Ritz Carlton Case Study
Ritz Carlton Case Study
Introduction to the Company
The Ritz-Carlton Hotel Company is one of the premier hotel management companies in the world today. Their goal of providing world-class service to its guests is rooted in tradition.
The Ritz-Carlton tradition begins in the early 1900s in Europe. Caesar Ritz a well-known hotelier transformed the Ritz Paris and the Carlton in London into the redefined standard of luxury hotels in the early 1900s. Caesar Ritz died in 1918 but his wife continued the expansion of hotels bearing his name (http://corporate.ritzcarlton.com/en/About/OurHistory.htm). The first American Ritz-Carlton opened its doors May 19, 1927 as the Ritz-Carlton Boston. Edward N. Wyner a local Boston businessman had initially started developing an apartment complex when he decided to change directions and build the luxurious Ritz-Carlton Boston. Mr. Wyner knew of the reputation of the aforementioned European hotels and sought permission to use the Ritz Carlton name for his envisioned luxury hotel.
The Ritz-Carlton Boston was considered a private club for the wealthy and was route and formality until the 1960s. Dress codes were enforced and women were not allowed to dine alone in The Café. Unescorted women were not allowed to enter The Ritz Bar until 1970. The dining cuisine was as superb as the hotel service (http://corporate.ritzcarlton.com/en/About/OurHistory.htm). Although Mr. Wyner died in 1961, a land development company and Gerald W. Blakely a major shareholder owned and managed the hotel until 1983 when William B. Johnson purchased the rights to the Ritz-Carlton name.
This was the start of the modern-day Ritz-Carlton Hotel Company (http://corporate.ritzcarlton.com/en/About/OurHistory.htm).
From the humble beginning of the Ritz-Carlton Boston to 1994 when the Ritz-Carlton operated 25 hotels in the United States and abroad, the Ritz-Carlton declared its position in the luxury hotel market. Flash forward 20 years present-day, the Ritz-Carlton Hotel Company operates 85 hotels worldwide in 30 countries. The company employs over 35,000 employees with one common goal, “We Are Ladies and Gentleman Serving Ladies and Gentleman” (http://corporate.ritzcarlton.com/en/Press/Kits/History.htm).
The Ritz-Carlton is a subsidiary of Marriott international. Bill Marriott is the chairman of Marriott international and Arne Sorenson is CEO of Marriott International. The Ritz-Carlton Hotel Company, L.L.C is headquartered in Chevy Chase Maryland under the direction of President and Chief Operations Officer Herve Humbler. Leeny K Oberg serves as Chief Financial Officer. Global officer, Worldwide Operations fall under the responsibility of Bob Kharazmi.
The Ritz-Carlton Hotel Credo is “A place where the genuine care and comfort of our guest is our highest mission.” Their motto is “We are Ladies and Gentleman serving Ladies and Gentlemen.” They have three steps of service:
1.A warm and sincere greeting. Use the guest’s name.
2.Anticipation and fulfillment of each gas needs.
3.Fond farewell. Give a warm goodbye and use the guest’s name. (http://corporate.ritzcarlton.com/en/About/GoldStandards.htm).
In the year 2000 they launched the Ritz-Carlton Leadership Center this is where organizational leaders can go to learn about the principles that embodied the Ritz Carlton culture. (http://corporate.ritzcarlton.com/en/LeadershipCenter/Default.htm). Introduction to the IS Department
The Ritz Carlton’s Organizational structure is one of the things that sets them apart and gives them the ability to provide the best customer service possible. They have a very specific hiring process that they incorporate called the “quality selection process” which helps them to pick the best possible candidates for the job. This is crucial, especially with their organizational structure, because every employee plays a vital part of the customer experience. Some might say that the front line employees play the most vital role of them all. The Ritz has 4 Chief Officers which included President and COO Herve Humler, CFO Leeny K. Obert, Global Officer of Worldwide Operations Bob Kharazmi, and CIO Barry Shuler
Each area in which the hotel has a presence is also equipped with a regional director of public relations and an area communications manager, as well as a General Manager for each location (http://corporate.ritzcarlton.com/en/Press/Default.htm).
