Forte dynasty takes next steps

LONDON – At age 32, Charles Forte understands the value and positioning of classic luxury and is not that interested in changing what his father has built over the last 25-plus years at Rocco Forte Hotels. But the young director of development for the London-based hotel company with 14 hotels and 20 private villas primarily in Europe and predominantly in Italy does have a bit more ambition and wants to double the size of the business and its EBITDA in the next five years.

Forte also has learned that great opportunities are not easy to find and said he refuses to make bad deals for the sake of growth. But now with some added firepower from new 49% owner Public Investment Fund (PIF) from Saudi Arabia, more opportunities could emerge and gives RF Hotels a reported enterprise value of around £1.4 billion ($1.8 billion).

He has a good head start with seven deals currently in the pipeline – three management deals (Sardinia and Naples, Italy, as well as Dubai), three leases (Puglia and two in Naples) and one owned development in Sicily, Italy. They were close to a deal in New York City but were outbid. Not to be discouraged and with strong ambition to add a U.S. flagship, Forte still has his eyes on New York, as well as Miami Beach, Palm Beach and Los Angeles.

Rocco Forte Hotels will soon open this property in Naples, Italy

“We’re pushing the boundaries a bit,” said the fourth generation Forte hotelier. “We’ve been very comfortable growing in Italy, and now we’re trying to expand the frontiers of where we are as a business. That’s definitely quite different for us in many respects.”

The end game is to sign about three deals a year and continue the legacy built by now Chairman Sir Rocco Forte, emphasizing quality over quantity and the importance of human interaction in luxury hospitality.

“Me and my sisters want to build upon what my dad has created, and we just take it one day at a time,” he said. “We’ve all grown up in this business and are very proud of our heritage. We feel a real duty to try and build upon what’s been done… We have an idea where we want to be in the next five years, and then we can have a look at what’s next… I want to double the size of the business in the next five years and see good growth outside of Italy, and the U.S. is definitely key for us.”

Overall, the group is performing well this year and is on budget, according to Forte, who added they are starting to see more softness and rate resistance from its European customer base.

“A lot of the growth has come not from our strongest performing markets like Rome, but rather Edinburgh and London,” Forte said. “We are seeing good growth in Munich, as well.”

Increased credibility

Yes, the PIF deal is expected to give RF Hotels a little more street cred when sitting at the deal table and allow Forte to be more aggressive with its bids.

“PIF did invest a little bit of money directly into the company, and that’s like a mini-war chest to help us be a bit more aggressive for management contracts and lease deals,” Forte said. “In very specific situations, we can look at co-investing as minor partners into deals. They’ve come in and want to see us grow.”

Forte would like to continue to grow in Italy but doesn’t want to be considered too Italy centric. Again, the U.S., where 45% of its current business originates, is a priority, as is the Middle East. Forte said another deal in Dubai is close and he expects to find an opportunity in Saudi Arabia with the Red Sea a possible destination. The rest of Europe remains a target and currently there is a deal developing in Marrakech.

Forte said he does not expect PIF to buy or develop assets to grow RF Hotels’ management business, but added that as the relationship matures, those are the kinds of conversations are a possibility.

Rendering of a living room at an upcoming Rocco Forte House in Milan, Italy

The two investors are also considering setting up a “sidecar” investment vehicle to acquire or develop assets, but Forte said those types of funds for smaller groups tend to be challenging with “practical issues.”

Ultimately, Forte’s bigger development issues include visibility in new markets. They are tackling it by signing senior development “aides” who work on a freelance basis. They just signed an ex-Belmond/Rosewood developer and are looking for others in the Middle East and U.S.

The second big issue for RF Hotels, according to Forte, is ready capital to acquire assets. He said by the time they find capital partners, they are usually too late to the dance.

He also doesn’t want to get squeezed on terms as the operator. So, they remain selective for the best deals – similar to how Rocco Forte has operated. “We’re not an operator who likes to overpay for things, and it’s become extremely competitive,” Forte continued.

For the moment, Forte said the group is not looking to sell its five owned hotel assets to raise growth funds because they are yielding well, and brand extension are not part of new conversations either. But Forte does see a gap in the market and likes its new position with Rocco Forte House luxury serviced apartments open in Rome and Milan. They are small with nine and 11 units, but Forte thinks it’s an interesting way to get into markets where they don’t have hotels.

The group is also starting to develop residences with 20 built alongside their Verdura Resort in Italy, where there is room for another 46 units. “We’re looking at various city projects, as well, where there will be a residential component,” Forte said.

Keeping the heritage alive

Charles Forte is now a fourth-generation leader working alongside his father, aunt and Deputy Chairman and Director of Design Olga Polizzi, and sisters, Group Director of Food & Beverage Lydia Forte and Wellness Consultant and CEO of Irene Forte Skincare, Irene Forte.

We’re not a lifestyle brand, and I think our customers appreciate that. I don’t think they want us to reinvent the wheel.

Charles Forte

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When asked to reflect on his family heritage and working with his father now for the past seven years since joining the business, Forte said his biggest takeaway so far is “there is no substitute for being present, persevering and being consistent.”

While he believes he tends to take after his mother and is more emotional, his father has taught him to be steadfast and calm in moments of adversity. “My father is someone who’s always stuck through it, and I’ve always been very impressed by the way that he deals with adversity.”

He’s proud to be part of a family business and even points to his grandfather Lord Charles Forte as he works to pass those values on to the people he works with today. “That means treating people like family… I’ve always heard lots of stories about my granddad being very approachable and personable, and I try to emulate that.”

In fact, the younger Charles Forte isn’t trying to reinvent the company started by his grandfather – maybe only putting a few modern twists to its classical, quiet, not so casual luxury approach to hotelkeeping.

“I think it would be a mistake to think that the new generation has all these bright ideas, and we can just flip things on their heads and make them 100 times better,” he said. “But the younger generation helps bring it forward with the times. You’ll see with a lot of the new hotels were doing just a slightly younger interpretation in terms of the design, food and beverage, service delivery to keep it relevant… But it’s been the way it’s been for a long time for a reason… We’re not a lifestyle brand, and I think our customers appreciate that. I don’t think they want us to reinvent the wheel.”