Kerzner's
trick then was the same as it is today - to offer people the sort of
hospitality they have never experienced before. What has changed is
that people didn't expect it back then, and now they do. "If you look
at the mid-1960s in South Africa, the expectation was governed by what
was on offer. It was nothing like what has evolved over the years. It's
natural that people's expectations of a great boutique hotel operation
is quite different today than it was 30 or 40 years ago. When you
compare the first Walt Disney theme park with what it has become today,
it is extraordinary the way it has grown. The expectations are quite
different."
Colleagues talk about
Butch Kerzner in loving, reverential tones. They refer to his people
skills and his way of making things happen. "He was a total package,"
says Steve Ross, who joined the board of Kerzner International, through
Butch Kerzner. "If you talk to people on Paradise Island, they all
remember Butch. His presence around that whole company, you don't
replace that overnight. The company is doing fine, but it still feels
the loss of Butch."
Howard Brett "Butch" Kerzner was the
antithesis of his father. Not for him the party-going celebrity-filled
lifestyle. Neither did he share his father's gruff, intemperate manner.
According to colleagues, Butch was the family man: clean-living,
passionate and driven about his work. He was polite and charismatic and
his private interests included rock-climbing.
Butch was the only
one of Kerzner's five children to follow his father into the business.
He studied economics at Stanford University, worked on Wall Street and
joined Sun International in 1992. He completed the £125m purchase of
Paradise Island, dealing with the Mohegan native Americans over the
Mohegan Sun gaming development in Connecticut, and negotiated with both
Greenwich and Manchester city councils over the rights to run the UK's
first super-casino.
"When Butch became CEO, he had a great deal
of respect for Sol and his opinions," says Paul O'Neill, one-time
president of Kerzner International Bahamas in 2006. "Sol really was a
consigliore. He was an adviser to a large degree. They spoke all the
time, and they built great relationships with folks they did business
with.
"Butch wasn't someone who sought the spotlight, he was very
much the businessman, the family man. Sol was a little bit more
comfortable on the dance floor, if you know what I mean." Butch's
stand-out moment was taking the company private last year, in a $3.8bn
buyout which increased the family's stake from 11 per cent to 25 per
cent. Yet the family still ended up making more than $400m from the
transaction.
"From Butch's standpoint, he wanted a bigger
interest in the business; he saw that the company wasn't being valued
correctly," Ross says. "He saw the opportunities of being private."
While
Kerzner had a vision for resorts and strong attention to detail, his
son had strong business nous and deal-making acumen. It was, says Ross,
"a tremendous double act". Investors who supported the company going
private had the utmost respect for Sol Kerzner and his capabilities,
but didn't want to build the company around one person.
Butch
Kerzner built a partnership with the Dubai royal family that secured
its investment in Kerzner International and was instrumental in
securing land for a -second Atlantis resort on the Palm Dubai, which
opens next year. He was negotiating with the Singapore government over
a casino licence, building the One&Only brand and scouring the
world for other development projects.
It suited father and son.
Kerzner senior got time to work on The Cove development and think up
new visions, and his son's business reputation grew. The succession of
the Kerzner empire was taking a logical and compelling route.
Butch
Kerzner died on October 11 2006 in a helicopter crash while overlooking
potential development sites in the Dominican Republic. "Obviously it's
a huge setback in my life. Life wasn't quite the same," says Kerzner,
who speaks with affection for his son, demonstrating respect for him as
a business partner and pride in seeing the boy make the grade in the
same profession.
"I spoke to Sol very soon after it occurred,
probably minutes," says O'Neill. "He wanted my wife, Judy, and I to be
in the Bahamas, with Vanessa, Butch's wife." O'Neill was five months
retired as president of the Bahamas operation. He had been planning to
spend more time with his grandchildren and to travel with his wife.
"It's a 24/7 business. We just decided that we wanted to take that
break."
O'Neill got another call later that evening. It was
Kerzner again. "He started talking about the organisation's needs. He
wanted me to come back to take an operating role. I immediately agreed
to do that, and I was on a plane the next day."