There are over 28 different service areas within the hotel chain ranging from things like Food and Beverage and Housekeeping to Brand Management and Healthcare Services. One of the most amazing things about the Ritz Carlton’s organizational structure is how involved each and every employee is with the guest’s experience. In every functional area of the hotel there is a lineup each morning. In this lineup the department meets and the associates who are going off duty explains the guest situations and requests to the employees who are coming onto a shift. The front line employees are required to fill out guest preference cards for guests who make comments about things that they like or dislike while staying at a hotel. These notes are then given to the Guest Recognition Coordinator who would then enter them into the Encore software system.
The strategic goal of the Ritz Carlton is to build seamless customer-driven service systems that would anticipate a guest’s needs and preferences, and at the same time react instantly to correct any service error or satisfy any complaint. This is extremely important mainly because of their organizational structure and the fact that all associates will be listening and recording guest preferences at all times. Jim Veil, general manager of the Buckhead Ritz Carlton explained that “The technology serves us well. But it is our people who work at listening; so that we can record the customer’s every want and need. Overall the most important thing for the Ritz is their employees but they also must have systems in place that make it easy to enter customer preferences and organize the information so that it is easy to use (http://noelevatortothetop.com/2009/01/12/barry-l-shuler-cio-of-the-ritz-carlton-on-organizational-structures-for-this-economic-climate/).
The systems must make it easy and quick to enter customer information because it will make the Guest Recognition Coordinators more efficient. It will also make them more likely to encourage the other associates to turn in the cards because it will not be a difficult task to enter in the information. The system must also be able to display customer information easily so that it is easy to distinguish who is who if customers have the same name, or if an associate has accidentally miss-spelled a name it would be nice if it gave them options of who they might be trying to find.
The Hotel’s infrastructure is largely comprised of data analytics solutions. Business Intelligence plays a huge part of their infrastructure because they are required to take data about their guests and turn it into useful information that they can use on a daily basis to make their guest’s stay more enjoyable. For example a guest may tell a member of the housekeeping team that they enjoy having extra towels. The Housekeeper could gather this data to give to the Guest Recognition Coordinator so that they can make the data useful for the rest of the guest’s stay as well as any other time they stay at one of the Ritz Carlton Resorts. Another part of their infrastructure is data warehousing.
The Ritz Carlton needs to store all of the information that they gather so that they can use it later on. They also need to share the information across multiple branches of their Hotel. Enterprise information management is yet another part of The Ritz Carlton’s infrastructure. “Enterprise information management (EIM) is a set of business processes, disciplines and practices used to manage the information created from an organization’s data.” EIM helps to create quicker and more efficient data management operations. It allows for information creation, capture, distribution and consumption. The main goal of EIM at The Ritz Carlton would be to help provide a quick and easy way to access information and also record customer interactions (http://searchcontentmanagement.techtarget.com/definition/enterprise-information-management-EIM).
Current Primary Applications
The Ritz Carlton currently uses two primary applications – Encore and Covia. Covia is primarily used to handle guest reservations at the various locations around the world. Encore also tracks guest reservations but that is not the primary purpose that it serves. The primary purpose of Encore is to store guest information so that it can be used to create a better experience for them the next time they come for a stay. Covia was originally created to serve the airline industry. In 1990 Covia funded the changes necessary to begin to track hotel reservations. Covia managed the Ritz Carlton’s Information system and the people who were responsible for taking the calls, but the Ritz Carlton was in charge of making the hiring decisions for those people. Shortly after, in 1992, The Ritz Carlton took over hiring, training, and supervision of all of the reservation agents.
From this point on the Ritz Carlton paid for Covia’s service in two ways. The first was a transaction fee for each reservation made, and the second was a storage fee for each time a customer file was downloaded. Encore is used primarily as the property management system for the Ritz Carlton. Encore is used to store each individual’s hotel reservations and to update guest preferences and historical guest information. Encore also stores any significant service failures that a guest has experienced in the past. A huge benefit of the encore system is the fact that it is compatible with Covia. Therefore the two systems can talk to each other and are constantly shuffling information back and forth between the two. Encore gives the associates the ability to pull the data in the way that it will be most beneficial for them. They are able to pull only the data that will matter most to housekeeping or food service and deliver the information to the specific functional areas. They can also pull reports to see areas in which they are thriving or need improvement.
