As tourism industry has been increasing dramatically during the last two decades, hotel industry is at war. In global competition, hotel chains are required to offer not only standardized facilities, but also standardized services. To meet the different needs of customers in each individual country while maintaining the same standards of services, global marketing strategy plays a critical role. Being a leader in upscale hotel chain industry, The Ritz-Carlton Hotel took a unique path to compete with its rivals.
Founded on principles of groundbreaking levels of customer service, and with guest satisfaction being the highest mission, the Ritz-Carlton Hotel Company, is the first and only hotel company to win the desirable Malcolm Baldridge National Quality Award and the only service company to win the award two times, with the most recent honor received in 1999.
Brief History of Ritz-Carlton Hotel Company
The Ritz-Carlton Hotel Company was established in 1983 when real estate mogul and former CEO William B. Johnson acquired the rights to the name made famous by Swiss hotelier Cesar Ritz. The company manages more than 50 luxury hotels worldwide, in Australia, China, Indonesia, Japan, Malaysia, Mexico, Puerto Rico, Singapore, South Korea, Spain, the US, the US Virgin Islands, etc. The Ritz-Carlton name is synonymous with luxury, and its hotels are consistently rated among the best in the world. The company operates sales offices in Germany, Japan, the United Arab Emirates, Singapore, the US, and the UK. Hotel giant Marriott International owns the company. Besides Four Seasons hotel, its top competitors are Fairmont Hotel Management and Starwood Hotels & Resorts Worldwide. (www.ritzcarlton.com)
History of the Malcolm Baldrige National Quality Award
The Malcolm Baldrige National Quality Award sets the standard for excellence for U.S. companies. Named for the former Secretary of Commerce, on August 20th, 1987, President Reagan signed the Malcolm Baldrige National Quality Improvement Act, establishing an annual National Quality Award. The purposes of the award are to promote quality awareness, recognize quality achievements of U.S. companies, and publicize successful quality strategies.
Hunt (1993, pg.161-162) stated, the Malcolm Baldrige National Quality award criteria are the basis for making awards and providing feedback to applicants. In addition, they have three other important purposes: (1) to help elevate quality standards and expectations; (2) to facilitate communication and sharing among and within organizations of all types based upon common understanding of key quality requirements; and (3) to serve as a working tool for planning, training, assessment, and other uses.
The award criteria consist of seven core values and concepts:
Leadership: Examines how senior executives guide the organization and how the organization addresses its responsibilities to the public and practices good citizenship.
Information Analysis: Examines the management, effective use and analysis of data and information to support key organization processes and the organization’s performance management system.
Strategic Quality Planning: Examines how the organization sets strategic directions and how it determines key action plans.
Human Resource Utilization: Examines how the organization enables its workforce to develop its full potential and how the workforce is aligned with the organization’s objectives.
Process Management: Examines aspects of how key production, delivery and support processes are designed, managed and improved.
Business Results: Examines the organization’s performance and improvement in its key business areas: customer satisfaction, financial and marketplace performance, human resources, supplier and partner performance, and operational performance. The category also examines how the organization performs relative to competitors.
Customer and Market Focus: Examines how the organization determines requirements and expectations of customers and markets. (Capezio ; Morehouse, 1995, pg. 299-300)
The Malcolm Baldrige, unlike many other awards, is based on results and customer satisfaction. The award is not given for specific products or services. To be selected as an award recipient, an organization must have a system that ensures continuous improvement in the delivery of products and services and provides a way of satisfying and responding to stakeholders.
The Malcolm Baldrige Award and the Ritz-Carlton
As noted by Evans ; Lindsay (1999, pg. 64): “The hotel industry is a very competitive business, one in which consumers place high emphases on reliability, timely, delivery, and value. Ritz Carlton focuses on the principal concerns of its main customers and strives to provide them with highly personalized, caring service. Attention to employee performance and information technology are two of the company’s many strengths that helped it achieve superior quality”.
The Ritz-Carlton Hotel Company, L.L.C. was named a winner of the 1999 Malcolm Baldrige National Quality Award by the United States Department of Commerce. The Atlanta, Ga.-based company, a previous Baldrige recipient in 1992, joins only one other American company that has earned the distinction more than once. Ritz-Carlton is the only company in the hotel industry to have ever achieved the award, which recognizes exceptional achievement in the practice of total quality management principles.