Kerzner arranged
a board meeting by conference call. "It was held in a state of shock,"
recalls Ross. "I remember Sol picking up and saying: 'We've got to do
this and this.' You saw the strength of Sol." One of the things someone
had to do was make the licence-bid presentation to the Singapore
government. Kerzner decided he would do it himself. "Butch was buried
on a Friday afternoon, and Sol left for Singapore on the Saturday or
Sunday," says Ross. With so little time, the presentation, as put
together by Butch Kerzner, was left untouched. "It must have been very
tough for Sol. The presentation had Butch speaking on a video tape. You
can only imagine what that would have been like for Sol watching it. It
had to be unbelievable. I heard he was very strong." Kerzner
International lost the Singapore licence contract.
Sol
Kerzner is throwing a party, a three-day party. The man once described
by Frank Sinatra as "the best saloon-keeper in the world" has got an
array of A-list celebrities coming to Paradise Island, his 685-acre
beach destination in the Bahamas, to mark the opening of The Cove, the
latest phase of his Atlantis resort complex.
Janet Jackson is the
headline act for Kerzner's incredible grand opening weekend. John
Travolta, Sean Connery, Stevie Wonder, Whitney Houston, Michael Jordan,
Lindsay Lohan, Liv Tyler, Rob Lowe and Kanye West also give the event
star-studded quality. No expense is spared on the fireworks, the Dom
Perignon is in full flow, and sushi, lobster and oysters are in
plentiful supply. In Kerzner's world, everything has to be on a grand
scale.
Atlantis
was big enough even before Kerzner spent $1bn on the Cove expansion.
The giant Royal Towers hotel complex has 2,900 bedrooms, including a
$25,000-a-night suite, 35 restaurants, a large casino and 20m gallons
of pools and lagoons. But The Cove adds a more cosmopolitan edge to the
resort, its 600 rooms housed in a Beers and Rockwell-designed hotel
slightly away from the more garish Royal Towers.
A tranquil
open-air lobby offers an arresting view of the ocean. There are
adult-only pools, fine dining and a boutique that wouldn't look out of
place in Paris. You can swim with dolphins, or take a ride in the big
new spectacular, Aquaventure, a 63-acre water park, complete with
harum-scarum rides such as the Leap of Faith, set, for some reason, in
a replica Mayan temple.
The Cove is already a success. American
families, mainly from the eastern and southern states, fill the place
for long weekends or four- to five-day vacations. As Kerzner parties
with his family and celebrity friends, Kerzner International, the
world's foremost destination resort operator, has notched up another
triumph.
A month earlier, Kerzner's mood was altogether darker. A
fire overnight near one of the poolside areas is troubling him. He
walks up and down the cooking stations at The Cove's Mosaic restaurant,
which is busy for breakfast but quiet this lunchtime, and nothing on
offer seems to interest him. Staff fuss around his table, and he shows
his irritation - he seems to wear a permanently grumpy expression, so
that when he smiles occasionally you're rather grateful for it.
Pictures from past decades show a bronzed or flushed, well-rounded
face. He is no more than five and a bit feet tall, which may explain
why boxing was a formative experience in his Johannesburg youth. There
is nothing showy about his appearance, his stride perhaps betraying the
effects of last year's triple heart bypass.
Kerzner is stilted as
he begins to discuss his latest venture. He warms up a bit as the
conversation turns to his achievements and the hospitality industry in
general. Then, at the end of the lunch, he is asked to head to the
beach, a hundred yards from the restaurant, on foot, for a photo-shoot.
He grumbles, but relents. The grumble turns into a minor tantrum on the
beach walkway when he realises the photographer wants him to step on to
The Cove's glorious sand. "I can't be seen in front of my guests like
this," he says tetchily. The photo-shoot is abandoned, Kerzner summons
a driver and is driven off in a golf buggy, his mood considerably more
sour than at the beginning of lunch.
Kerzner is 71 and has been
in the hospitality business for almost half a century. One thing he has
always valued in that time is publicity, hence the lavish parties, the
big-name acts at his resorts and the company's brash number one core
value: "Blow away the customer." "I am not mad about shmoozing," he
said a few years ago. "I've made some very good friends. But, you know,
to me it's really a business."
Kerzner has been married four
times. The first ended in divorce, his second wife killed herself and
his third was a Miss World winner. His fourth wife is the much younger
Heather Murphy, the best friend of a Californian supermodel to whom he
had been engaged for some years. He has a rugged, colourful persona and
unsettles his staff by going around his resorts finding fault with some
detail and "firing" the culprit on the spot. He never actually fires
them, but it is his way of showing his displeasure.
