The Ritz-Carlton Hotel

Hotel industry is one of the most lucrative sectors across the globe. This trend has seen primary stakeholders adopt critical strategies likely to guarantee success in a highly competitive environment. Perhaps the most commonly used strategies for coping with this kind of competition include staff training and management to keep the guests motivated; staff motivation and up-skilling to ensure the employees remain focused on their duties; and increased marketing strategies to attract both independent and business travelers (Lee, Tsang, & Pan, 2015). Another approach is the use of hotel management companies in order to improve their position and services rendered to consumers. Despite these improvement strategies, hotels continue to face a myriad of challenges such as finding new and better ways of managing profits and revenues, guest satisfaction, and improved channel management (Berezina, Bilgihan, Cobanoglu, & Okumus, 2016). In particular, the amounts of profits and revenues have dramatically declined for the industry while consumers demand for personalized services has increased leading to reduction in profits. With reduced profits, it has become hard for the players to achieve an improved hotel chain management. The case of the Ritz-Carlton Hotel Company is a manifestation of problems associated with increased competition and high customer demands regarding services offered. Nevertheless, these issues can be alleviated through maintenance of the initial occupancy rates and appropriate adjustment of the countdown and occupancy rates.

Background

The Ritz-Carlton is one of the best-recognized hotel management companies in the world. It deals in hotels and resorts where it is known for its excellent services. Its origin can be traced back in the late 1800s when its founder, Cesar Ritz, established the first hotel in Spain and later spread to London and the United States (Sucher & McManus, 2005). Its exceptional performance through time can be attributed to a performing business model that attracts high average rates of occupancy from both independent and business travelers. Quality is an important value that has kept the company rolling. The firm integrates the values and principles of Malcolm Baldrige National Quality Award as a guideline for continuous quality improvement, quality planning, quality audits, benchmarking, supplier certification, and dealing with the associated costs of poor quality (Sucher & McManus, 2005). Human resources are treated with the utmost respect at this organization. Employees are given numerous opportunities for development as well as extensive formal and informal training prior to begging their duties. Employee productivity is not only measured against the laid down service quality indices but also handled by the workers themselves. In addition to worker’s supervising their accomplishment, they are recognized for exceptional work in a number of ways. They include minor rewards and awards provided within their respective sections as well as large awards at the hotel level. For example, the hotel chooses a five-star team to receive five-star rights at the Ritz-Carlton Hotel and round-trip airfare for two people every year.

The exceptional quality standards at this institution could be the reason the Millennium Partners has chosen it to oversee the opening of a multi-use facility to be located in the historic Foggy Bottom district of Washington District. This new facility worth $225 trillion standing on a-two-and-a-half acres includes 162 high-end condos, sports facility, a splash spar, three eateries, retail stores, and a hotel. The Millennium Partners is a real estate agency currently headed by Brian Collins (Sucher & McManus, 2005). Its principals initially endeavored to create high-end luxury condos that would attract high prices from rich people looking for secondary or tertiary residential homes in world-class cities. It was not their intention to venture into the hotel business. However, the dawning that it cannot provide the best services in residential properties leave alone apartments that have the required height, views, and lights made them venture into the hotel business. In particular, it became impractical for the company to solve the service problem as there was no explicit formula it would use to assure the customers that it would continuously offer greater services. Moreover, it became challenging to implement all the required amenities in a single apartment in cities with height restrictions and limits such as Washington. It forced the company to venture into the hotel business in order to remain operational and profitable.

