The Ritz-Carlton: Ladies and Gentlemen Serving Ladies and Gentlemen
The Ritz-Carlton has, since its founding in 1983, been synonymous with luxury and true hospitality. As the company declares on its own website, it is a ‘place where the genuine care and comfort of our guests is our highest mission’.
The Ritz-Carlton is a luxury hotel chain that operates 89 hotels and resorts in 29 countries, competing with the likes of the Four Seasons, the St. Regis, and the Peninsula. The Ritz is the only hotel company to twice win the Malcolm Baldrige National Quality Award from the United States Department of Commerce, and consistently wins awards from Conde Naste, J D. Powers, Forbes, Travel + Leisure, AAA, Conde Naste, and many more.
The company’s business is well-aligned in strategy, marketing, and operations. Its marketing is most visible: Ritz-Carlton properties are ostensibly adorned with extravagant chandeliers and gold finishing; the crest bears the image of a lion (symbolizing wealth) and a crown (representing royalty).
However, true luxury depends not only on the product, but on all the ‘magic’ that accompanies it. The secret to Ritz-Carlton’s success lies in its operational excellence. The company utilizes many operational levers in order to serve their business strategy of delivering genuine care and comfort.
- Focus on data collection and analytics. Daily, employees record data points to track a myriad of customer interactions and events. These data points serve two purposes. First, it allows managers to better analyze the business in real-time and react quickly to any arising trends. Second, it permits front-line employees to utilize information to surprise and delight frequent customers with their favorite scented candle or personalized welcome tray.
- Empowered employees. In order to allow employees to offer a high quality of customer service, the Ritz-Carlton has eliminated the bureaucracy typically involved with flagging and resolving customer complaints. Instead, they have decentralized this power by granting every employee discretionary spending of $2,000 (per incident) to satisfy a customer.
- Internal processes to ensure organizational alignment. Employees have a daily 15-minute ‘line-up’ meeting during which daily plans, special events, special guests, and ‘wow’ moments are shared with the entire staff. These ‘line-ups’ allow the company to frequently and consistently communicate its values with all 35,000 employees.
- Cultural alignment across geographies and roles. To ensure that a culture of class and luxury permeates all Ritz-Carlton hotels, the company utilizes frequent trainings and specific language. The vision and values of the Ritz-Carlton are not simply words on a page: employees undergo a lengthy upfront training period with frequent re-trainings. The goal is that all employees, across its 89 locations, can both articulate and live the Ritz-Carlton’s mission. Additionally, the use of language is important in instilling culture. The company motto, which is oft referenced, is, “We are Ladies and Gentlemen serving Ladies and Gentlemen,” signaling the importance of employees as a resource.
- Designs to maximize customer experience. The Ritz-Carlton focuses on both physical product designs and process designs to maximize travelers’ hotel experiences. Care is taken to ensure that sophistication and elegance is communicated in even the subtlest details. For example, many Ritz-Carlton hotels continue to set their tables with cobalt blue glasses. This cobalt blue was considered a status symbol in 1920s New England, because only the wealthy could afford the blue glass, which had to be imported from Europe. In more recent years, the Ritz-Carlton has become one of the earliest luxury hotels to incorporate mobile technology into the customer experience. By incorporating mobile into customer processes like checking in or poolside ordering, the hotel is able to create an experience that younger generations appreciate.
The Ritz-Carlton has been highly effective in utilizing operational excellence to drive performance. Employee turnover, when compared to other luxury hotel operators, is incredibly low – 18% versus 158%. Additionally, consumer engagement, as measured in Gallup polls, ranks Ritz-Carlton in the 90th percentile. The Ritz-Carlton will continue to compete successfully as it continues to use operational tools like employee feedback and detailed customer data to adapt to changing travel trends.