His 60-a-day
smoking habit induced a heart attack and his Scotch intake is well
chronicled, as was his complaint about having to share a room with
another man in the Betty Ford clinic. Worry beads have replaced
cigarettes and age may have dulled his fondness for ending a long
working day with a stint at the roulette wheel. But no one doubts the
man's relentless energy. He is, or was, "a humming dynamo", says Chris
Brammer, who worked for Kerzner for 10 years as a general manager. "He
is not an empathetic person. He and Napoleon would have got on fine,"
says Brammer. "I believe, to his friends and associates, he was a very
close person. To the poor slobs like me, he was a guy you didn't get
across. He was a strong leader."
Born in a poor Johannesburg
suburb to Russian Jewish immigrants, Solomon Kerzner was the youngest
of four children. A welterweight boxing champion at university, he got
a degree in chartered accountancy and set up with a top Durban
practice. Hospitality was familiar to him. His parents owned a boarding
house in Durban. Backed by some of his accountancy clients, he
progressed from buying Durban's Palace Hotel to taking an undeveloped
site and turning it ino a five-star resort hotel, the Beverly Hills.
When it opened in 1964, resort hotels, equipped with an array of
sports, entertainment, bars, restaurants and other leisurely pursuits,
were a rarity around the world, let alone in South Africa. "I built
South Africa's first five-star hotel," Kerzner recalls.
Kerzner's
trick then was the same as it is today - to offer people the sort of
hospitality they have never experienced before. What has changed is
that people didn't expect it back then, and now they do. "If you look
at the mid-1960s in South Africa, the expectation was governed by what
was on offer. It was nothing like what has evolved over the years. It's
natural that people's expectations of a great boutique hotel operation
is quite different today than it was 30 or 40 years ago. When you
compare the first Walt Disney theme park with what it has become today,
it is extraordinary the way it has grown. The expectations are quite
different."
Kerzner's ambitions grew. He built a 450-room beach
hotel, then found a partner in South African Breweries to create the
Southern Sun Hotel luxury chain. He ventured outside South Africa to
open Le Saint Geran on Mauritius, the first of what was to become his
One&Only luxury hotels brand. But it was back in his homeland that
Kerzner really made his international reputation - and his fortune -
with his four-hotel resort, Sun City.
Chris Brammer worked for
Kerzner's Sun International in the late 1980s. One of his jobs was to
persuade customers from the South African suburbs to visit Sun City,
which was located some 300km away in Bophuthatswana, one of the 10
bantustans or black tribal reserves set up by the South African
apartheid regime. While gambling was banned in South Africa, it was
permissible in these homelands, and Kerzner obtained a gaming licence;
soon South Africans were enjoying hedonistic weekends and holidays on
an unprecedented scale.
Sun City hosted international artists in
a 6,000-seater super bowl; golf courses attracted the world's best
players; and Miss World was crowned there - yet many criticised this as
giving succour to apartheid. Topless dancers and X-rated cinemas were
standard, though Brammer says tales of prostitution are false.
Kerzner
stamped his mark on the resort with fantastical hotel structures such
as the Lost City, surrounded by a 25-acre botanical jungle, and the
Cascades. He built water rides and attractions, something that would
feature in many of his future projects. And, of course, the casino was
centre-stage. "Sun International was the largest self-governing gaming
company in the world," says Brammer. "There was no gaming board. The
rules we lived by were our own rules."
Brammer recalls a
television ad for the resort. A Boer farmer arrives at Sun City on a
cart pulled by four oxen. He wins the jackpot, there are coins pouring
all over the place, and his prize is a Lamborghini. The next shot is of
the farmer sitting in his new car, being escorted out of the door, but,
as the camera pulls back we see that the Lamborghini is on the cart,
being pulled by the oxen - the farmer can't drive.
Sun
International operated under extremely exacting standards. Pouring beer
into a glass was taught using a four-page manual. Kerzner set up lavish
conferences for his general managers to show them what was possible
with a bit of imagination. But the Kerzner obsession for detail was
always rammed home. Brammer remembers him opening one conference after
a very fine lunch out by the pool at Sun City. "How did you enjoy your
lunch?" Kerzner asked.
"Very nice," the general managers said.