Statement of the Challenges

Two major problems are evident from the case. The first issue is Collins’ doubt on the efficiency of the seven-day countdown training process in guaranteeing a higher occupancy rate in a rather shorter time. Apparently, the Ritz Carlton Hotel Company must follow a strict and a standard hotel opening process which prompts Collins to question its validity to enhance performance and productivity. The seven-day countdown training process is deemed to yield high efficiency and reduced burden on new managers and leaders responsible for running the hotel. Typically, day one of the training entails staff orientation whereby new employees are joined by other members of their divisions before being introduced to the company’s history, values, and philosophies. In particular, the Schulze’s speech addresses the philosophy of the high-quality service organization by informing the employees that they are not servants but individuals involved in the provision of professional service (Sucher & McManus, 2005). Notably, during this address, the new workers learn the start of the Ritz-Carlton. This motto is part of the gold standards that include the Credo, the three steps of service, the workers’ promise, and the twenty fundamentals that allow new employees to focus on the principal company’s scopes. The service philosophy and the role of leadership are also introduced in day one of the training. Day two of the seven-day countdown encompasses the departmental vision sessions where new employees are presented to their respective departments (Sucher & McManus, 2005). The main tool implemented in this stage is group exercises that allow them to interact with others as well as identify their likes and dislikes and how they can work as a highly functional unit despite their vast differences. For the next five days, the Ritz-Carlton Hotel Company embarks on skills training of the new employees. The period seeks to solve any emerging issues and difficulties that can arise during the first two days of the training, the personal grooming sessions, uniform fitting sessions, and the daily lineup. The last three days of seven-day countdown entail technical training where employees learn the finer details involved in executing their jobs to the pre-set standards by the company (Lee et al., 2015). There is a mock activity where workers are allowed to practice serving real consumers. An essential exercise during this period encompasses management’s protection of employees from the overwhelming responsibility of controlling the occupancy rates. The company projects an occupancy rate of 50% in the first month of the opening of any hotel and subsequent improvements. Alternatively, by the lapse of the three to four months, it must achieve 80% target occupancy rates. Collins’ concerns with this training are whether this timeframe actually limits the hotel’s capacity to start at a higher residency rate and achieve 80% within such as small period (Sucher & McManus, 2005). Thus, Collins’ issue is whether additional training is necessary to assist the workers further fine-tune their service skills. More importantly, Collins seeks for assurance that the hotel is ready for opening and their established service maintains flawless and the real draw for the potential condominium residents. The second challenge lies within the McBride’s doorstep. He doubts whether he should adjust the seven-day countdown which has become the worldwide best practice for that company. McBride believes that the $700 million investment made by Millennium Partners to the Ritz-Carlton’s other properties gives Collins the right to question and voice his concerns on the countdown process (Sucher & McManus, 2005). By extending this training period, it would come at high financial expenses and the possibility of a change of a world-wide best practice for the company. Consequently, this factor necessitates a truce to deal with both problems which will ensure the continuity in business.

Cause of the Problems

Collins’ problem could be caused by the increased competition and high customer demands regarding the services offered to them. The growth in the number of players in the hotel industry has seen increased competition. It has not only forced the companies to lower the prices of occupancy but also introduced attractive packages for both the independent and business travelers. Compounded by the demand for excellent and individual-centered services by the consumers, it could be the real reason Collins requires a long training in which the employees would be equipped with high skills to oversee excellent housekeeping services (Berezina et al., 2016). This step will ensure its customers keep returning for more services. On the other hand, McBride’s dilemma of vacating the world-wide best practice that has solidified the position of the Ritz-Carlton and possibly put it in the global map could be attributed to the need to protect the Ritz-Carlton legacy in the hotelier industry (Sucher & McManus, 2005). The company has a rich history which spans centuries that could be associated directly to the traditional seven-day countdown process. By vacating this position, McBride would not only betray the organization but also would subject the organization to a business environment unknown to it. Moreover, increasing the training process could come with significant financial obligations. The company would be forced to raise the budget in order to cover additional materials, sessions, and other administrative fees. From the case study, it is revealed that the company has, in the recent times, been experiencing challenges and reduced profit margins owing to changing business environment and increased competition in the hotel management sector. It is evident that adding on the length of training sessions would stress an already constrained company. Therefore, it would not be a favorable choice for him as he would be forced to seek external sources of funds to accomplish this goal. In any case, the company could be contemplating on lowering the costs associated with recruitment and training, increasing the employee salaries in order to keep them motivated, and providing better working conditions, especially in the first few months of the opening of the new hotel. It is observed that reaching the 80% occupancy rates within the first four months is a demanding and strenuous exercise. By improving the working conditions, the organization would ensure the workers are protected from these stressors.

Recommendations

These problems can be defeated with the implementation of the best solutions among the following choices.

Recommendation 1: Maintaining the Initial Occupancy Rates

Under this recommendation, things would be kept as they are. It means that the seven-day countdown would remain despite the obvious issues raised by Collins. It is obvious that the advantages of the current program outweigh the negatives in this case. In particular, the current plan has weathered, refined, and evolved since the opening of the company in the 1800s. Since then, it has provided the company with a standard for greater efficiency by allowing the flawless execution of the organizational goals. Although the countdown process is short, it has been associated with increased productivity and high occupancy rates as employees become more comfortable with time. In addition, this formula has focused on providing the much needed “wow” process from the beginning, thereby becoming part and parcel of the organizational change. Any change could be faced with great resistance from both the employees and the administration. This factor could have an adverse implication of crippling the business. The current program has allowed for enough allotment of time of every aspect of training, focused on the quality, and deals with the expected minor service failure from the start. This choice is expected to yield some costs that the Ritz-Carlton would have to bear. First, it may fail to satisfy the training requirements wished for by Millennium Partners. The company is on the record insinuating the seven-day training session may be insufficient to impart the required skills to the employees. Since the Ritz-Carlton Hotel Company draws significant profits from Millennium Partners, failure to incorporate Collins’ recommendation in the training exercise could lead to loss of profit when the company severs ties with Ritz-Carlton (Sucher & McManus, 2005). It could further worsen the internal environment at the Ritz-Carlton by creating conducive environment for tensions between McBride and the owners following the Millennium Partners decision to withhold some profit from the company. Moreover, failure by employees to meet the standards set by Millennium Partners could also trigger conflicts between the two companies.

