Case Study for Ritz-Carlton Hotel Company - Essay Example

Case Study for Ritz-Carlton Hotel Company The legacy started by the founder of Ritz-Carlton Hotel Company lives on as one of the most renowned brands in the hospitality industry continues the provision of excellence to every guest (Lampton 2003). Even in its establishment as a business organization, the company has already communicated its desire to provide the best experience possible through the highest standard of product and service. Even in the early operation of Ritz-Carlton, the company has recognized the two components of its product offering; one which is tangible while the other is intangible. The tangible aspect corresponds to the company’s infrastructure and amenities. Aside from this, Ritz-Carlton also emphasized excellence in customer service which is the intangible aspect of its product. This is highlighted by the famous words of its founder: “Never say no when a client asks for something even if it is the moon. You can always try” (Lampton 2003). Thus, “guests remark that they are “pampered,” “respected,” “treated like royalty,” and “incurably spoiled” (Lampton 2003). Recognizing the importance of customer service in extending the Ritz-Carlton experience, the company has been passionate in training their staff and treating them as their strategic partners. The hotel chain makes it a point to make employees absorb the core value in the organization, train them, prepare them to serve the market. What is remarkable is the company’s strong adherence to strategic human resource management. Ritz-Carlton’s staff irrefutably becomes its competitive advantage (Lampton 2003). Ritz-Carlton: King of Hotels and Hotels to Kings Ritz-Carlton Hotel Company’s popularity is highly due to its upscale, luxury brand of hotels and resorts with locations in major cities in the United States and other internationally famous destinations such as Montego Bay, Jamaica, San Juan, Puerto Rico, Bali, Hong Kong and Qatar. The hotel company owns 59 hotels in 20 countries 37 of which are hotels while 22 are resorts. The operation of the hotel company began in 1983 with the purchase of the Ritz-Carlton, Boston by William B. Johnson. However, the legacy of the hotel is attributed to the celebrated “king of hoteliers and hotelier to kings,” Cйsar Ritz. The company states that “his philosophy of service and innovations redefined the luxury hotel experience in Europe through his management of The Ritz in Paris and The Carlton in London.” The company’s quest of providing quality accommodation and service named it one of the best hotels in the world as it consistently reaped awards from prestigious organizations like Forbes, Travel Weekly, Luxury Institute, and Consumer Reports. In 2006, it was awarded the Mobil Five-Star Award and AAA Five Diamond Award (Ritz-Carlton 2007). Serving Ladies and Gentlemen Ritz-Carlton’s market segmentation is reflected on its different product offerings. The company irrefutably utilized geographic, psychographic, as well as behavioral factors in designing their product line. In terms of geographic it can be noticed that Ritz-Carlton offers accommodation in four key strategic locations—tourist spots, business districts, metropolitan, and countryside. The company offers luxurious accommodations in scenic tourists’ destinations like Bali, Milan, and Barcelona as well as in the business districts of New York, Tokyo, and Dubai International Financial Center. Metropolitan like areas like Seoul and Kula Lumpur as well as the countryside of Florida and Montego Bay are conquered by the pleasure offered by Ritz Carlton (Ritz Carlton 2007). In terms of psychographic and behavioral factors, Ritz-Carlton segments its market by looking at the general and specific interests of its customers. The hotel company divides its target company according to the purpose of their use of facility. Three general classifications are generated: those who stay in the hotel for business purposes; those who consider Ritz Carlton for leisure during holidays and vacation; and those who want to celebrate their special occasions like wedding and anniversaries. The company did not lose sight of the fact that adults often bring their little ones on vacation. Ritz-Carlton has specific activities for kids through the Ritz Kids Roundup Programs (Ritz-Carlton 2007). Selling the Ritz-Carlton Experience: The 4Ps Ritz-Carlton promises not just to provide luxurious and comfortable accommodation to all its guests but extend the “Ritz-Carlton experience.” This is further described in the hotel company’s credo: “The Ritz-Carlton experience enlivens the senses, instills well being, and fulfills even the unexpressed wishes and needs of our guests”. In order to do this, the company does not just offer perfection not just on their “tangible products” but also by extending personal high quality service. Ritz-Carlton’s unique value proposition is communicated in its motto: “We are Ladies and Gentlemen serving Ladies and Gentlemen.” This stresses the fact that the company wants to provide excellent service. The company also emphasized that as the human resource in Ritz-Carlton are Ladies and Gentlemen, they exactly know the needs of fellow Ladies and Gentlemen (Ritz Carlton 2007). The Boston Ritz-Carlton introduced room and service standards unprecedented in America, now considered de rigueur for luxury hotels. Among them: “Private bath in guest room; Elevated dress codes: white tie and apron uniforms for waiters and waitresses, black tie for the Maitre d’ and morning suits for all other staff. (Note that this was adopted decades before the term “dress for success” permeated the business arena); and Intimate, smaller lobbies, contrasting with the customary expansive lobbies that afforded little quiet or privacy for conversations.” (Lampton 2003) Since Ritz-Carlton offer the best accommodations and amenities to give that luxurious lifestyle to its guests