"Let
me tell you something," Kerzner replied in a rage. "The hot dishes were
shit, the desserts were shit, the people responsible for the lunch are
shit."
Sun International demanded a doubling of revenue every
three years. Kerzner gave his executives excellent salaries and
unlimited expense accounts. He gave them the resources to build golf
courses with the finest grass from Australia, a fantasy of King
Solomon's Mines, man-made lakes and wildlife parks. These standards are
reflected in today's practices, and you don't have to look far anywhere
in the industry to find someone who used to work for Sun International,
Brammer says.
The Sun King, as Kerzner was known, ran into
political difficulties. South Africa's post-apartheid justice ministry
alleged he had bribed his way to gaming licences by paying substantial
sums to tribal leaders in Bophuthatswana and Transkei, another homeland
where he won exclusive gaming rights. Kerzner would later admit to one
payment involving the Transkei gaming rights, but the case against him
ran into the sand.
Kerzner's defence has always rested on two
claims. The first was that in the unregulated climate of South Africa's
black homelands - set up by the Pretorian regime to stop blacks seeking
work in the white cities - that was the way business was done. The
second was that Sun City created an industry that gave employment and
training to uneducated black South Africans. Nelson Mandela couldn't
shower enough praise on Kerzner. If, to the outside world, he was "the
sultan of sin", to Mandela he was "by far the greatest entrepreneur in
the tourism industry", coming from a family "not only interested in
their own enrichment, but willing to give back to their country". When
Kerzner handed over a 20m rand cheque for a new hotel school in
Johannesburg in 2003, Mandela told his audience: "The Kerzners have...
boosted the South African economy with their entrepreneurship."
Kerzner's
narrow escape from the South African judiciary did not hamper approval
from other gaming regulators. New Jersey gave him a gaming licence in
1997 after concluding that the Transkei payment was "an aberration" in
a previous decade. The consent of this and other regulators allowed
Kerzner to turn his attention to international developments.
Post-apartheid South Africa clawed back some of his -gaming licences,
and he sold most of his South African interests. His next move was into
the US market, buying up Paradise Island in the Bahamas in 1996. The
deal was closed by Kerzner's son, Butch, who was making his way up the
business in a quiet but assured manner.
Colleagues talk about
Butch Kerzner in loving, reverential tones. They refer to his people
skills and his way of making things happen. "He was a total package,"
says Steve Ross, who joined the board of Kerzner International, through
Butch Kerzner. "If you talk to people on Paradise Island, they all
remember Butch. His presence around that whole company, you don't
replace that overnight. The company is doing fine, but it still feels
the loss of Butch."
Howard Brett "Butch" Kerzner was the
antithesis of his father. Not for him the party-going celebrity-filled
lifestyle. Neither did he share his father's gruff, intemperate manner.
According to colleagues, Butch was the family man: clean-living,
passionate and driven about his work. He was polite and charismatic and
his private interests included rock-climbing.
Butch was the only
one of Kerzner's five children to follow his father into the business.
He studied economics at Stanford University, worked on Wall Street and
joined Sun International in 1992. He completed the £125m purchase of
Paradise Island, dealing with the Mohegan native Americans over the
Mohegan Sun gaming development in Connecticut, and negotiated with both
Greenwich and Manchester city councils over the rights to run the UK's
first super-casino.
"When Butch became CEO, he had a great deal
of respect for Sol and his opinions," says Paul O'Neill, one-time
president of Kerzner International Bahamas in 2006. "Sol really was a
consigliore. He was an adviser to a large degree. They spoke all the
time, and they built great relationships with folks they did business
with.
"Butch wasn't someone who sought the spotlight, he was very
much the businessman, the family man. Sol was a little bit more
comfortable on the dance floor, if you know what I mean." Butch's
stand-out moment was taking the company private last year, in a $3.8bn
buyout which increased the family's stake from 11 per cent to 25 per
cent. Yet the family still ended up making more than $400m from the
transaction.
"From Butch's standpoint, he wanted a bigger
interest in the business; he saw that the company wasn't being valued
correctly," Ross says. "He saw the opportunities of being private."
While
Kerzner had a vision for resorts and strong attention to detail, his
son had strong business nous and deal-making acumen. It was, says Ross,
"a tremendous double act". Investors who supported the company going
private had the utmost respect for Sol Kerzner and his capabilities,
but didn't want to build the company around one person.
