Tuesday, February 2, 2010

The Pierre Hotel: A Board Tale

Laura Landro's Wall Street Journal profiles of her stays at ultra-lux resorts and hotels are a guilty pleasure for me. Chances are I will never set foot in 99 percent of the palaces of pleasure that she "tests out" for the WSJ readership, but I enjoy vicariously her candid and colorful documenting of the best and, yes, the worst, that these facilities offer to the business and vacation traveler.

She got me engrossed again with her stay at the Pierre, the famous New York hotel, which she recounted about a week ago. There is an interesting governance tale about the Pierre.

When Isadore Sharp, founder and CEO of Four Seasons Hotels Ltd., wanted to buy a premier property in New York for his expanding hotel chain, he set his sights on the Pierre. He needed the hotel's board to approve. He tells the tale in his book Four Seasons: The Story of a Business Philosophy [Portfolio]:

"We immediately approached the Pierre's board with an offer. The board was led by it chairman, Serge Semenenko, and two other prominent members, Matthew Rosenhaus and Arthur Bienenstock.

"I was quite optimistic that we would get the Pierre. In discussing it with my family one evening during dinner, our boys asked why I was so confident.

"I don’t usually talk about a deal until it’s completed, but I was so sure of this one that I said, 'We’re nearly there now. We’ve got the support. We’re almost certain it’s going through.' Then, jokingly, I added, 'Only one thing could go wrong. An impossible scenario. A board member could die.'

"But that's exactly what happened. The two main supporters of our proposal, Chairman Serge Semenko and Matthew Rosenhaus, both died suddenly, and Arthur Bienenstock, our third proponent, wasn't prepared to push it through alone. We eventually convinced him that the Pierre needed his leadership, and again he brought owners around to our side."

A happy ending to this board governance story. I learned from Landro's article that the Pierre is now operated by Mumbai-based Taj Hotels Resorts and Palaces. On future visits to the hotel I will always think of the tumult that took place when two of the board's key members died mid-deal.