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Rocco Forte Builds New Hotel Chain
Years after Family Feud
By Cliff Feltham, Daily Mail, London
Knight Ridder/Tribune Business News 

Mar. 8--It is six years since multimillionaire hotel tycoon Sir Rocco Forte lost his job. He was deposed as the head of an empire created by his father after one of the most bitter takeover battles in City history marked by ruthlessness, intrigue and treachery worthy of a Shakespearean tragedy. 

Rocco is now building a new hotel business � and a new life. 

It is a venture into which he has sunk a large part of his personal fortune. The contrast between the two careers could not be greater. 

At Forte he controlled 800 hotels, 1,000 restaurants, 100,000 staff, and ran departments for marketing, personnel, sales � all the trappings which accompany a multinational concern. 

Today Rocco, 57, works with a head office staff of 17 from simple open-plan offices close to London's Haymarket. Rocco Forte Hotels has seven hotels, with an eighth opening in Frankfurt in 2005. 

These are no budget night stopovers, but luxury hotels to suit the most discerning traveller. Rocco's designer sister Olga Polizzi has helped to blend old world grandeur with modern high tech communication systems. One hotel has seaweed wraps and hydrotherapy suites. Another has views over Rome's rooftops. 

It is easy to dismiss this as a rich man's indulgence, a project to pass the time and avoid dwelling too much on a loss which clearly still causes hurt years afterward. 

But Rocco appears totally committed to his new hotels. Such full commitment is essential. The hotels are at the upper end of the market, which has been hammered by the collapse in tourism since September 11. 

Rocco concedes trading has been difficult, and some hotels have suffered. "The slowdown has cost us a lot of profit, although there has been help from the fall in interest rates." He puts the net impact at UKpound 3 million. 

Other groups have tried and failed to create a luxury pan-European city centre chain. Rocco is competing against major players with powerful brands and international marketing muscle. He admits overheads for a small group are higher than he would like. 

Does this give him sleepless nights? The Bank of Scotland has granted a near UKpound 300 million line of credit but he still has family money at stake, some UKpound 60 million from his retired father and his sister. He laughs, a shade nervously, and says he sleeps soundly, but he can't be sure about the bank manager! 

The night after Rocco surrendered control of Forte he lay awake wondering "what the hell to do with my life." Married with three children, Lydia, now 15, Irene 13, and son Charles 10, he had enough money to live a life of comfort with his wife Aliai. 

Forte was taken over for UKpound 3.9 billion. When Rocco discovered that Granada was considering breaking it up and selling the upmarket Meridien chain for UKpound 1.1 billion, he began negotiations to buy, but the deal eventually floundered leaving him rootless once again. 

From the age of 14 Rocco had worked in the hotel industry, starting as a cellar boy at the Cafe Royal, learning the business step by step under the tutelage of his father, the legendary Charles, now 94, who built a global empire starting from a Regent Street milk bar in 1934. 

Even with a personal fortune estimated at UKpound 300 million from the takeover, Rocco had no intention of living in idle splendour, or indulging his passion for sport. He routinely cycles 50 miles and has run eight marathons. 

He rarely talks to City journalists these days � more to fashion writers about the latest designs for his hotels. He prefers not to dwell too much on those bitter months in 1995/96. 

Famously, he was reportedly grouse shooting in Scotland when Granada's Gerry Robinson launched his bid. The implication was that here was a playboy boss pursuing the pleasures of life rather than working for his shareholders. 

THE RECENT COURT ROW between Unilever and Mercury Asset Management brought all the memories back. MAM and its investment chief Carol Galley triggered the downfall of the Forte dynasty. MAM was a major Forte shareholder and felt its investment was not earning good enough returns. 

One critic said: "On every measure Forte was underperforming." 

It was a classic battle � the working class Irishman Robinson pitched against the upper crust Forte. Robinson said at the time "Hotels, like catering, TV, and any business, are about management." 

Says Rocco: "I thought I had done everything that was needed, before I was rudely interrupted. When I became chairman I met Galley and Stephen Zimmerman (MAM's co vice-chairman). 

"They were outspoken about what needed to be done, and over the next two years I delivered. So I felt let down by the way they behaved � not so much by the final decision, because the price was high and I don't blame institutions for accepting the money. 

"MAM were instrumental in the bid happening, although they will deny it. Zimmerman jumped two feet in the air when I confronted him over it. That is what is so irritating. But once a company is bid for, it is all about getting the price up. I think we were successful because Granada made no money. It cost them more. 

"The irritating thing was being bid for in the first place. I was doing huge amounts of work and we had real profit growth in the year before. 

"But I didn't do enough to promote myself and what was happening. Now I am small I have to shout loudly to be heard!" 

Rocco is dismissive of Robinson, and clearly considers him MAM's puppet. 

After the bid, Robinson came to see him. Says Rocco: "He seemed as if he hadn't a clue what to do next. Everyone had heard of Hanson clearing everyone out within 24 hours of an acquisition. With Forte, it took over a month for the directors to go. Even two months afterwards, I was still signing cheques." 

The whole experience clearly left a mark. It is highly unlikely Rocco would ever float his new business. He enjoys the freedom from institutional interference. If he were running a public company, he might have to be more ruthless with his fledgling chain. 

St David's in Cardiff, for instance, is a disappointment. The Bay area has failed to take off as projected. Rocco says: "We need to sell rooms at UKpound 150 a night to be profitable. I realise now that is not easily achieved in Cardiff." Generous grants made the project seem more attractive than it was. 

Industry observers claim his decision to launch the business in 1996 may have been influenced by a wish to avoid tax penalties, by reinvesting capital gains from his Forte shares. 

ALONG THE WAY, he has collected hotels in exotic locations such as St Petersburg � but not in Paris or London. He acknowledges the gap. 

"Of course I want to be in London but I am not going to overpay and endanger the company. I haven't found anything that makes sense, but I am looking." 
 

The new venture's slow progress inevitably invites comparisons with the way his dynamic father built up the Forte group. Rocco wants hotels with a maximum of 200 rooms. Beyond that, he believes it is difficult to maintain standards. Managers who meet them can earn 40 percent bonuses. 

Rocco is satisfied overall. The Hotel de Russie in Rome and Savoy in Florence are trading well, as is the Balmoral in Edinburgh. " I didn't have a target when I set out. To have eight properties in five years (including Frankfurt) is not a bad record. 


Hotel Savoy
Piazza della Repubblica 7
50123 Florence Italy

"We have established a reputation for stylishness and comfort. I think I have demonstrated that I am not fooling around." 

-----To see more of the Daily Mail and the Financial Mail on Sunday, or to subscribe to the newspaper, go to http://www.financialmail.co.uk

UKpound preceding a numeral refers to the United Kingdom's pound sterling.

(c) 2002, Daily Mail and the Financial Mail on Sunday, London. Distributed by Knight Ridder/Tribune Business News. UL, UN, 


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