Fairmont Hotels' Turnaround Strategy

Abstract

In 1994 a wealthy investor purchased controlling interest in Fairmont Hotels, but in 1991 there was no guarantee the five-property chain would even be in operation by 1994. The year 1991 began Fairmont's turnaround when the owners, the Swig family, hired Robert Small, most recently of Walt Disney World hotels, to run the company. Small focused on a top-line strategy of boosting occupancy and market share at the expense of average rate. He wooed travel-industry suppliers by promising performance to keep clients happy. Since corporate customers were also feeling the effects of recession, Small set rates and policies to meet their needs. To fill empty rooms in slow times he implemented price promotions for leisure travelers. To ensure that the company delivered on its promises, Small and his team restructured marketing and human-resources departments. Overhead was cut by trimming accounting and other back-office functions. The result was a steady increase in occupancy with no substantial loss in revenue per available room. Subsequent economic recovery allowed Fairmont to increase rates until it attracted the buyer's attention.