Case Study - Ritz-Carlton Hotel Company

“Service” can be an elusive concept. What is the essence of the Ritz-Carlton experience? What is the Ritz-Carlton selling?

“We are not is the hotel business. The hotel business is about selling rooms, selling food, selling the bar. We do these things incidentally, but our business is service. We charge for service. Our commitment to our customers is excellence in service. Service is our profession”. It cannot be put in better words than put by Mr. Schulz. Service is not something that can be qualified by one word or a particular act. Ritz-Carlton is there to provide finest service to their customers by providing them superior facilities during their stay so that they (customers) can have life lasting experience.

The service quality provided by Ritz-Carlton stems from their way of treating their customers and employees i.e.  “The Gold Standard”, a combination of three steps of service, The Motto, The Employee Promise, and The Twenty Basics, to promote employee focus on Ritz-Carlton’s core company value. The effect of this philosophy can clearly be seen in R-C’s operational efficiencies (~80% occupancy rate) and only 20% employee turnover (as compared to industry’s 100%).

Expositional service of R-C is clearly due to its exceptional work force. Human psychology clearly dictates that there has to be a balance between offered to and offer by. R-C offers high quality work environment to its employee and in return their employee provide highest quality services to their guests[1].  R-C’s employees have opportunity not only to excel their position but also develop new skills to be able to bare significantly higher responsibility.

How does the Ritz-Carlton create “Ladies and Gentlemen” in only 7 days?

A good alignment of employee’s vision with that of company’s vision is essential for the success of the organization. Recruiting team at R-C makes sure that there is a good value & purpose match between employees and organization. In order to produce high quality service professionals it is essential to remind the employees that they are there for a purpose.

The process of creating “Ladies and Gentlemen” in seven days started way before that when candidates to be interviewed were greeted with utmost hospitality and friendliness. After the recruitment the same continued[2]. Mr. Schulze’s first address[3] was another mile stone that clearly conveyed R-C’s values and culture and his intent that R-C is here to create Ladies and Gentlemen who were there to serve and to be served.

Seven days training to the new employees was a critical task that motivated and trained all the employees to blend in R-C’s values and culture. Various tasks at the training sessions gave employees an opportunity to familiarize themselves with their co-workers as well as R-C’s culture. This period gave them opportunity to train themselves so that they could understand their and their customer’s purpose and how R-C can help them to achieve it.

In what may be a first for the hospitality industry, Brian Collins, hotel owner, has asked James McBride, Ritz-Carlton general manager, to lengthen the amount of time spent training hotel employees before hotel opening. Should McBride lengthen the 7 Day Countdown? Or, is this the time that McBride should consider a total overhaul of the hotel opening process. If yes, what should he change, and how should he go about doing it?

1. We recommend that they should think of implementing additional training if it only takes additional 7 days as it would provide them with an incremental revenue of $620,000. If it takes 21 days to train the  employees then we would recommed not the undertake the process.

2.     The training plan would vary depending on the location of the hotel as lower average daily rates (ADR) would make this process non-fesiable (due to constant training cost).

3.    This plan has to be tested very carfully as implementing this strategy overall without testing may have adverse effects.

4.  We don’t recommend total overhaul of the system as it is a well established standardized working system.

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[1] Vijay Sing’s reason to work for Ritz-Carlton “I came to work for two reasons. One, to achieve excellence. The other, to achieve excellence with friends”.

[2] Incoming employees were treated by the scores of managers with smile and by saying “We are happy you are here”, welcome “I am glad you’ve come”.

[3] “You are not servants. We are not servants. Our profession is service. We are Ladies and Gentlemen, just as the guests are, who we respect as Ladies and Gentlemen. We are Ladies and Gentleman and should be respected as such”.