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Ritz-Carlton

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Ritz-Carlton

BUS 480

Larry M. Barker

10/2/2017


Executive Summary

Ritz-Carlton operates a chain of luxury hotels and resorts in the United States and Abroad. The company is renowned worldwide for its commitment to excellence, which includes delivering outstanding customer service through extensive employee onboarding and training programs. After undergoing an ambitious expansion program in the 1990’s, Ritz-Carlton was saddled with heavy debt. As a result, the company was purchased by Marriot in 1998. Nevertheless, the Ritz-Carlton brand went on to win industry awards and has been cited as an industry leader for quality and service standards, many of which are imitated by industry rivals and outsiders alike.


Brief History

Ritz-Carlton is a hotel chain with 123 properties in the United States and abroad (p. C-291). The company earned a reputation for delivering outstanding customer service and world class experiences based on its dedication to exceeding its guests’ expectation. Many of Ritz-Carlton’s achievements are the result of its rigorous selection process, and the training and development of subsequent new hires.

Over the years, the company has been bought and sold and operated by various executives and parent companies. Despite these changes in leadership and ownership, the brand has remained committed to its service standards and delivered upon its promises.

As of 2012, the company grossed $3 billion (p. C-391) and continues to invest heavily in its training and development programs. In fact, the company has always “invested significant amounts” of capital in its training programs and properties. Currently owned by Marriot, Ritz-Carlton has been recognized and awarded for its quality and service standards, many of which are imitated to this day by its competitors and outsides, such as Apple.

Problem Statements

Scripting the service that employees deliver does not necessarily motivate them. Instead, employees may simply be following blindly as they perform their daily routines, making what should be personable and unique service and experience a ritualistic and mundane feature. As a result, the culture becomes resistant to change. Employees are under tremendous pressure to follow the script which may lead to their getting burned out or overly stressed on the job.

In the early 2000s, the Ritz-Carlton began an ambitious expansion program. They began by establishing a line of luxury condos, followed quickly by a timeshare club and subsequent spas, golf courses, and resorts. These efforts saddled the company with large debt loads, but ultimately paid off.

However, Ritz-Carlton faced three risks moving forward:

  • Quality – As the number of locations increases, it becomes increasingly difficult to ensure the same level of quality is delivered across the company. As a result, services may suffer and there may be a lack of consistency as a result.
  • Brand – The rapid brand expansion exposes Ritz-Carlton to decline in onboarding and training quality as it attempts to align new management and employees with company values.
  • Partners – Additional partners must be brought on to make the expansion a success, introducing outside elements to the company and forcing Ritz-Carlton to either compromise or adapt its current practices to fit new models.

Possible Solutions

Ritz-Carlton’s strategy to expand presents an opportunity for it to scale, consolidating value chain activities into one entity. This strategy makes it possible for Ritz-Carlton to bring its marketing activities under one roof where the target market is understood better by all parties. Furthermore, promotional activity can be done from the same system, utilizing a central database.  

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