Alan J. Fuerstman asked a lot of his team during the recession and got back even more at Montage Hotels & Resorts

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It seemed as if Alan J. Fuerstman could not have picked a worse time to open two new hotels.

In late 2008, the economy was in free fall as the global recession took hold. Leaders everywhere found themselves scrambling to see how deeply they would have to cut their expenses. And in the midst of all that tumult, Fuerstman prepared to open a new property in Beverly Hills, Calif., for Montage Hotels & Resorts.

“My concern was we’d be opening a hotel in a market in Beverly Hills that had been traditionally running occupancies in our luxury sphere in the low 80s,” Fuerstman says, meaning that hotels were typically in the 80 percent range in terms of occupancy.

“That was the average occupancy of the competitive set we were looking at. The year we opened, the occupancy dropped collectively in that set to below 50 percent. So the challenge was the business traveler wasn’t traveling. It was a dramatic reduction in travel until the economy picked up a little bit.”

Plans were also in the works to open Deer Valley, a new hotel in Park City, Utah, in 2010. Scrapping or postponing plans for these new hotels was not an option, but Fuerstman also knew that he couldn’t just ignore what was happening around him.

“The real challenge for us was to create and deliver luxury experiences, yet still maintain our vision and commitment to quality,” says Fuerstman, the company’s founder and CEO. “We had to deliver on the brand promise, but we still had to be financially viable. It really forced us to operate as a team and to get creative in finding ways to stay true to our vision and our commitment and still weather the economic storm.”

Fuerstman was confident he could make it all work. His job was to get his team, which now totals 2,500 employees, to believe the same thing.

“At the end of the day, the organization looks to the CEO and the leadership to have confidence,” Fuerstman says. “That confidence in charting the direction of the company is extremely important.”

 

Be clear about your plan

Fuerstman began his mission to get Beverly Hills and Deer Valley up and running successfully by being candid with his team about the challenges they faced.

“They don’t want to hear sugarcoating,” Fuerstman says. “If there is a tightening of the belt or if there are certain things that have to change for the success of the overall organization, you have to deal with those things head on. In a difficult time period, the team really appreciates open and honest communication.

“Fear of the unknown is the greatest stress for our associates. I thought it was very important that we involve all levels of the company in the problem-solving and framing of the future and what success could look like.”

One move that was on the table for Montage was to slash prices to get people in the door.

“What we had to avoid was heavily discounting and repositioning where our product stood,” Fuerstman says. “But we still needed to offer a greater value because of the economic downturn to our customers. So we turned to creating more packages and doing some more value-adds that we maybe hadn’t done in the past, but that now became part of our strategy.”

Certainly, some companies in times of recession choose to drastically cut their prices thinking that something is better than nothing. Fuerstman did not believe in this approach and felt doing so would be a disservice to what customers had come to expect from the Montage brand.

The new value options were part of the plan, but the continued commitment to exemplary service at every level was going to be just as important going forward.

“It’s important that companies take the time to map out and create the kind of infrastructure needed to deliver the outcome they are looking for,” Fuerstman says. “Some of the less glamorous parts, whether it’s opening a hotel or the opening of any business — they cannot be neglected. We cannot deliver the level of service we want to unless every aspect of the organization is pulling together to create that environment and experience we seek.”

 

Provide the tools to succeed

One of the first areas to get cut when the economy turns downward is often employee training, and that’s a big mistake.

“You cannot expect extraordinary results unless you’re investing in the people who will be delivering those results for you,” Fuerstman says. “Leadership needs to invest appropriately and generously in the development of their teams. Quite often, organizations make the mistake of spending less on training and spending and less on the types of things that have a long-term impact on the delivery of your product or guest satisfaction.

“We have a tremendous commitment to our training and ongoing education that starts before any associate has contact with our guest. It continues through all levels of our organization and that commitment to training and learning is never-ending.”

Having a person who is responsible and accountable to make sure employees are constantly learning is a good way to ensure the success of such an effort. The person who heads up this effort at Montage is Derra Lee Edwards, the company’s corporate director of learning.

Since Fuerstman founded Montage in 2002, he has sought to change the way people think of luxury.