Butch
Kerzner built a partnership with the Dubai royal family that secured
its investment in Kerzner International and was instrumental in
securing land for a -second Atlantis resort on the Palm Dubai, which
opens next year. He was negotiating with the Singapore government over
a casino licence, building the One&Only brand and scouring the
world for other development projects.
It suited father and son.
Kerzner senior got time to work on The Cove development and think up
new visions, and his son's business reputation grew. The succession of
the Kerzner empire was taking a logical and compelling route.
Butch
Kerzner died on October 11 2006 in a helicopter crash while overlooking
potential development sites in the Dominican Republic. "Obviously it's
a huge setback in my life. Life wasn't quite the same," says Kerzner,
who speaks with affection for his son, demonstrating respect for him as
a business partner and pride in seeing the boy make the grade in the
same profession.
"I spoke to Sol very soon after it occurred,
probably minutes," says O'Neill. "He wanted my wife, Judy, and I to be
in the Bahamas, with Vanessa, Butch's wife." O'Neill was five months
retired as president of the Bahamas operation. He had been planning to
spend more time with his grandchildren and to travel with his wife.
"It's a 24/7 business. We just decided that we wanted to take that
break."
O'Neill got another call later that evening. It was
Kerzner again. "He started talking about the organisation's needs. He
wanted me to come back to take an operating role. I immediately agreed
to do that, and I was on a plane the next day."
Kerzner arranged
a board meeting by conference call. "It was held in a state of shock,"
recalls Ross. "I remember Sol picking up and saying: 'We've got to do
this and this.' You saw the strength of Sol." One of the things someone
had to do was make the licence-bid presentation to the Singapore
government. Kerzner decided he would do it himself. "Butch was buried
on a Friday afternoon, and Sol left for Singapore on the Saturday or
Sunday," says Ross. With so little time, the presentation, as put
together by Butch Kerzner, was left untouched. "It must have been very
tough for Sol. The presentation had Butch speaking on a video tape. You
can only imagine what that would have been like for Sol watching it. It
had to be unbelievable. I heard he was very strong." Kerzner
International lost the Singapore licence contract.
"Remarkably
well," is how Sol Kerzner describes himself at the moment. "So far, so
good." Eight months after Butch's death, he is preparing his next
project. The Atlantis Palm in Dubai opens next year and Kerzner will
want to be on site getting every last detail right. "I feel very
confident it is going to work like a charm," he says.
One
challenge that he has yet to scale is the European market. So far it
has eluded him, and Dubai will, he hopes, draw customers from the
Continent. He also thinks UK visitors will take to The Cove in a way
they would not the main Atlantis complex. "We have never until now
tried to penetrate that market place," he admits.
Kerzner has
also invested some time in getting into prime position for the UK's
casino expansion. When the government announced plans for Las
Vegas-style casinos, Kerzner's team built relations with the local
authorities bidding to run the new licences. When the government scaled
down the ambitions, most of the US-based operators picked up their
chips and left the table. Kerzner is the last one sitting, having
secured operating rights with Manchester, the site for the UK's first
super-casino.
Plenty of hurdles stand in the way, not least
parliament's unhappiness at the outcome and Manchester's promise to
reopen the selection process for the casino's operator. The controversy
has brought some unwanted publicity for Kerzner as the UK media
portrayed the would-be operator of Manchester as "a vulgar tycoon" with
"a shady past". Kerzner admits to feeling sore about the comments. But
after a lifetime in the spotlight, another bout of unwanted publicity
is hardly likely to deflect him.
More exacting is the long-term
succession issue. In the medium term, Kerzner is in the driving seat
again, the company's chief executive. As well as bringing Paul O'Neill
out of retirement, he also persuaded Bob Cotter, veteran hotels
executive who became chief operating officer at Starwood Hotels, to
cancel his retirement to come and work his marketing skills on the
business.
Kerzner has about a further 150 acres on Paradise
Island for a final phase of Atlantis. Once revenues and occupancy rates
are firmly established at The Cove, he will turn his attention to how
that final phase will work. Cotter sees a healthy pipeline in the
upmarket One&Only brand. Dubai will also attract high-end
customers. "I think we will likely be at the higher end of the leisure
hospitality industry than we have been," Cotter says.
As for an Atlantis elsewhere in the world, he says, you might not find a site like Paradise Island again.
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