and residents, the company prices are also very high. Accommodation in Ritz-Carlton starts from $400 and it can mount according to the additional amenities and services that the guests require. Promotion efforts are essential not only in attracting new customers but also in retaining current clients. What is also apparent in the promotion strategies of both companies is going beyond the traditional advertisement efforts and utilizing innovative and available resources. In the case of Ritz-Carlton, the company extensively uses travel agencies in advertising its accommodation services. Currently, the hotel company also has a partnership with another luxury brand Mercedes Benz. This promotion called the Key to Luxury package is gaining popularity as indicated by the continuous growth in demand. Ritz-Carlton also offers vacation and weekend promotion packages. The hotel company rewards its loyal customers by its PointSaver Promo which lets customer who frequently visits their hotels. It should be noted that Ritz-Carlton often extends these promotions with its affiliated travel agencies. The advent of advanced technology and the wide of the internet make other promotional efforts possible for the company. The company’s website serves as a promotional tool geared in capturing the internet savvy customers. As discussed above, Ritz-Carlton specializes in the provision of the “Ritz-Carlton experience” by locating in tourists destinations, business districts, metropolis and countryside. However, as the traditional channels do not fully suffice in capturing customers, the hotel company launched its website (www.ritz-carlton.com) to further inform clients of its products and services. It is worth mentioning that reservations and inquiries can be made online. Managing Customer Relations Ritz-Carlton is regarded as one of the earliest pioneer of customer relationship management (CRM). The goal of the company is not just maximize profits but delight customers. Ritz-Carlton as discussed previously in not just on the business of providing accommodation but on the conveyance of the “Ritz-Carlton experience.” Thus, the company employs a customer-focused strategy through its capital and human resources. Currently, the company asserts that it provides “Guest Delight” through personal services and facilities. The company understands that each customer is different and should be accommodated according to their individual preference. This makes the “Ritz-Carlton experience” highly personalize and customized (Ritz Carlton 2007). The company ensures the quality of its facilities and amenities as well as recognizes the fact that its workforce should also be trained to provide excellent service. Thus, the company has a training and certification to make sure that guests get the treatment they deserve. In addition, the company is known to track the requests of its individual guests. For example, if a specific customer asks for baby shampoo during her stay at the hotel, she will be supplied baby shampoo again the next time she is accommodated in any part of the world. This is consistent with the hotel company’s commitment to retain customers (Ritz Carlton 2007). Competing Through Strategic Partners The importance of human resource in a business organization is emphasized by strategic human resource management. Today, the vast majority of organizations, regardless of whether they produce and sell goods or services, seem to state that their most important resource is their personnel (Holmlund and Kock 1998). Practically nobody denies the importance of human resources to business success, and expressions such as "human resource represent an investment rather than a cost" have become quite usual (Gonzalez 2004). John Purcell who is known to have pioneered in this field, highlighted the importance of employees in his research which emphasized the huge role played by the company’s workforce as “strategic partners.” This case study is even complemented by the experience of Ritz-Carlton in the hospitality industry. Being an organization that competes in the market mainly through its workforce, the hotel chain follows notable steps in aligning its workforce to its identified strategic goals. 1. Selecting Employees Contrary to the practice of other business organizations in the hospitality industry, Ritz-Carlton does not “hire” its employees but “select” only the best from the applicants. Because of the company’s reputation, the generation of applications has never been a problem. This is illustrated when the hotel chain open in Korea where 580 job positions were opened. The response has been overwhelming as the company’s HR department received 15,000 applications (Lampton 2003). The process of selecting applicants is primarily conducted through the use of benchmarking. The company studies the attributes of competitors’ top performers in order to create the ideal profile for a specific position (Lampton 2003). Ritz-Carlton use this in developing job description and detailed job qualifications. To aid in the selection process, the business organization employs the service of Talent+, an international human resource firm based on Nebraska. Talent+ “adds objectivity to the selection process, and helps assure that new employees will bring full commitment to the Ritz-Carlton tradition and service.” The company gives more preference to applicants who finished their degrees. 2. Grooming Applicants In order to ascertain the applicant’s alignment with the organization, Ritz-Carlton communicates the company standard during the interview process. The company determines whether a prospective employee can give up some of his/her attributes which are detrimental for it (Lampton 2003). For example, the company prohibits the wearing of body piercing jewelry. This is a part of Ritz-Carlton’s grooming of applicants in order for them to be “Ladies” and “Gentlemen.” 