those people. In outlining the credo with which he wanted to run his company, Sharp declared that the ‘Golden Rule’ was going to be one of the cornerstones of the corporate culture that he was trying to create. “We aimed to treat others as we would want to be treated ourselves,” says Sharp. “Enforcing our credo was the hardest part, and senior managers who couldn’t or wouldn’t live by it were weeded out within a few years.” It was a painful process, says Sharp, but one that had to be done.
From its customers to its staff, Sharp wanted to create a culture of service that was based on the Golden Rule. How can something like that be put into action? First, says Sharp, get the right people on board your team. For instance, before you can work for the Four Seasons, you must be scrupulously screened through a series of five interviews. “To be at the top we get service standards down to the bottom of the pyramid, and that process begins for us with our hiring policy,” he says. “We hire for attitude. We want people who like other people and are, therefore, more motivated to serve them. Competence we can teach. Attitude is ingrained.”
According to Sharp, the driving force behind his success has been his desire to treat Four Seasons employees with the same level of respect that they in turn are expected to give their guests. The success of this policy has shown itself not only in terms of employee engagement and satisfaction. For the past nine consecutive years, the Four Seasons has been the only Canadian company to land on Fortune magazine’s list of the 100 best companies to work for in the U.S.
“Businesses are all relationships, based on common values, values such as staying true to your word,” says Sharp. “Every religion also enshrines those values, so you can have different religious beliefs, but underlying those beliefs, you’ve got people who must have similar values, and can work together.”
Sharp’s commitment to his employees has been tested in the aftermath of many well-publicized events. In the aftermath of 9/11, the hotel industry began to suffer the effects; people were not flying and traveling as much, so there was a severe downturn. However, whereas its competitors were laying off staff to reduce their costs, Sharp refused to let the Four Seasons go down that same road. He refused to lay off his staff or lower his hotel’s high quality of service, demonstrating his commitment to both customers and employees.
The tsunami crisis in Southeast Asia was a similar test of Sharp’s commitment to his credo. Waves pounded the Four Seasons hotel in the Maldives and within 24 hours, all employees and guests were safely evacuated from the island. But, the damage didn’t stop there. With the resort now closed, hundreds of employees were all of a sudden out of work “at the moment when they needed income most as they started to rebuild their lives and communities,” says Sharp. “We couldn’t let that happen.” Sharp subsequently sent all his employees to other Four Seasons hotels around the world in order to keep them employed. “In true Four Seasons fashion, they have become a dynamic part of the teams at these hotels, embracing our guests with their caring service.”
Lesson #5: Find Your Comparative Advantage and Step Beyond the Standard
It is one of the Four Seasons’ greatest ironies that despite its tremendous success as one of the world’s premier luxury hospitality companies, it actually owns very few hotels. One of the most important decisions Sharp made early on in the life of the Four Seasons was that he wanted to create a unique business model; he wanted his company to be principally occupied with management, instead of ownership of its hotels.
Sharp believed that shifting investment away from hotel ownership and towards management expertise was a way of “freeing up assets to be used for hiring, training and motivating employees – everyone from dishwashers to bellhops to managers to cleaning staff.” Thus, over the past forty years, the Four Seasons has evolved into what is principally a management holding company with different partners investing in different hotels.
Sharp’s strong desire to steer clear of hotel ownership is clearly reflected in one of the company’s key documents: “It is Four Seasons’ objective to maximize the percentage of its operating earnings from the management operations segment, and generally to make investment in the ownership of hotels, resorts and Residence Clubs only where required to secure additional management opportunities or to improve the management agreements for existing properties.”
Under the Four Seasons’ unique management agreements, the company generally supervises all aspects of the day-to-day operations of its hotels on behalf of the owners. Everything from sales, reservations, accounting, purchasing, budgeting, and the hiring, training, and supervising of staff thus falls under the Four Seasons’ management duties. At the corporate level, the Four Seasons also often provides strategic management services, such as recommendations of IT systems and developing long-term marketing strategies.
To be sure, the Four Seasons both manages and owns some hotels. But, if Sharp had it his way, the company would avoid the burdens of ownership completely. The fact that this is one hotel chain that would rather not own hotels has played a key role in its success. In exchange for its management services, the Four Seasons charges a range of fees, including a base fee, an incentive fee, a sales and marketing charge, and a reservation charge. The base fee is a percentage of each hotel’s gross revenues, while the incentive fee is calculated based on the operating performance of each hotel it manages. That is where the Four Seasons makes its real money, and that is exactly how Sharp wanted it.
Leaving behind the issues that come with ownership, Sharp has been able to focus the Four Seasons on what it does best – service. He assessed his competencies and realized where his competitive advantage lied – and it wasn’t in owning real estate. His assessment proved correct; over the years, management earnings have tended to rise, while ownership operations have lost.
In splitting up management and ownership, Sharp demonstrated his willingness to do something differently than his competitors and it was this creativity for which he would later be rewarded.
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