“We were looking for a more comfortable luxury and a more gracious and personable style of service that was unscripted, yet highly focused on personalization for each guest experience,” Fuerstman says. “That vision led us to creating a curriculum around that.”

One of the cornerstones of customer service at Montage is employee empowerment. Fuerstman doesn’t want employees thinking about rules or polices when a customer has a problem. He wants them thinking about what the best solution would be to help that customer.

“Empowerment focuses on your ability to properly train so that the empowered associate can respond in a way that is consistent with the brand,” Fuerstman says. “One of the biggest inhibitors to empowerment is when managers and leaders overreact to associates who are trying to act in an empowered way.”

Employees have a responsibility to know your brand and your values when responding to customer concerns or questions. But you have a responsibility to not fly off the handle if they think on their feet in a way that is different than how you would have handled the situation.

“If you overreact in such a way, you’ll put the fear in your associates so that they will stop making the kind of decisions independently that you wish they were making for the betterment of the hotel or resort,” Fuerstman says. “So we look internally. When empowerment is not working, we look at ‘What are we doing wrong from the training and educating perspective that leaves our associates uncomfortable acting empowered?’ Often, we need to be self-critical.”

It all comes back to the idea that you’re part of a team, and you need to make sure you’re doing your part as the leader just as much as you expect your employees to do the same.

“If the empowerment isn’t where you’d like it to be in your organization, you either haven’t trained properly for it or you made the cardinal mistake of overreacting when an empowered associate does something different than you would like them to do,” Fuerstman says.

“That doesn’t mean we’re accepting and understanding of the same mistakes made over and over again. But it’s an important distinction. If you want an empowered environment, you need to look internally.”

 

Look past your ego

Fuerstman admits it took time for him to become better at being a truly empowering leader. But he quickly realized that he didn’t want to be a hindrance to the growth of his business.

“Leaders need to recruit the best and brightest talent around them,” Fuerstman says. “If someone in my organization can do something as well or better than I can, I should be the last guy doing it. I should focus on opportunities where I add the most value. That works throughout the organization. Avoid the tendency to cling to things you like to do if it can be done as well or better by somebody else. It frees you up to accomplish more.”

And in the case of Montage, it freed Fuerstman to help make Beverly Hills, Deer Valley and all his properties great success stories in the tough economy.

“Our team did a remarkable job of responding to the fact that it wasn’t business as usual and we needed to operate in a different type of environment,” Fuerstman says. “Some of those lessons learned in that time period have helped us as we’ve come out of it and prospered.”

Fuerstman is confident the future will be just as bright, in large part because of everyone’s willingness to learn from others and work as a team.

“It’s so important that we unlock our team’s best thinking and that’s a huge responsibility for us as leaders,” Fuerstman says. “The best leaders know how to nurture that and create an environment where the organization is forthcoming and freely engaged to help make our company as strong as possible.”

 

Takeaways:

  • Be loyal to your brand.
  • Make continuous education a priority.
  • Don’t be a bottleneck to growth.

 

The Fuerstman File

Name: Alan J. Fuerstman

Title: Founder and CEO

Company: Montage Hotels & Resorts

Born: Passaic, N.J.

Education: Attended Gettysburg College, Gettysburg, Pa., and received a bachelor’s degree in political science.

Why did you choose political science as a major? I was very interested in political science and thought I wanted to be a lawyer. I started working in hotels my senior year of high school and got a part-time job as a doorman and worked as a bellman every summer when I was in college. When I graduated college, I thought I’d take a year off before pursuing graduate school.

I happened to come out west and had the opportunity to open a resort as a bell captain of a hotel. I fell in love with the business and decided I really wanted to passionately pursue that as a career and I’ve never looked back.

Is there one thing that stands out to you about the hospitality business? I love that we have the opportunity to enrich lives. Whether it’s the guests staying with us, our associates, the communities we serve or the investors that choose to invest with us, we have tremendous opportunity and responsibility. It’s exciting to engage in that every day.

Who has been the biggest influence on your life? My parents. They shaped my thinking in so many ways, and they’ve had a tremendous influence on who I am today.

If you could speak with anyone from the present or past, with whom would you want to speak with? Leonardo da Vinci. To be such a visionary and ahead of his time, so forward thinking and artistic. The blend of that is incredibly interesting.