Identify the Problem
The problem with the COVIA system, according to Bowman (2011), was the fact that the system had no way of distinguishing guests with similar names. If for example, two guests reserved a stay at the New York Ritz and one had requested extra pillows in their room, the system would not be able to distinguish between the two guests. Or if Jack Jones called in to reserve his same package from the Atlanta Ritz, a representative would pull up the name in the COVIA system and perhaps get a list of the 20 Jack Jones that had stayed with the company. Another issue that arose during the case was an example of guests reserving under a new name, and the system would place them as a brand new guest instead of updating a previous account. On top of all of this, each time a new guest is added into the system a service charge was placed on the Ritz-Carlton as a data transaction fee. According to the Corporate Director of Quality Patrick Mene, the money that could be placed into the prevention of these issues may not justify the money in defect prevention with the company.
From an operations standpoint, spending $3 to prevent a problem that saves you $1 in losses may end up being a more costly business model in some areas. The Ritz-Carlton is by no means shifting to a reactionary business model, and the line-up and Mystique company programs are based on data collection and early prevention. According to the 2007 vice president of quality management John Timmerman (2007), the staff at the Ritz is trained to take on any unforeseen problem and take control of it. Being aware and active may not prevent the problem from arising, but the guest must feel like everyone at the Ritz will do everything in their power to fix it and compensate the guest for their trouble. Each employee’s ability to spend up to $2000 on guest compensation at their own discretion might seem to be the more effect and cost effect measure to keep clients long time, according to Patrick Mene (1999).
The current Ritz-Carlton has been awarded for accomplishments in hotel and general service management for the last few years. In 2013, the Ritz was awarded the Points of Light Institute Corporate Engagement Award of Excellence for its Community Footprints program. The program focuses on using the same skills and training that the Ritz employees utilize, to teach children to reach their dreams and move towards successful careers. The Ritz-Carlton also received the 2013 US News and World Report for best hotels in the United States and the Conde Nast Traveler Gold List in 2014. In both 2013 and 2014, AAA Travel gave the Ritz their highest award category of Five Diamonds.
Forbes Travel Guide also gave several Ritz-Carlton sites the Five Star rating for hotel excellence. These awards span for several years, and are all located on the Ritz’s corporate website. These awards are a testament to the Ritz Carlton’s constant strives for top quality service and excellent client experiences. Along with quality awards, the recognition for the company’s environmental and community impact give the corporate giant a persona of one that cares about not only the community inside the business, but the one outside as well.
Current Projects & Challenges
Some current projects that have been out for the last two years, is the Ritz-Carlton Mobile App. According to Melanie Nayer (2012), “The launch of this app redefines the possibilities available to mobile consumers, and gives other luxury hotels something to shoot for.” The mobile app has multiple services and functions designed to improve, streamline, and in some ways guide the guests stay with the Ritz. According the President and COO Herve Humler at the announcement of the app (2012), there are multiple functions and special treats for each guest to utilize if they participate in the digital service. The app not only allows guests to reserve rooms without speaking to a Ritz representative, it also has an in depth guide to each hotels unique characteristics and local attractions. It will even make suggestions to a client base on past recommendations, requests, and tastes for local attractions that might meet their needs.
The increase in mobile services and the technological advances with on the go consumerism, people in general have different expectations of companies no, according to Chris Gabaldon Chief marketing officer for Ritz (2012). “The real art is to extend your particular brand into the digital space in a way that is meaningful and relevant to a luxury consumer, while staying true to your core values as an organization.”, says Gabaldon (2012). A hotel service like Ritz can utilize the mobile services and meet the needs of clients who are in fact, on the go, while using the Ritz. Instead of relying on in-house computer centers or getting in contact with hotel staff, guests can now manage their own stays with the touch of a button. The application has essentially four major functions. Detailed information is laid out about each hotel across the globe.
