Rocco's return

Every day for the past four years, Sir Rocco Forte has suffered the ignominy of knowing his name is plastered on hotels he no longer has anything to do with. Sir Rocco, son of Lord Charles Forte, Britain's most famed rags-to-riches immigrant, had taken charge of his father's hospitality empire in 1993. Three years later, everything, from the roadside Happy Eaters, through the reps' favourite Trusthouses, to the Savoy, was wrested from the family's control by Granada's Gerry Robinson in a bitter £4bn hostile takeover.

Every day for the past four years, Sir Rocco Forte has suffered the ignominy of knowing his name is plastered on hotels he no longer has anything to do with. Sir Rocco, son of Lord Charles Forte, Britain's most famed rags-to-riches immigrant, had taken charge of his father's hospitality empire in 1993. Three years later, everything, from the roadside Happy Eaters, through the reps' favourite Trusthouses, to the Savoy, was wrested from the family's control by Granada's Gerry Robinson in a bitter £4bn hostile takeover.

The Forte family were left with an enormous sum of money but bereft of their raison d'être, with the humiliation of the family firm being run by managers from motorway service stations. Now, the younger Forte has something to be proud of again.

Once more, a hotel group bearing the family's name (or, to be precise, its initials) is rising, with Sir Rocco at the helm. This time, there are no motels or branches into airline catering (one of the old Forte empire's more peculiar diversifications). As befits a man who pocketed, with his father and siblings, more than £300m from the £4bn takeover, he is running a luxury boutique hotel group and chairing an upmarket internet venture.

So far, RF hotels, the company headed by Sir Rocco, has opened six premises across Europe, including the much-hailed St David's Spa on what was previously a mud flat in Cardiff. The Lowry, a luxury hotel in Manchester, opens next year, and a golfing resort in Sardinia is being built. The hotels are eclectic and cool, rejecting the uniform impersonality of the recognised luxury chains.

This year's openings of the Hotel de Russie in Rome, and the Savoy in Florence, has confirmed to the world the fact, surprising to some, that the accountant son of the 92-year-old former hotel tycoon has something of an eye for stylish elegance. "I'm very happy with the way things are going," says Sir Rocco. "We're past the initial phase, we've got six operating hotels across Europe turning over quite well and plans to do a lot more. It's a different feeling to running a huge business, but there's a great satisfaction nonetheless."

Sir Rocco, 55, is also non-executive chairman of Lobster. com, a foodies' internet site which offers tips from chefs, and gourmet food delivery across the country. Despite his £250,000 investment in the website, his main job is, as it has always been, in the hotel group. The structure of his new venture is complex, with separate ownership and management companies, and separate companies running the hotels in each country.

But Sir Rocco put in most of the £60m startup capital, the rest of the equity being held by his family. Total turnover this year is expected to be £50m. Insiders say the profits this year are expected to be less than £5m, reflecting the amount reinvested in the expanding group.

He is a dapper, diminutive man with an air of well-bred elegance and an accent that would fit perfectly in the salons of Chelsea, where he lives. The RF Hotels offices occupy the middle floor of an anonymous modern block in St James's, next to Trafalgar Square. His desk is in a corner of the open-plan, L-shaped office. We meet in a conference room with a glass-topped table and green suede chairs at the other end. If it weren't for the photographs of the hotels in Rome, Florence and St Petersburg, it could be an accountants' premises. His critics have always suggested if he hadn't been the son of Sir Charles, an owner of several small cafes, who built up the Forte empire from a milk bar he opened in 1934, he would never have held the jobs he did.

His dynamic older sister, Olga Polizzi, was always cited as the smartest and most energetic of the Forte children. She owns the successful Tresanton hotel in Cornwall, and has invested in the new company and helps her brother with the interior design of his hotels. His defenders say Sir Rocco had a lot to live up to, and even if he lacks the vision of his empire-building father, he has been immersed in the hotel industry since an age when most executives were still doing paper rounds. "When I was a child, my father had a lot of meetings at home on weekends, and when I was 12 or 13 I used to sit in on the meetings," he says. From the age of 14 he'd take menial, backroom jobs in his father's hotels during the summer holidays, for which he would be paid the standard wage.

Sir Rocco attended Pembroke College, Oxford, and studied French and Italian. He was already nearly fluent in the latter, although his parents spoke mainly English with him. After university, with his father's encouragement, he joined Dixon Wilson, the City chartered account- ants, where he endured three years of "purgatory" to get his accountancy qualifications. Then he joined his father's company as a researcher. "I couldn't get out of accountancy fast enough," he says. "I found it the most boring thing."

This was the time the image of the Italianate playboy, which was to dog him through the years at Trusthouse Forte, was born. Sir Rocco was seen in all the best clubs almost every night, stepping out with a variety of glamorous women, including Jerry Hall and a succession of models. "I was young," he says with a smile. And he says it never affected his work.

Indeed, a couple of years after he started at Forte, the 28-year-old was sent to one of the group's hotels, in Cannes, to fill in for a manager who had resigned suddenly. It was still the golden age of the French Riviera. "I would work from 7am until midnight then go out on the town until the early hours," he says. "But I was always at my desk the next morning, and the year that I ran the hotel was the only year it turned a profit. I put some personality and life into the place."

He rose rapidly through the group's management structure in London, which gave rise to some resentment. "I suppose it was an overpromotion," he admits. "It couldn't have happened to anyone else, it was only because of who I was." A Forte executive of the time remembers the young Rocco as polite and diligent, but without the incisive mind of this father. Doubts about Sir Rocco's ability to cope with a rise to the top of what was becoming a major international hotel and restaurant chain were planted then, the same doubts that helped create the environment for a hostile takeover in the City two decades later.

With his father expanding the hotel group rapidly in the Seventies and Eighties, Sir Rocco worked in senior positions, eventually becoming deputy chief executive, then chairman when his father retired in 1993. At that stage the group had 800 hotels, more than 1,000 restaurants and 100,000 employees. Among Forte executives there were murmurings of disgruntlement, as there had been over the past few years.

"When I became chief executive I found out that before, however much I'd asked people to do things, they would say to themselves, 'Well, that's what he thinks, but what does the old man want us to do'."

The culture of resentment was something he had to fight against when he was in charge. "It was very difficult to change anything until I took over from my father," he says. "But there are politics in any organisation. In this case it was a different kind of politics."

Sir Rocco launched a reorganisation of what had become an unwieldy catering group, selling off peripheral businesses and cutting layers of management. He says now his reorganisation should have been more rapid.

"When I took over it was a poor time for the hotel industry (in the early-Nineties' recession) and over the next three years we knew we were vulnerable to takeover. But when we looked around we saw everyone else was in the same state. We never even considered Granada."

He was on a shooting break with friends in Yorkshire when a stockbroker friend rang and told him Granada had just launched a hostile bid for Forte. "No one had imagined Granada bidding for us," he says. "They had no experience in the business and there was no synergy. So yes, I was taken aback."

Analysts say he fought back with a shrewdness and vigour that surprised many, but in January 1996 Granada succeeded in wresting the company from the family's control with a higher bidding price.

Was it a wrench to lose the family jewels? "Of course it was," he says, becoming testy for the first and only time. "I mean, it had been my life and suddenly there was nothing. All sorts of people have setbacks in their lives, and some wouldn't regard [the takeover] as a setback, after all, one had a lot of cash in one's pocket.

"But I was very committed to that business and I was excited about taking it forward, I had plans to make it one of the top players in the world, making a lot more money. And suddenly I didn't have that and, my gosh, my life is based around my work. So of course it's a big change."

There was a flicker of hope, raised by Granada, who said they wanted to sell off the Forte group's luxury hotels, which included the Meridien chain Rocco had acquired from Air France two years before.

"When Gerry Robinson came to see me after the bid had succeeded, it was very funny because they were terrified, they believed the propaganda about me (being uncontrollably furious). He sat there meekly, and he said, 'So what are you going to do, Rocco?', and I said, 'Why, are you offering me a job?' Then I said I'd heard he wanted to sell the luxury hotels and I wanted to buy them, and he said, 'That's a good idea'. It was a very odd meeting."

Sir Rocco raised £1bn in the first six months of 1996 for the Meridien group, but by the time he submitted the bid, in June, Granada had changed its mind and decided to hang on to its assets. "I suppose I was a little slow," he says. The bid did have one beneficial effect. "Because I immediately started raising money, that kept me going and stopped me dwelling on what had happened. I didn't have a time when I was just sitting and pondering.

"I couldn't do nothing, and I started thinking about a new luxury hotel business. I knew there was the opportunity for creating a luxury chain in Europe because there's no established group of European luxury hotels with good coverage."

Kempinski had hotels in Germany and Eastern Europe; Orient Express had its primary interest in the Far East; Four Seasons didn't have thorough European coverage. "I set out to have hotels just in Europe's key cities. I haven't succeeded yet, but that's what I plan." Sir Rocco kept the new business in the family. Apart from himself, investment came from his father and his sister Olga. Each new hotel is funded separately, partly through debt from the Bank of Scotland, the Forte's long-term bankers.

The business started slowly because of Sir Rocco's policy of either building hotels from scratch or renovating establishments that had fallen from grace. "If you buy an established hotel in a city centre, you're going to pay a high premium and buy it on a 5 to 6 per cent yield, then with your sweat take it up to 7 to 8 per cent. Well, that's no good to me, so I have to find situations either where the hotels are run down and need effort and money to restore them to their former glory, or find new situations where you establish a hotel." In both cases, he says, you get a far more reasonable entry price.

His initial ambition was to start with a showcase hotel in London. But he found no suitable properties. "I'm still looking," he says. Other hotels have come in less competitive markets. The first to be operated by RF Hotels (he is not allowed to use the Forte name) was the Balmoral in Edinburgh, which he bought from the Bank of Scotland. He was familiar with the property, having managed it for the bank when he was at the old company.

Forte was still the management company, and when he bought the property he threw out the Granada management. "There was some satisfaction in that," he says, smiling. "I suppose you have to take pleasure in small mercies."

In 1998, to great media fanfare, Sir Rocco opened the St David's Hotel and Spa in Cardiff, on what had been marshland south of the city centre. This was the first five-star hotel in Wales and his media-friendly attitude contributed to what is generally regarded as a great success. Less successful was a planned joint venture into a chain of four-star business hotels in Russia, which fell victim to Moscow's economic collapse in late 1998. Sir Rocco did open a five-star hotel in St Petersburg the following year, then turned to Italy, where the Fortes are minor celebrities.

"My father's a favourite son who went abroad and brought credit to the nation," he says. "I will end up doing more in Italy than in any other country." The hotels in Rome and Florence, both in characterful old buildings that have been renovated and redesigned, have been praised by critics as graceful and contemporary. There are also plans to open in Milan, Venice, Berlin, Prague and Frankfurt. "Having 20 hotels within the next few years is my first target," he says.

He doesn't even try to hide his contempt for the way his father's old hotel group is being run by Granada. "They've basically destroyed what was a quality business. They've milked it, they haven't invested in it, they've squeezed the business for all they can. From what I can see they haven't made any more money than we were forecasting we would make; they've just made it in a different way, damaging the business."

Sir Rocco is an outspoken critic of European monetary union, which he says would "import bureaucracy and corruption into Britain", although he says his reasoning for this is political and economic, rather than nationalistic. "How could I be a Little Englander?" he says. "That would be pathetic." Friends say Sir Rocco is more relaxed than when he was running the Forte group. "Although we employ 1,500 people now it's still a very small organisation. Communication is easier, I have an open-plan office, I know all the department heads in the hotels and a lot of staff in a way I could never have done in the old group. It's different. If you're running a huge group and you've got the chance of taking it somewhere else, that is satisfying.

"I've always worked in a big business environment and it's relatively easy. The money's there and if you make mistakes it's not so crucial. Also you have big accounting and legal departments. You make a decision and everything else happens for you. In a small environment none of that applies. Here I have to do a lot of it myself."

The tycoon-turned-entrepreneur says a new business has its own rewards. "I don't have the terrible thing of having to deal with institutional shareholders, which is very time-consuming. They're very happy, then suddenly a bid's on the table and they're unhappy." He doesn't rule out going public, but he would keep a large private stake.

"What's been fascinating about starting from scratch," Sir Rocco says, "is that every two to three months the capability of the company changes. What you couldn't do three months ago you suddenly can do now. So in three years I might be doing something I couldn't imagine I'd be doing now."