UK: THE DAVIDSON INTERVIEW - SIR ROCCO FORTE.

UK: THE DAVIDSON INTERVIEW - SIR ROCCO FORTE. - Since taking over as chairman, Sir Rocco Forte has overhauled Britain's largest hotel and restaurant group. His knighthood may have given him the recognition which, Andrew Davidson suspects, he has needed.

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Last Updated: 31 Aug 2010

Since taking over as chairman, Sir Rocco Forte has overhauled Britain's largest hotel and restaurant group. His knighthood may have given him the recognition which, Andrew Davidson suspects, he has needed.

Sir Rocco Forte, chairman of Britain's largest hotel and restaurant group, is not a man who gives much away. Short and saturnine, he mixes Mediterranean good looks with a decidedly English reserve. He speaks slowly and cautiously, with a deep voice and, uncannily, with the same enunciations and mannerisms as the Prince of Wales, something which people often remark upon and which they have never yet found a suitable explanation for. It used to occasion much sniggering in the City and jokes about men waiting for kingdoms. Not so much any more, perhaps.

Sir Rocco may still not be as famous as his father Charles Forte, the whippet-thin Italian emigre who founded the Forte empire and swiftly became Britain's best-known caterer, but he is catching up fast. After 12 years as chief executive of the Forte group, and three as chairman and chief executive combined, he has finally emerged from his father's shadow to reshape the wide-ranging, £2 billion-turnover empire, which includes everything from Little Chefs and Happy Eaters to Claridges and the Hyde Park Hotel. Large chunks of the old Forte group have been sold off. Big sums raised to invest in foreign markets. New men brought in. New strategies laid out. Some still believe that Forte will never be as good a deal-maker as his father, but others are impressed. Even if it all goes wrong, at least he is having a tilt at it.

Most would cite Forte's television commercial for American Express last autumn as notice that he had arrived. Its lugubrious opening line 'Every great hotel is a disaster waiting to happen ...' seemed to be a permanent feature of ITN adbreaks in October/November. Who wrote that script? Forte, tightly wrapped in his trademark grey double-breasted suit, coughs nervously. 'There was no script as such. I said it.' It was, however, tremendous PR for Forte, both man and company. Yet, according to colleagues, he took a lot of persuading to do it. 'We said what we wanted to get covered. That's why we did it. Not,' he adds with a terse smile, 'because I am a failed actor.' I think that was a joke (he later explains that he did appear in an ITV play as an Italian waiter in his youth) but often it is hard to tell with Forte. The reserve can leave an unbridgeable gap. Colleagues who have known him a long time say that, when among people he trusts, his ready charm and openness are assured. Yet with others, especially those in the media he has not met before, the shutters come down. It is probably a result of the pasting he took in the '80s as his father's placeman, when his every move at the company was scrutinised and criticised. That kind of experience can leave scars.

We are sitting in his seventh-floor office at Forte's High Holborn headquarters. Forte himself, flanked by his PR woman, looks rather ill-at-ease. He says he has just been checking sheets at the Waldorf, perhaps hoping to underline his attention to detail. This same attention had already run to demanding a list of my questions in advance, to ensure that he is 'prepared'. He smiles and says it is his intention, just as it is mine, to get swiftly off the list. The office, small and hung with enough family photos to make Lord Grade jealous, hums with the rumble of London's evening rush-hour traffic. Outside the door, a map of the world is stuck with pins marking all the outposts of the Forte empire. Clearly, plans are afoot.

According to insiders, it would be hard to overestimate just how much Forte has changed the company since his father, Lord Forte, stepped aside. Back then, things had looked bleak. Recession and the Gulf War had combined to knock the stuffing out of the company's profits, which had fallen from £185 million to £60 million between 1991-2. The slump was exquisitely timed; not only had the City lost confidence in Forte's leadership but interest rates were set to shoot up and the company had just increased its borrowings. 'So we had the double whammy of increased rates at the same time as profits dropping,' says Sir Rocco. 'I will be better prepared next time, but I hope I don't have to face a next time like that again.'

