by Doug Gollan, a Contributor, for Forbes.com
In a private dining room at The Bellagio Resort in Las Vegas during August when many CEOs would rather be on vacation somewhere that the outside temperature is not 115 degrees, Alan Fuerstman was clicking through slides of his hotels, recently opened ones, locations about to open, some of his classics, and the pipeline of projects for his two luxury brands, Montage Hotels & Resorts and Pendry Hotels. It's something the founder, chairman, and CEO of Montage International has been doing for three straight days every August since 2003 and apparently enjoys immensely. The adoring audience for the presentation is top producing travel advisors from the Virtuoso network attending their annual conference.
As images of hotels and resorts in Los Cabos, San Diego, Kapalua, Laguna Beach, Beverly Hills, South Carolina, Baltimore, New York City, the New Jersey countryside, Sonoma and Montana roll by one of my tablemates says under her breath, “It gets longer every year,” creating a few laughs, but not enough to stop the proud boss and the company's largest shareholder. After a few more clicks one of his colleagues gets up and whispers to him, causing a pause. Fuerstman then stops to tell the advisors, some of what he is showing them are projects that haven’t been officially announced, but since he considers the agents part of the Montage family, he is going to show a few more, but please don’t post anything about them…yet.
If it seems more like one of those gatherings where your favorite uncle is showing home movies from his most recent road trip across America, it’s not an accident. Most of the group have known each other for decades. Much of the management team at Montage has been there from the beginning or just about, including Fuerstman’s son Michael who serves as co-founder and creative director at Pendry. Fuerstman jokes to the audience that his scion's entrée into hospitality started a few hundred feet away as a lifeguard at the Bellagio’s pool back when dad was the vice president of operations here.
Things are changing, however. Montage entered its teen years with just three hotels, Laguna Beach, Deer Valley, and Beverly Hills, and a single brand. Earlier this year it celebrated its 15th anniversary by opening a stunning resort in Los Cabos that brings the current count to eight open properties. By the time the group turns 21, there should another seven or eight venues, possibly more, based on Fuerstman’s slide show.
The growth comes against a backdrop when many were wondering if smaller luxury groups could survive in a world where the big players were getting bigger. Over the past several years, Marriott International added The Luxury Collection, St. Regis and W Hotels to its own The Ritz-Carlton, Bulgari, Autograph Collection, Edition, Reserve and JW Marriott brands. France’s Accor picked up Fairmont, Raffles, Swissotel, Onefinestay and an interest in Banyan Tree and SLS parent SBE in addition to its Sofitel, Legend, M Gallery and SO flags. U.K.-based behemoth IHG has been moving away from its core of Holiday Inn and Intercontinental business hotels bulking up with Kimpton and Regent. Not to be left out, Hyatt recently signed a partnership with Small Luxury Hotels and is pushing its Andaz brand into the 5-star segment alongside Park Hyatt and Grand Hyatt.
Most luxury hotels aren’t owned in any significant way if at all by the companies whose signs you see on the door, so growth is based on top brass making a constant stream of presentations to developers and financiers working to get deals to manage hotels either as a new build or conversions.
“For a hotel owner, you select a management company for their expertise, but also for distribution, their ability to make technology investments for the future, research into consumer trends, loyalty programs that drive the types of business you need, buying power for everything for refrigeration units to paper towels and so on. The bigger the company, the more scale, so scale is a very powerful proposition for an owner,” says one hotel executive I talked to, adding, “When you see a small group with a big pipeline of management contracts, it’s saying that owners are rating management, operations and the product they are delivering at a level that offsets the disadvantages of being small.”
And perhaps that’s the point. Both the owners who hire Montage to manage their hotels and the travel advisors who recommend them to their well-heeled clients are buying into the Fuerstman’s vision, with Montage the idea that the highest level of luxury service can be delivered in a modern way, localized to California Cool or Southern Charm. With its second brand, Pendry, the company wanted to prove that you could have trendy lifestyle hotel and a bit of a party scene but with the same attention to pleasing the guest as at the mother brand.
"Alan and his executive team have elevated (Montage) to the top of the luxury hotel market. My clients love staying at their properties and are always wanting to try another hotel within the brand," says Anne Morgan Scully, president of McCabe World Travel, adding, "Their newest brand Pendry is attracting their own following and has one of the most forward-thinking hotel designs in today's hotel market They are creating great public spaces that are cutting edge, fun and the place where clients want to be seen. Alan has the golden touch on delivering hotel brands that are sought after by clients looking for excellence in hotel satisfaction."