Recommendation 2: Extend Countdown and Observe the Initial Occupancy Rates

This selection would solve the problems for both parties. On the one hand, extending the countdown would allow sufficient training to the employees as per the suggestion of the Collins. On the other hand, observing the initial occupancy rates would ensure that the employees of the Ritz-Carlton Hotel Company are not pressured to deliver beyond the existing standards. It would be advantageous because the employees would deliver more as they become acquainted with the new environment (Sucher & McManus, 2005). There are numerous benefits to adopting this particular strategy. The selection would ensure more efficient training of employees such that they can deliver on the demands of the consumers. It also adds onto the morale of the workers since they will acquire the required skills, knowledge, and expertise yet contribute at the same occupancy rates. In addition, the strategy is beneficial in that it can decrease tension between the owners of the two companies. By implementing this strategy, it would mean that the two companies are in a good working relationship which can reduce tensions in both companies. Furthermore, this policy has the capacity to allot sufficient time for the new firm awarded. The fact that it extends the countdown lends itself to the dynamics of environment within which the new facility is located. Therefore, training can be adjusted appropriately to meet these demands. This strategy has, however, numerous costs and expenses. The extended countdown could mean additional training expenses, hence the loss in profit for the Ritz-Carlton Hotel Company. This strategy could also adversely affect the brand in the sense that it deviates from the norm, and Ritz-Carlton would have to announce this new strategy which may call for additional costs. Moreover, this new policy does not guarantee an enhancement in efficiency or enhanced skills, knowledge, and expertise on the employees. As such, the countdown extension can foster losses and rescheduling of the entire training period without any benefits to the companies.

Recommendation 3: Extend Both the Countdown and the Initial Occupancy Rates

It is also a probable solution or suggestion for the problems highlighted in the above sections. This recommendation would serve to increase the countdown and the first residency rates. Therefore, the employees would have to be as productive as the level of the initial training. The main advantages with this strategy are that it has the capacity for better profitability and lessened risk, particularly to the Millennium Partners. There is also lessened likelihood of tension between the leaders from the two companies, and it would yield more efficient employees who can deliver the quality standards advocated by the Ritz-Carlton Hotel Company (Sucher & McManus, 2005). On the downside, this strategy is likely to lead to some challenges. First, the entire strategy calls for additional costs of implementation. In particular, extended countdown would require additional financial expenses for training while extended initial occupancy rates would mean additional efforts to the employees. Second, this strategy would impact the Ritz-Carlton brand in the sense that the firm would start implementing a whole different program that it has no information about its effectiveness and efficiency in observing its legacy. Third, there is no guarantee that these adjustments will yield any positive results or success. Consequently, it cannot be objectively determined if the program would work even in the short run. Its failure would be accompanied by loss of profits and deformed organizational strategy that may take time to repair. Complete rescheduling of the entire program would adversely affect the worldwide best practice.

Conclusion

The Ritz-Carlton Hotel Company is one of the best-recognized hotel management companies in the world. It deals in hotels and resorts where it is known for its excellent services. However, the company faces two major problems. The first challenge is Collins’ doubt on the efficiency of the seven-day countdown training process in guaranteeing a higher occupancy rate in a rather shorter time. The second issue lies within the McBride’s doorstep whereby he is challenged by whether he should adjust the seven-day countdown which has become the worldwide best practice for that company. According to McBride, the investment worth millions made by Millennium Partners to Ritz-Carlton gives Collins the right to question and voice his concerns on the countdown process. By extending this training period, it would come at high financial expenses and the possibility of a change of a world-wide best practice for the company. The above problems could be attributed to the need to protect the Ritz-Carlton legacy in the hotelier industry, and the Collins’ need to withstand increased competition and high customer demands in terms of housekeeping services offered. To alleviate these problems, three solutions are advanced. First is to maintain the initial occupancy rates under this recommendation. It means that the seven-day countdown would remain despite the obvious issues raised by Collins. The second recommendation would be to extend the countdown and observe the initial occupancy rates. This selection would solve the problems for both parties. On the one hand, continuing the countdown would allow sufficient training to the employees as per the suggestion of Collins. On the other hand, observing the initial occupancy rates would ensure that the Ritz employees are not stretched to deliver beyond the existing standards. This strategy would be advantageous because the employee would provide more with time. The final recommendation would be to expand both the 7 day-countdown and the initial occupancy rates. As such, the employees would have to be as productive as the level of their initial training. The main advantages with this strategy are that it has the capacity for better profitability and lessen risk, particularly to the Millennium Partners. There is also lessened likelihood of tension between the leaders from the two leaders.