Something had to change, and it has. First came the new non-executives on to the Forte board as his father's men retired, then came a wave of new executive talent from across the hotel and restaurant industries. One colleague estimates that as many as half the top 40 decision-makers in Forte are now fresh blood. Head office has been re-organised. Forte himself came down from his 12th-floor eyrie; everyone got smaller offices on the seventh with an open-plan space for secretaries. Special Business Units (SBUs) were set up to concentrate on the different hotel and restaurant brands. Forte calls it 'flattening' the business, delayering to ensure there are less people between him and the customer. Long-time executives have marvelled at the briskness of it all. 'Even those of us who have known him for some time have been surprised by the speed with which he has set about it,' says one of the old guard.

With it has come a new focus and a new strategy. Priority number one is a perceptible improvement in the quality of service in Forte outlets, and the company is currently searching for an objective measure of those standards which can be introduced this year. To that end, it has also set about selling off those business interests like Gardiner Merchant, the contract caterer, and Alpha, the airport food chain, in which the public is not the first client, as well as a host of hotels and restaurants ear-marked as 'non-core'. The sale of Gardiner Merchant, a good profit-maker for the group, raised some eyebrows but Forte is adamant that the strategy is correct. The cash raised fuels the company's ambitions and helps to control the large debt (around £1.2 billion in the 1994 accounts) which it carried through the recent industry slump.

Next Forte is keen to push into new markets abroad. It already has interests in America and Europe and a British base spread across the hospitality spectrum, including well-known names such as Harvester, Posthouse and Travelodge. The new stategy is to build its presence in the international five-star hotel market as well. When we met, Forte had just clinched an agreement to buy Meridien, the French hotel chain, for £215 million. The money was raised through a rights issue. It got the group another 54 hotels (44 of which are 'management contracts' rather than freehold ownership) and a foothold in the Far East.

The City, for once, was impressed. The last interim figures, announced in the autumn, backed that up with good profit growth and a strong performance in the key London hotels market. It is still nowhere near the glory days of the late 1980s when annual pre-tax profits zipped past £200 million (last year's were £121 million) and its share price topped 350p (225p at time of writing) but it meant it was on the right track. It also meant that many have started to revise their opinions of Forte. 'He has not put a foot wrong since he became chairman,' says one analyst. 'It's been a top-to-bottom restructuring. But everything he has done has been positive and he has done it sytematically. I just don't think it has been fully appreciated outside the company yet.'

So, is Meridien a deal to be proud of? Forte smiles. 'We want to develop a major international hotel business which we don't have at the moment,' he says. 'From this we can build into a major network. Sheraton, Hilton and Inter-Continental have about 50,000 rooms. With Meridien, we have around 25,000, so we are still only half the size they are.' That does not, however, mean he is about to embark on a spending spree. 'No,' he says. 'Profits are at recovery phase, we have a disposal programme ahead of us which will release a considerable amount of funds, and we need to time that to our advantage.' Others, of course, are still rather uncomfortable about the logic that sees the same company running the likes of Meridien and the Happy Eater chain. Forte will have none of it. Developing an international five-star hotel chain side-by-side with its legion of motorway cafes is not a conflict, he says. 'People have run more diverse things than that. The two things aren't run together, anyway, they are run separately. Was Harrods affected when it was run by House of Fraser?' (Likewise, I suppose, he could have added Ford and Jaguar.) He continues: 'I sit astride both sides of the business and can attune myself to one or the other. And from where I sit I can see there is a similarity of overall approach in running the two, particularly as it applies to training people and sorting out service standards.' There is even, believe it or not, he says, some overlap between the sort of people who stay at five-star hotels and the nine million or so who frequent Britain's 84 Happy Eaters each year. The important thing is to lock into your customers, find out what they want, and clearly define your brands, and that, say the Forte fans, is what the company has done. Some critics, of course, remain unconvinced.