There is GPS that can synchronize with the client’s person phone that can notify the hotel when the client has arrived. The app also has a list of recommendation for the clients are applied to the guests account, and a scanner that allows the client to scan their phone when they arrive to signal they have checked in. The basic functions of Ritz contact numbers are placed in the app as well, and there are inbound inbox options that can have the guest receive notifications and messages from Ritz. And finally, there is an option at the base of the screen that allows the guest to give a summary of their experience to Ritz, allowing the company to review past performances and update client profiles with new information.
The Ritz-Carlton’s SWOT analysis can be examined with a focus on both quality from internal sources, and the outside externalities that affect every hotel business. To begin, the strengths of the company are its global recognition and the fact that it is has been able to make its presence known in multiple countries. The employee focus and the fact that all who work at Ritz are not just there to fill a specific role, but to be able to manage any client situation with pride and knowledge. According to Jim Veil, general manager during the case study (2011), “The technology serves us well. But it is our people who work at listening, so we can record the customer’s every want and need.” Each employee is given a high range of personal autonomy, and has the ability to find, assist, and record a client’s experience regardless of profession.
The company also has a rewards program that gives discounts and extra services for those who decide to return to the Ritz. A focus on customer unique experiences and the need to always be prepared for past and future wants and needs keeps them ahead of a client’s ever changing tastes. The constant focus on quality improvement and being a “high end” chain gives them the appeal of top notch service and environment. And the low turnover rate coupled with extensive employee training can provide the view that those who work at the Ritz are treated well and see value in their jobs.
The weakness and opportunities for the company are just as prevalent as the strengths are as well. Some weaknesses that the Ritz must stay aware of could be the fact that the Ritz-Carlton is a high end hotel chain, and that may deter some clients who believe they could not afford to stay there. The current economy also has hit many industries hard with slowing growth and customers, so it is important to remain steadfast with keeping loyal customers loyal. And along with the case study, the fact that the COVIA system could not create separate accounts for clients, or the fact that there was no way to distinguish certain individuals from each other, can create inefficiencies and lost opportunities to meet the client’s needs.
Opportunities for the company include creating more elaborate rewards packages and services for those who decide to stay with the Ritz. Promotions, special deals, and early notice for vacation packages are just some of the ways vacation companies could create a consumer centered incentive brand to keep loyal clients in their business. The Asian market is still lacking in a large presence of Ritz hotels. So the potential to find good growth and devolved locations for new centers of travel is always something to keep in mind. The Ritz also has the opportunity to jump onto the global tourism chains expansion concepts, like branching out to cruises and other vacation attractions that might not have hotels there, but can be provided quality services through Ritz-Carlton professionals. Of course, it is also important to focus on threats that may affect the business as well.
The two biggest threats to the Ritz Carlton currently are foreign hotel chains that are also trying to get into the global hotel market as well and the down slope of travel due to natural disasters and terrorism. With China now creating many of its own name brand luxury hotel chains, the Ritz must make sure to set itself apart as a global power in the luxury hotel management industry. As for the decline in clients due to weather and terrorism, those are just things that companies will not have control over, but must do their best to balance out these factors with great service and even better security.
When comparing our SWOT with our research the strengths, weaknesses, opportunities, and threats were very similar for the most part. There were a few points that we did not make that came up as well as a few things that we viewed as strengths that others could have considered weaknesses. The Strengths for the most part were very similar. Our SWOT analysis focused on global recognition, employees that were customer focused, and a great customer experience. There really weren’t any additional strengths that the other SWOT analysis pointed out, but it did give a few more detailed examples.
A few of the examples it gave was the fact that 99% of guests interviewed in an independent survey were satisfied with the hotel service and 80% of guests were extremely satisfied. Another great point that it made was that the Ritz Carlton was the only company to win two Malcom Baldrige National Quality Awards (in1992 and 1999) (http://www.managementparadise.com/forums/principles-management-p-o-m/208144-swot-analysis-ritz-carlton.html). The weaknesses that we found were the price perception along with a down economy, and the fact that their current system