Nancy Strong, the CEO of Strong Travel Services says, "Montage is an intelligent brand with a true vision of the future independent traveler. Their ability to understand the needs of the luxury traveler is the secret sauce of their success."
With rates at some of its Montage hotels that can start in the high hundreds of dollars per night and go up from there, Fuerstman acknowledges as the luxury market buoyed by the strong economy stretches to see how far it can increase pricing, the pressure is greater than ever to deliver that perfect stay. He says the company has been preparing for its expansion and maintaining its uber-luxury service by doubling down on investments in training and bulking up its executive team. Interspersed with company veterans are newcomers recruited from Marriott, Hilton, Hyatt, Rosewood, and Viceroy.
Lindsey Ueberroth, the CEO of Preferred Hotels & Resorts, a marketing group which represents over 650 luxury hotels in 85 countries visited Montage Los Cabos over the summer. She says in addition to being impressed with the hard product, including the space and finishes of even entry level rooms, the service delivery was already in full gear, something most experts believe takes at least a year to nail at the high end of luxury.
When after the lunch in Las Vegas I told Chris Hamaway, the group’s senior vice president of sales and marketing that Montage reminded me of Ritz-Carlton in the early years under its legendary founder Horst Schulze, he replied, “Horst hired me in 1999 and to this day many of the things he said in those first few years resonate. We try to be humble, keep our head down, and take care of the guests.”
While for now, Los Cabos is the only international destination in its portfolio and Maui is its furthest afield, looking at its future map highlights that even if you are super rich, you won’t have to travel to another continent for an interesting luxury experience. Last year the company broke ground on a Montage and Pendry in the picturesque California desert at La Quinta. In January, it signed a deal to build the Montage Healdsburg on 258 acres in Northern California's wine country due in 2020 featuring 130 bungalow-style accommodations.
Last month, the news was Montage Big Sky, which is set to open in 2021 less than one hour from the Bozeman Yellowstone International Airport and only 45-minutes from Yellowstone National Park. With a mountain modern design with aesthetics inspired by the natural setting, the $400 million resort will feature 150 guestrooms and suites and 39 Montage Residences. Resort amenities include a three-meal restaurant, lobby bar, and lounge, market, pub and recreation room with a bowling alley, indoor lap pool, family swimming pool, fitness center, Spa Montage, and 12,870 square feet of meeting and event space. The resort will feature ski-in, ski-out access to Big Sky Resort’s 5,800 skiable acres and access to Spanish Peaks Mountain Club’s 18-hole Tom Weiskopf-designed golf course.
Scheduled for 2020, Pendry Natirar in the rolling hills of New Jersey’s Somerset County about an hour from Manhattan will use a 33,000 square foot Tudor-style mansion formerly owned by the King of Morocco as the focal point for an adjoining hotel with 66 guest rooms and suites. In addition to residences for sale that will range up to 4,000 square feet, there will be over 13,000 square feet of meeting space that will make the resort a prime destination for executive meetings as well as family celebrations.
Stacy Small, CEO of Elite Travel International says, "I feel like I was on the ground floor and since (its first property in) Laguna Beach, I couldn’t wait to see what’s next. They’ve been true to what they said they were going to do. They’re not just going into the traditional markets everyone else is, and that’s good for me because clients always want new places."
Perhaps the most important of Montage’s recent spurt of announced announcements was its June deal to open the 164-room Pendry Manhattan West hotel in 2021 as part of an eight-acre shopping, residential and office complex that already has signed up Accenture, Amazon, Ernst & Young, J.P. Morgan Chase and the National Hockey League as tenants. The development is well situated adjacent to the ongoing $25 billion Hudson Yards project and Penn Station redevelopment which will change the face of one of the city’s last grimy areas. It’s also a significant win when one considers the list of luxury hotel groups that have had New York on their wish list for years and decades. There are more projects in the pipeline that we’ve heard about and actually seen, however, you’ll have to wait. Either way, as Montage matures from teenager to full-fledged adult, if Fuerstman's slideshow is any indication, the best is yet to come.