You would guess Forte has learnt to live with them. Since the day he joined his father's company, he has been the subject of regular digs that his position owed more to his family than to his abilities. He makes light of it now but it must have hurt. He shrugs. 'If I didn't have the steel to face up to that, then I probably didn't have the steel to be here,' he says. A lot of the criticism was wrong, anyway, he adds. 'Remember, I was being criticised for not doing things in 1989, not spending a lot of money buying things. If I had followed that advice I wouldn't be sitting here talking about it now. Look what happened to our competitors.' The joke inside the company is that it's not Forte which is the biggest hotel company in Britain now, it's the official receiver.

Being here, staying in charge, not being squeezed out - inevitably the theme recurs in his conversation. While he acknowledges that, as the founder's son, he had the easy way in to the business, it is also clear he has had a lot more to prove than anyone else in the company. Sir Rocco's colleagues say he can be a very demanding boss. 'It's always difficult for a son to follow in his father's footsteps,' agrees his father, Lord Forte 'but in my opinion the press have not treated him fairly.' Now, he says, his son's effectiveness can be judged by the results of the re-organisation. He believes that so far they are excellent.

Just how much influence Lord Forte, now life president of the company, still wields over his son is a moot point. They meet regularly and talk over all the big decisions. The evidence of the past suggests that the son always strives to please the father. Hence, after an expensive education at Downside and Cambridge, Forte trained as an accountant, not because he wanted to but because it was a good business grounding. Then there were the endless holiday jobs of his youth, washing up, waitering, scivvying in his father's empire. It helped him to see all sides of the business, but convinced others that he could never be his own man. Does it matter? Probably not but for Forte, at 50, it must still be extraordinarily irritating. The problem is that he is a rather different character to his father - less outgoing, more calculating - and, of course, Lord Forte is a hard act to follow.

Sometimes a change of face helps, though. One of the successes of the new regime has been to make peace with the Savoy, which had conducted a decade-long feud with the Forte group, ever since it became its major shareholder. The history of the feud is well-known. After buying into the company, which runs London's most famous hotel, Forte had found itself with a 68% stake but only 42% of the votes, because of the arcane system of family trusts which controls the Savoy. The ill feeling was compounded by the sniffy insistence of the Savoy management that Forte was hardly a suitable partner or owner.

Giles Shepherd, the previous managing director, liked to taunt Forte by describing it as a 'purveyor of services on arterial roads'. Forte's retort was always that the Savoy's management was hopelessly snobbish and inefficient.

Last year Shepherd finally left and Forte nearly put together an agreement that would have given his company a proper say in the Savoy's management. 'It was simply a getting together with other major shareholders, in principal the family trusts, to get the business run better,' he says. The agreement envisaged a management committee including representatives from both sides and a smaller board, but was never signed. Instead, Forte got a new managing director who is 'very acceptable' and a place on the chairman's committee which will help run the Savoy.

No one doubts, though, that if he could, Forte would make the Savoy the flagship of his new international five-star chain. However, when the point is put to him, he choses his words carefully. 'We don't want to take it over at the moment. We are very happy if we can continue at this level of co-operation to move forward in this way. There's no reason for me to take it over.' What he would like to see is a greater coming together of resources, in particular combining the Savoy name with Forte's hi-tech booking systems. (One of the keys to success in the modern hotel market is pushing loyal customers round your worldwide network.) 'They are a small company in what is becoming an ever-more competitive hotel world,' he says. 'Being able to plug into someone who has a reservation system and international arm like ours could be beneficial to them. I'm not saying it is going to happen but it is something that is there.'

So has the feud hurt? 'Public rows are never very good things and if people sling mud at each other some of it sticks, so from that point of view I don't think it has been terribly helpful. But it hasn't changed the fortunes of this company, because its underlying strengths aren't dependent on the Savoy. But it affects perceptions. It has obviously affected your perceptions.' Ouch. It is difficult to tell just how narked Forte has been by the Savoy affair, if only because, behind the smooth smile and wary eyes, his face is actually rather expressionless. But my earlier probing on the synergy between posh hotels and roadside cafes did seem to touch a nerve. Such criticism, he says, is just part of the Savoy mud thrown by Shepherd and his crew. Actually, that's what he intimates, rather than says. The exact words are: 'Some unscrupulous people used it to attack us and defend their own untenable positions.' Forte will not name names. I have simply drawn my own conclusions.

