Leisure giants' influence felt across nation

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The Independent Online
JOHN SHEPHERD

The names of Forte and Granada are stamped indelibly on the social fabric of Britain. They cater for both the rich and the poor, offering Little Chef restaurants, motorway service stations, Travelodges, the Grosvenor House Hotel in London - and Coronation Street.

Granada and Forte are giants in the pounds 100bn-a-year United Kingdom leisure industry. Their social influence dates back decades, and their corporate structures owe much to numerous aggressive and friendly take-over deals over the years. Granada started life as a private theatre company in 1934; Forte was incorporated in 1903 as the Hertfordshire Public House Trust company.

In terms of management style and culture, however, the two could not be further apart. Sir Rocco Forte, chairman, was born into business, and his family - headed by Lord Forte, the company's octogenarian president - exerts great control over the company. In contrast, Gerry Robinson, Granada's chief executive and chairman designate, was the son of a Donegal carpenter and the 9th of 10 children.

Both, however, have had to adapt fast to the recent changes in the leisure industry. In Forte's case the recession has been the catalyst, and in Granada's it has been the competitive march of satellite and cable television.

Almost every hotel operator, Forte included, was caught cold by the recession, and they are still only recovering slowly from relying on an antiquated approach of charging high prices for each customer, instead of per room as in the United States. The legacy of that strategy is that a large part of the industry is being run by receivers.

Forte is beginning to benefit from the marketing changes, but its financial position still shows scars from the recession. Shareholders started to pay for the climb out of recession when the dividend was first left unchanged in 1992, then cut by almost a quarter a year later.

Forte has also thrust itself down the path of hotel management rather than owning great lumps of prime real estate, which are costly to maintain. Managing hotels on a fee basis, or franchises, is the path the big hotels groups are taking.

Hotels are at the forefront of mass market end of the leisure industry, which thrives on high customer turnover coupled with the ability to extract as much money as possible from customers once they are on site by encouraging them to use hotel bars, restaurants, accompanying golf courses and fitness centres.

Recession also hurt the television industry, where the cash well, used to being topped up by big spending-advertisers, dried up. heavy cost- cutting was largely achieved through a rapid series of take-overs - including Granada swallowing London Weekend Television.

Granada now produces some of the biggest television hits including the award-winning Cracker, Coronation Street and Prime Suspect, from a much lower cost base than before Mr Robinson took the helm in the early Nineties.

One of the most striking contrasts between the two management styles is how they have adapted to the changing habits of the motoring consumer.

Granada, analysts argue, has the edge over Forte in motorway service stations by being quicker to ditch the one-stop greasy spoon image in favour of more comfortable, friendly sites offering customers a choice of decor and food.

Forte, meanwhile, is having to rethink how it markets Little Chef and Happy Eater, the market-leading roadside restaurant chains in the face of increasing competition from the big pub groups, such as Bass and Whitbread.

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