Sources:
Ritz-Carlton company website. http://www.ritzcarlton.com/en/Corporate/Default.htm
How The Ritz-Carlton Manages the Mystique. http://www.gallup.com/businessjournal/112906/how-ritzcarlton-manages-mystique.aspx
Ritz-Carlton’s Big Announcement And The Luxury-Mobile Paradox. http://www.forbes.com/sites/micahsolomon/2014/08/18/ritzapp/
Secrets of the Ritz-Carlton’s ‘Legendary’ Customer Service. http://www.psafinancial.com/2014/05/secrets-ritz-carltons-legendary-customer-service/
Interview: Ritz-Carlton COO on Adapting to Luxury Travelers’ Expectations. http://skift.com/2015/02/09/interview-ritz-carlton-coo-on-adapting-to-luxury-travelers-expectations/
Anna – this is awesome; Ritz is definitely a distinctive brand that has maintained its effective business model over the years. Two questions that come to mind for me are (i) how Ritz can really align its value proposition of service and luxury to its employees and (ii) how Ritz can maintain a distinctive operating model under the umbrella of Marriott and now the merger/acquisition with Starwood. On the first question, I struggle a bit with how Ritz can get its lower wage service staff to understand the customer experience and empathize with the customer given the gap in income / lifestyle. Second, how has Ritz maintained its own approach while existing alongside other Marriott brands (e.g., JW Marriott) and future brands (e.g., St. Regis). Thanks for sharing!
Thanks for your comment, Mark! I think you raise two great points. I don’t have the answer to either, but will venture a guess.
(i) Part of this is the hiring process – the Ritz makes sure to hire folks who can uphold its service standard. Afterwards, they utilize language like ‘Ladies and Gentlemen’ to elevate the attitude employees have towards all staff, and continue training on language, lifestyle, etc. One can argue that this might not be sufficient, but I don’t think this is different from any luxury service (e.g. black car service, flight attendant on an Emirates first class flight…).
(ii) I -believe- the Ritz runs its operations independently from other Marriott hotels. From my understanding of Starwood (which I presume operates similarly to Marriott and other hotel lines), hotel brands runs their own operations independently while headquarters / centralized functions consists of HR, finance, and brand management. The primary conflict I would see here is how HQ decides to allocate its marketing budget amongst various competing brands, not the operations itself.
Anna,
Great note. I was really interested to read more about Ritz Carlton and learn about their models. Besides Mark’s points, I also wanted to understand more about the data usage. In the luxury field, players have been very careful about data – Cartier has refused to use big data to its clients – and I am curious to know how, besides room bookings and restaurations, Ritz Carlton has actually been using data. How also, has been customers’ reaction. Data privacy is a key concern.
Another question was more about the business model compared to peers: how does Ritz Carlton creates value? How does it translate into financial returns which in turn feed the model? What is Ritz Carlton’s distinctive advantage?
Thanks Gilles for the comments!
I haven’t found any outrage from customers in terms of data use — I would believe that the Ritz uses data tastefully, and only in ways that surprise and delight guests (i.e. a circumstance that would make it less likely that customers would be upset).
In terms of financial returns — some of these softer operational excellence features have been shown to directly correlate with financial returns. For example, Gallup has data showing that consumer engagement (which the Ritz excels at) correlates to better financial returns. (I don’t have the exact numbers for this, unfortunately!)
This is very interesting. I defiantly agree that there is an anlignment between Ritz Carlton’s operating and business model,however, the question will be how will they be able to maintain this alignment in the future with start-ups, such as Airbnb starting to lock in luxury apartments that would be rented for daily use and competing directly with hotels, such as Ritz Cartlon. Even though, Ritz Carlton might provide the personalised experience, charm of a hotel, and house keeping, yet these start ups might provide larges spaces that are just as luxurious and at lower cost. Another question that would be interesting to know, weather Ritz Cartlon’s business model include owning the hotel? if so, the Ritz Carlton might be a strong player in the real estate market, as well.
Anna, thank you for this great post!
I am very interested in how luxury hotels are adapting to new customers from emerging markets, particularly China. Is Ritz-Carlton tailoring the experience in its hotels according to customers from this country? Or is it offering a consistent experience for all its customers?
I read a very interesting article on Time: http://business.time.com/2013/04/09/how-the-u-s-travel-industry-is-adapting-to-a-growing-wave-of-chinese-tourists/
This article mentions that tourists from China spend more on traveling abroad than any other country in the world. And it is growing very quickly! Chinese tourists spent 40% more on 2012 than in 2011. Hotels in the US are adapting to this trend. For instance, Marriott stopped using the number 4 in its rooms because it is related to bad luck in China. Sheraton and W Hotels started offering translation services in their hotels, and also included Chinese food in their menus. I was wondering if an hotel chain as conservative as Ritz-Carlton si also following this trend.