As you have to do about the Forte family's wealth, too. It's intriguing, to say the least, that despite Forte being such a large public company, no one is quite sure just how many shares are still in family hands. Most believe the family stake to be somewhere between 10% and 15% - the annual report does a good job of fudging any details of that, as well as the directors' beneficial and non-beneficial interests (Forte's sister Olga Polizzi, in charge of building and design in the company, is also a director). Lord Forte himself told me he owns 50 million shares but the family would prefer the exact number of the total holding to remain secret. Why? 'It's not very nice opening a newspaper and finding out how much you are worth,' says Sir Rocco, suddenly wrinkling his nose. Others have estimated the family wealth at close to £200 million, a sum which makes the chairman's salary of £320,000 seem rather, well, unimportant. 'Let's just say we have a significant holding in the company which helps keep our noses to the grindstone,' says Forte.

It will be interesting to see how long it remains a family affair. It is not exactly fashionable in the City for Britain's biggest companies, carrying billions of pounds worth of shareholders' money, to be handed endlessly from father to son. The press have already noted that Sir Rocco now has his own son to pass it all on to. Will he? Forte laughs. 'My boy is three! I think it is a bit unfair on him to start deciding now whether he will come into the business. It depends if he is good enough and interested enough. Likewise with my daughters. It depends on qualities and inclination. But I think I would like them to have some grounding in business because hopefully I am going to leave them relatively wealthy.' In the meantime, he points out, there are advantages to having a Forte in charge. 'At the end of the day the person running the business as a public company has to be as effective as anyone else who might be brought in. But if there is that ability and inclination in a family member, it is a nice thing if it can continue. It's a different feel if the name over the door is the same as that of the guy running the thing. There's continuity. There's history. All those things which can be good things if the individual is a positive individual.' Forte, it is clear, is in it for the long haul, as you would expect from someone who lists marathon-running - best time three hours, 11 minutes - as one of his leisure activities (he also plays a bit of golf as a member of no less than four clubs: Sunningdale, Wisley, the New Zealand and the R&A). He hasn't run a marathon in three years, since he became chairman. He says he misses feeling in trim and wants to run another this year now he is 50, but whether he can spare the hours for training is another matter.

What he really craves now, I suspect, is just a little acknowledgement of what he has achieved. Perhaps his knighthood, announced in the New Year's honours list, will help, but it is hard not to feel that there is still a sense of insecurity about Forte, both the man and the organisation, despite the good story they have to tell. I will give you an example. No sooner had I mentioned this to another Forte executive, than the PR is on the phone to the Management Today offices enquiring why I should take that attitude, that I should be grateful as I had got twice as long with Forte as had been agreed, and that, anyway, I had tried to trick him with my 'naive' questions. Oh come on. Perhaps the company, like its boss, should loosen up a little bit and then the message would get through. But these are only matters of presentation, nothing another Amex ad wouldn't sort out.

Biographical Notes

1945

Born Bournemouth 18 January

Educated: Downside; Pembroke College, Oxford

1970 Qualified as chartered accountant

1973 Director of personnel, Forte

1978 Deputy chief executive, Forte

1982 Joint chief executive, Forte

1983 Chief executive, Forte

1992 Chairman, Forte

Sir Rocco Forte is a director of the British Tourist Authority, president of the British Hospitality Association, a member of the World Travel and Tourism Council and a director of Savoy plc.

What People Say

'From an early age he always wanted to come into the business and it has been very pleasing to me. I didn't force him in any way.'

Lord Forte Rocco's father

'He has an absolute determination bordering on stubborness to do things. It can mean he is very demanding to work for. He always expects you to give 100%.'

A Colleague

'It's the easiest thing in the world to attack the son of a pioneering entrepreneur. For years people said that anything he did was inferior to his father, and if anything went wrong it was Rocco's fault.'

An Analyst

'Rocco is a prisoner of his environment. While the old men are still there, there is no way he can break free.'

A former Forte executive, 1992

'(Rocco's) long-term strategic development has not been sophisticated. People want to know what Forte has been doing for the past 10 years.'

A critic, 1992.

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