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.)
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