Caso Ritz Carlton operaciones, Guías, Proyectos, Investigaciones de Producción y Gestión de Operaciones

¡Descarga Caso Ritz Carlton operaciones y más Guías, Proyectos, Investigaciones en PDF de Producción y Gestión de Operaciones solo en Docsity!

Operations and Logistics

2021-

Case Report 1: The Ritz-Carlton Hotel Company

Group 1

Introduction

Ritz-Carlton, founded in 1898, is nowadays, one of the most successful and luxurious hotel companies in the world. It is characterized for providing an excellent quality of service to its customers. The success of the hotel chain is due to 2 key indicators. The first is the average daily rate, which is targeted to the local market, and the second and most important is the revenue per available room, which is aimed at clients, including independent travelers and meeting event organizers. Likewise, its success is due to the fact that Ritz-Carlton believes that it is important for its employees to have control over the occupancy rate. So, in the opening of a new hotel, a number of employees is hired to meet a demand of 80% occupancy, even when in the first month there is only 50%, so that employees are coupled to the occupancy rate and feel comfortable, which in the future will increase their productivity and the quality of their tasks, therefore providing excellent service.

The Ritz-Carlton was planning on how to launch the opening of a new hotel which is part of a multi-use facility owned by Millennium Partners, but at the same time, they had already signed contracts to manage 5 other hotels and the upscale property developers had also linked deals with Four Seasons, Ritz-Carlton’s biggest competitor. The company has always been rigorous about their opening process, focusing on meeting the demands of the market and customers. At the moment, the hotel company has a “Seven Day Countdown”, a program to orient and train their employees, but Ritz-Carlton is facing a dilemma. There are concerns on whether the seven-day time frame limits the hotel’s ability to open at a higher occupancy rate, to reach 80% occupancy in a shorter amount of time, on whether this time is enough to train the employees to have strong service skills, give the excellent service customers expect and launch the project. Finally, top management is also concerned with changing this process, since it integrates quality control and human resources in a perfect balance, they are concerned of influencing negatively the high standards that Ritz-Carlton has maintained throughout the years.

Value Promise of Ritz-Carlton The Ritz-Carlton company focuses on giving high quality management and service, by assessing the importance of system and process development. They expect to give the best personalized service in their hotels by serving their customers with purpose. To achieve this, they emphasize on total quality management (TQM) and human resources (employee

philosophy and to repeat the foundation of the business to build the habits necessary for employees to deliver the highest level of service demanded … Ritz- Carlton seeks to prepare employees to fulfill their current functions but also to accept more responsible positions in the future”. Once employee satisfaction is obtained, employee loyalty and employee productivity are developed, to return those in a high customer service. Given a good service, customers are satisfied and develop loyalty and trust which gives a good reputation to the company (Thiell, 2021). Finally all of these translate to revenue growth and profitability.

Dilemma of the '7 Day Countdown' The Seven Day Countdown is a methodology implemented by The Ritz Carlton to incorporate new employees to the organization’s culture in just seven days. It was a result of the evolution of the hotel-opening process since the 1980’s. Each day has an established objective that needs to be fulfilled by the new employees in order to get more involved with the operations of the hotel, as well as the culture, values, training and expectations. The Seven Day Countdown is divided in 3 stages: staff orientation, departmental vision sessions and skills training.

The first stage, staff orientation, consisted in welcoming the new employees and making them feel encouraged and motivated, while presenting their gold standards, service philosophy and leadership orientation. Additionally, it was important to make the new employees learn the hotel’s motto: “We are Ladies and Gentlemen serving Ladies and Gentlemen” (pg. 12), so they could know their role and how important they are in the organization, while making them focus on the core company values. The second stage, departmental vision sessions, was meant to make employees connect with their teammates, as well as understanding their long-term purpose depending on their area of service, and which practices they can implement to accomplish them. Finally, the third stage, skills training, was intended to master each employee’s skill depending on their work area.

The dilemma that McBride is facing is whether to lengthen the Seven Day Practice or not. In order to evaluate this decision, pros and cons of the situation should be taken into consideration.

Regarding the advantages of lengthening the Seven Day Countdown:

● Employees may be better trained and prepared for when the hotel opens to the public, increasing productivity and guaranteeing a more perfect service delivered to the real-life customers. ● There are more opportunities to identify weaknesses or problems that employees are facing, and having the required time to perfect them. ● When employees have more time to adapt to the organization’s culture, they may perform better and reach the company’s goals, improving their reputation and image.

However, lengthening the Seven Day Countdown may also bring disadvantages to the organization: ● The Seven Day Countdown is an established methodology worldwide, it is part of what makes the Ritz-Carlton unique. ● The hotel has obtained many prizes and recognitions because of this practice, if they lengthen it, they may ruin their image. ● When employees are working in a real-life situation, they may act more accordingly and put their full potential. Working in a real-life situation will make the employees know how to act and know what to expect sooner.

At the end there are two options, maintain the 7-day countdown or to lengthen it. In the first option, the classic methodology of the Ritz-Carlton is maintained, which has made the hotel obtain awards and recognitions, gives employees more real-life training, would give the hotel a RevPAR average of $199,51 in the first 4 months (Exhibit A) and will maintain the total expenses of the pre-opening budget at 3,5 million. The second option would be to lengthen the countdown to a 10-day period. We concluded that the 10-day period would make the employees capable of achieving a 70% occupancy from the beginning with a monthly increase of 3% reaching 80% in 4 months, understanding that each day of training increases the capability of the occupancy at the opening by 7% (Exhibit B). Furthermore, in this option the employees would have more training and be better prepared for the job, so the hotel would have an increased productivity from employees, more opportunities to identify weaknesses and problems, and more time to solve these, better acceptance from the employees to the company's culture, an average increase in the RevPAR of 15% compared to the RevPAR of the first option (Exhibit C), average RevPAR of $227,74 (Exhibit A) and an increase in the total expenses of the pre-opening budget from 3,5 million to 5 million (Exhibit B).

Exhibits

A. Operating statistics for the first and second possible options:

B. Pre-opening expenses and marginal increase in opening capacity percentage:

C. Comparison of operating statistics of the two options:

D. Operating statistics at a 88% occupancy with ADR constant from 2001: