Grand Hotelier

Octavian Report: Can you tell us a bit about your background? What was your first experience with luxury hotels?

Jim Sherwood: I grew up in Lexington, Kentucky, in Berkeley, California, and in Bronxville, New York. My father was a patent lawyer and engineer, with his law practice in Lexington. Right after the war, he was employed by the U.S. government to record the development of the atomic bomb. That took us to the University of California at Berkeley and then to New York, where the Manhattan Project had been based.

After high school in Bronxville, I went to Yale. During that period of the early 1950s, the Korean War was going on. I elected to become a naval officer upon graduation from Yale in 1955. I was commissioned on graduation day, but the war was effectively over, so I managed to miss that. I stayed in the Navy for five years and was all that time mostly in Asia. Every time we would go into port for a few days, I would stay at the local luxury hotel. They weren’t very expensive in the 1950s. They were nothing compared with what they are today. You could get a suite for $50 a night. In the Asia of those years, the dollar was all-powerful. You had something like 500 yen to the U.S. dollar. You got quite a lot for your room expenditure. When we were in Japan, I always went to Frank Lloyd Wright’s famous Imperial Hotel in Tokyo, a magnificent luxury hotel. Sadly, it was pulled down some years later. When we were in Hong Kong, I always stayed at the Peninsula, which is still, in my opinion, one of the best hotels in the world. In Honolulu, I would stay at the Royal Hawaiian. In San Diego it was the Coronado Beach, in L.A. the Beverly Hills, and in San Francisco the Fairmont.

OR: When did you acquire your first hotel?

Sherwood: In 1976. At that point I had been in the container-leasing and shipping business for almost a decade. This was via my company Sea Containers. I’d overseen massive expansion, and I was grateful for that, but the sector was now attracting other big companies that had far more resources than we had. I said to myself, “I think we ought to diversify so that we’re not totally reliant on marine containers.” I tried to figure out what we should we diversify into. We were operating the container-leasing business in 80 different countries, all of which I had visited. I had stayed in the best hotels in all 80 countries. The best hotels were often in a pretty sorry state, although many of them had been famous in their day. And it occurred to me that if we went into the hotel business, we could manage that business side-by-side with the container business.

We had, by that time, offices in all regional centers of the world where there was shipping activity. I felt that it would also be no conflict of interest with respect to the container leasing. We wouldn’t want to get into any business which would conflict, in some way, with our customers, the ocean carriers. Obviously hotels wouldn’t conflict with container leasing.

The first hotel which came on the horizon was the Hotel Cipriani, in Venice, which I bought in 1976 for the huge sum of £900,000. The purchase was made in British pounds because the hotel was owned by three sisters, members of the Guinness family. They all lived in Great Britain. In the second half of the 1970s, you may recall, Italy was a complete mess. The Red Brigades were active, perpetrating a large number of kidnappings and bombings. The country thought that it would go Communist. The sisters who owned the Cipriani panicked and decided to sell out. I felt that Italy was going to survive all this turmoil and that the Hotel Cipriani would enjoy a very good future. I bought it — and that was my first investment.

The hotel was losing money at that time, but I brought in a very skilled manager and he quickly turned the Cipriani around. By the second year, it was making a very good profit. That whetted my appetite to go further in the hotel business. I set about to make more acquisitions. That became what was Orient Express Hotels, at the end of the day. I learned an important lesson, too, about the difference between the two industries: marine containers never complain.

OR: Can you tell us about how you developed the Orient Express railway revival?

Sherwood: In 1977, the year after I bought the Cipriani, the French railways announced that they were stopping Orient Express train service, which then ran between Paris and Istanbul, via northern Italy and Serbia. When that happened, when the announcement was made, in every newspaper that I could read I saw articles about the Orient Express and its history and the terrible loss of this most famous train in the world.

I had it in the back of my mind that what we ought to do is restart the Orient Express and run it primarily between Paris and Venice. We would then be able to bring in a lot of guests for the Hotel Cipriani. In October of 1977, Sotheby’s put up for sale five first-class sleeping and restaurant cars from the Orient Express. These cars, all built between the World War I and World War II, were the epitome of luxury. They had been used in the film Murder on the Orient Express and they were then owned by the film company. They had no longer any use for them, so they decided to put them up for auction in Monte Carlo. I went to the auction. There were only four bidders for the cars; the sale was held in the freight station of Monte Carlo. When I went in there, the place must have had 300 members of the press. Every major TV station, NBC, Japan Television, the BBC — all were represented.