Is the Ultra High End Aman Resorts Imploding Amidst Death Threats from a Russian Oligarch?

There may be no more important story about the future of true luxury travel this summer than the epic struggle for control of Aman Resorts.

Fortune goes in-depth into the ultra-luxury chain’s dirty laundry.

I’ve never stayed at an Aman Resort. I have wanted to for many years, but I probably never will.

  • There’s no points program. I can’t use my miles (other than credit card points that buy any travel at about a penny a point, but that’s not a good value here).
  • They’re simply too much money, I’d never be comfortable spending $1000 a night on a room. I’ve never spent half that (though I’ve come kind of sort of close to half using points redeemed for stay certificates used for a buy up on an award night, hah).

Nonetheless, they do appear to offer some truly special places where I would love to vacation. Beautiful spots, wonderfully appointed, and with unique access to culture and world class service (at their best, at least).

One is perched on the edge of a national park in Rajasthan, India; another overlooks ninth-century Buddhist temples, surrounded by four volcanoes, in Java.

For aficionados, Aman is much more than a hotel. It’s an experience unrivaled anywhere else. At the Aman at Summer Palace in Beijing, guests have access to a secret door that opens onto the east gate of the palace gardens. At the Aman Grand Canal in Venice, they are allowed to visit the Doge’s Palace and clock tower in St. Mark’s Square after hours.

The company manages better than a 21% operating margin on revenues of more than $200 million, despite occupancy rates of about 30%. They rarely discount and don’t advertise.

A deal was made to buy the chain — including an ownership stake for its founder — in early 2014 but by the end of April the ownership was in court. At one point there was more than one person claiming to be the company’s chief executive, issuing orders and cancelling orders made by the other.

A court put company founder Adrian Zecha was put in control… for 17 days.

The founder departed Aman in the mid-1990s when he no longer exercised majority control. He came back when the resort chain was acquired by an Indian company just before the global financial crisis.

He then took part in the early 2014 buyout of the company spearheaded by an American and a Russian oligarch Vladislav Doronin (who used to date Naomi Campbell).

The next court date is September 15, with a December trial on the fate of the company a possibility.

There are lessons in this, of course. When making 9 figure deals, vet your partners — their stories, the veracity of their documents, whether they even have money. And if you’re linked up with a Russian billionaire, watch reruns of the Sopranos before signing on the dotted line (“Zecha’s witness statement in the London litigation asserts that he was intimidated into leaving.”).

One wonders how long a company can continue to excel, at top of the world levels, with its leadership embroiled in lawsuits. Or what the future of the chain will be, whatever the outcome. Its value lies in its brand, and its culture. Both are put at risk by the turmoil. And for the spoils to be worth it to the victor, it will be tempting to move the company from its core business of ultra high end resorts into more city hotels, use the brand to sell real estate development, and seek to extract incremental revenue from the 70% of its rooms that go unoccupied at any given time.

(HT: Alan H.)


About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. I’ve been to several Amans. They really are everything they are cracked up to be.

    At $1,000/nt, that is five Chase Ink apps. Should be doable, no?

  2. I have stayed at 3 Amans, no means an AmanJunkie as they call themselves. The on on Java at Boroboduhr is like nothing else I have ever seen. Early entry to the temple.. perfect service just amazing. The two in Sri Lanka are less expensive ($400++ per night) and are pretty amazing, but not quite as good.

    Sad to see the drama in this… they really are something special

  3. Having stayed at 4 they are frankly cringing mediocrity and this debacle is the tip of the Aman iceberg. If you enjoy dancing ‘native’ children upon check in, the support of indentured slavery, and mediocre dining then they’re certainly the chain hotel for you.

  4. The 30% occupancy is intriguing. Theoretically you just build fewer rooms and have the same amount of privacy for guests.

    Wonder if it’s a place that gets 70% or higher occupancy just a few times a year and they don’t want to turn away the high dollar guests, so it simply works that way.

  5. They get close to full during what constitutes peak times of the year for a given Aman; but then occupancy drops and stays low for longer periods, excepting weekends and holidays somewhat.

    Don’t forget why Aman villa sales are part of the strategy for the three named figures despite their frustration with one another. Speaking of frustration: D sick of A and Z; A sick of D and brought in Louis Freeh for security against D; Z finding D unrefined and not his problem but A’s problem while A turns into Z’s problem as well.

    It’s a veritable soap opera — their business lives and their personal lives.

  6. What would you say if you knew Anthony Weiner has hung around one or more of these characters who have given Zecha a whirlwind of an experience?

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