3. Training and Development Training and development in Ritz-Carlton become one of the central functions of the human resource department. Unlike most organizations which require employee to sit for a day or two for the orientation, the hotel chain gives a more thorough programme which could last within a year. After being selected, a new employee will be asked to attend an initial orientation for two consecutive days. Within the span of three weeks, he must be able to pass Ritz-Carlton Certification Exam and will now be deployed to “wow” the customers. THE GOLD STANDARD 1. The Credo The Ritz-Carlton Hotel is a place where the genuine care and comfort of our guests is our highest mission. We pledge to provide the finest personal service and facilities for our guests who will always enjoy a warm, relaxed, yet refined ambience. The Ritz-Carlton experience enlivens the senses, instills well-being. and fulfills even the unexpressed wishes and needs of our guests. 2. Motto At The Ritz-Carlton Hotel Company, L.L.C., "We are Ladies and Gentlemen serving Ladies and Gentlemen." This motto exemplifies the anticipatory service provided by all staff members. 3. Three Steps Of Service 1. A warm and sincere greeting. Use the guest's name. 2. Anticipation and fulfillment of each guest's needs. 3. Fond farewell. Give a warm good-bye and use the guest's name. 4. Service Values: I Am Proud To Be Ritz-Carlton 1. I build strong relationships and create Ritz-Carlton guests for life. 2. I am always responsive to the expressed and unexpressed wishes and needs of our guests. 3. I am empowered to create unique, memorable and personal experiences for our guests. 4. I understand my role in achieving the Key Success Factors and creating The Ritz-Carlton Mystique. 5. I continuously seek opportunities to innovate and improve The Ritz-Carlton experience. 6. I own and immediately resolve guest problems. 7. I create a work environment of teamwork and lateral service so that the needs of our guests and each other are met. 8. I have the opportunity to continuously learn and grow. 9. I am involved in the planning of the work that affects me. 10. I am proud of my professional appearance, language and behavior. 11. I protect the privacy and security of our guests, my fellow employees and the company's confidential information and assets. 12. I am responsible for uncompromising levels of cleanliness and creating a safe and accident-free environment. 5. The Employee Promise At The Ritz-Carlton, our Ladies and Gentlemen are the most important resource in our service commitment to our guests. By applying the principles of trust, honesty, respect, integrity and commitment, we nurture and maximize talent to the benefit of each individual and the company. The Ritz-Carlton fosters a work environment where diversity is valued, quality of life is enhanced, individual aspirations are fulfilled, and The Ritz-Carlton Mystique is strengthened. Source: Ritz-Carlton Website What is thought in the three-week training and development programme is primarily centered on Ritz-Carlton’s Gold Standard which encompasses the company’s values and philosophy encapsulated in The Credo, The Motto, The Three Steps to Service, and The Employee Promise. This programme is more than just reading and memorizing this Gold Standard. Employees are required to know this by heart and discuss this with their fellow employees’ everyday of their employment with the company (Lampton 2003). 4. Employee Empowerment Ritz-Carlton believes in giving employees the authority and power to solve problems involving customers. Upon selection, staffs can commit up to $2000 of the hotel’s funds in order to bring immediate resolution of a customer’s concern (Lampton 2003). Hotel’s employees are also given more than enough say in managing day to day affairs. The business organization treasures feedback from the staff on how customer service can be further improved (Lampton 2003). 5. Instilling Belongingness Ritz-Carlton emphasizes the need of making customers feel at home with the organization. Thus, the company strives in making this possible by providing venues where employees can bond with their fellow staff and other members of the organization. Facing the Challenges Ahead In the 21st century, Ritz-Carlton still upholds its promise of keeping customers delighted amidst the challenges and threats in the external market. The integration of the world economies through the creation of regional and trade blocs eliminate trade boundaries thereby facilitating the entry of competitors to the market. This puts pressure to the business organization as these external factors will significantly build up and intensify competition to the booming hospitality industry (Yang and Fu 2007). In this hypercompetitive business environment (Kotler 2005), the challenge for the company is how to enhance the capacity of its human resource in order for the company to transform this competitive advantage into sustainable advantage. References Boxall, P. and Purcell, J. 2003, Strategy and Human Resource Management Palgrave Macmillan Gonzalez, S 2004, Improving human resources management: some practical questions and answers, International Journal of Contemporary Hospitality Management, 16(1), 59-64. Holmlund, M. and Kock, S 1998, Relationships and the internationalization of Finnish small and medium-sized companies, International Small Business Journal, 16(4), 46-63. Hui-O Yang, Hsin-Wei Fu. 2007, Creating and Sustaining Competitive Advantages of Hospitality Industry. Journal of American Academy of Business, Cambridge 12, no. 1 (September 1): 113-119. Retrieved 13 August 2007, http://www.proquest.com.proxy.devry.edu/  Lampton B. 2003, Paragon of Customer Service Excellence, Retrieved 13 August 2007, http://www.expertmagazine.com/EMOnline/RC/part1.htm Lampton B. 2003, My Pleasure—Ritz-Carlton Hotel Part 2, Retrieved 13 August 2007, from http://www.expertmagazine.com/EMOnline/RC/part2.htm Ritz-Carlton Website (www.ritzcarlton.com) Read More