Seven categories make up the award criteria: Leadership, Information Analysis, Strategic Quality Planning, Human Resource Utilization, Process Management, Business Results, and Customer and Market Focus. At Ritz-Carlton, a focus on these criteria has resulted in higher employee and customer satisfaction, increased productivity and market share. Perhaps most significant is increased profitability. Research shows that the stock price of companies with effective Total Quality Management implementation outperformed the S;P 500 Index by approximately 34% over a five-year period. (www.ritzcarlton.com)
Service Quality at the Ritz-Carlton Hotel
The Ritz-Carlton has 17,000 staff people and over 15,000 guestrooms; these conditions give it lots of opportunities for both preventing defects and beginning improvements every day.
According to Horst Schulze: former President and COO, The Ritz-Carlton Hotel Co., LLC, “leadership drives an organization.” The Ritz-Carlton started in 1983 without any hotels. The dream was to create the standard for a world class hotel company. As the company grew, the leadership found that many of their customers did not agree that Ritz-Carlton was successfully meeting their needs. To remedy this condition, Ritz-Carlton started benchmarking with quality winners and began incorporating the Baldrige approach. Today, Ritz-Carlton has more than 50 hotels worldwide and new ones under construction. Every hotel implements the Baldrige criteria. Ritz-Carlton leadership is involved in all its corporate areas, both administrative and operational. It makes sure the organization is a learning organization, is caring, and has a heart. It also makes sure that all leadership is attuned to all the stakeholders they serve, whether they are guests, employees, investors or the community. (http://www.progressivepractices.com)
“Leadership looks over all we are involved with,” said Schulze. The perspective is the pyramid shaped strategic plan through which everyone can clearly tell to what degree the whole organization is aligned with its strategic goals. (http://www.progressivepractices.com)
The Ritz-Carlton operates from an easy to understand definition of service quality that is aggressively communicated and internalized at all levels of the organization. To maintain its status as the world’s premier hotel chain, the company uses a philosophy it calls “The Gold Standards” in its continuous improvement endeavors; these Gold Standards include the 20 “Ritz-Carlton Basics, Three Steps of Service, the Motto, and credo (See appendix). Each employee is expected to understand, embrace and energize these guidelines to offer groundbreaking levels of customer service and satisfaction; carrying out these basics means that Ritz-Carlton is living its fundamental values and striving to meet and exceed customer expectations.
To provide the personalized service demanded by customers, the human-resource function works closely with the other operational functions. Each hotel has a director of human-resources and a training manager, who are assisted by the hotel’s quality leader. Each work area has a departmental trainer that is responsible for training and certifying new employees in his or her unit. Employees receive more than 100 hours of quality education aimed at fostering a commitment to premium service, solving problems, setting strategic quality plans, and generating new ideas. Employees are empowered to “move heaven and earth to satisfy a customer”, to enlist the aid of other employees to resolve a problem swiftly, to spend up $5000 to satisfy a guest, to decide the business terms of a sale, to be involved in setting plans for their particular work area, and to speak with anyone in the company regarding any problems. (Evans ; Lindsay, 1999, pg. 64)
The Ritz-Carlton also uses information technology on a daily basis to gather and use customer-satisfaction and quality-related data. Information systems involve every employee and provide critical responsive data on guest preferences, quantity of error-free products and services, and opportunities for quality improvement. (Evans ; Lindsay, 1999, pg. 65)
Basic quality is to recognize not just what the customer wants but truly understand the customer and then creating processes with the involvement of the employees connected with each process to deliver excellent service. Quality means continuing to see how well you’re doing and how to do it better, and then eventually bringing the processes to zero defects. One lesson the hotel has learned is not to underestimate the value of even one idea or quality improvement effort. The Ritz-Carlton has become an intelligent organization, where all people understand and actively participate in the processes that support the creation of excellent service. It has come to know that, without quality they would not be dominant in product and profit.
Three Steps of Service
1) A warm and sincere greeting. Use the guest name, if and when possible;
2) Anticipation and compliance with guest needs;
3) Fond farewell. Give them a warm good-bye and use their names, if and when possible.
“We are Ladies and Gentlemen serving Ladies and Gentlemen”
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
The Ritz-Carlton experience
enlivens the senses, instills
well-being, and fulfills even
the unexpressed wishes
and needs of our guests.