On October 11, 2000 The Ritz-Carlton was on the eve of opening Washington DC’s first luxury hotel in 10 years. The 300 room hotel was part of a $225 million complex owned by Millennium Partners. This would be the first hotel opened of a six hotel deal between Millennium Partners and The Ritz-Carlton. Millennium Partners owned the properties and The Ritz-Carlton was hired to operate the hotels. After only seven days of training the 400 person staff would open the doors the next morning.
James McBride, the general manager, faced pressures concerning the training approach The Ritz-Carlton had established. Millennium had two primary problems with the seven day training process. First, they felt seven days was not an adequate amount of time to get an entire hotel staff trained to provide flawless service. Secondly, they felt there was a revenue loss since the hotels typically only opened at 50% occupancy due to the limited training.
Managing a hotel chain had a key potential problem - there were two different customers. They had the hotel guests to service and satisfy, but they also had the hotel owners to satisfy. Millennium Partners, who owned the D.C. hotel and had over $700 million invested in all six hotels, had concerns over opening a new hotel with new staff that had seven total days of training. The hotel owners expected complete perfection from the first day of operations. Training new staff to perform at the level of excellence expected within seven days represented a risk to Millennium and also The Ritz-Carlton. A mistake here could result in losing contracts for the remaining five hotels.
In addition, Millennium had contracts with The Ritz-Carlton’s largest competitor – the Four Seasons. Over the previous three years, while the Ritz-Carlton had achieved higher occupancy rates, the Four Seasons had averaged higher Average Daily Rates and Revenue Per Available Room. For an average 300 room hotel this could equate to nearly $2M higher revenue for hotels operated by Four Seasons (Exhibit A).
A second concern was The Ritz-Carlton’s policy of opening the hotel at a 50% occupancy rate. Millennium questioned if more training would allow the company to open at a higher rate. The D.C. hotel was part of a multi-use site that included condominiums, so flawless service was even of greater importance from day 1. This would be The Ritz-Carlton’s first attempt at opening a hotel in a multi-use facility.
Recommendation and Rationale
The concerns of the Millennium Group were understandable. However, the success of The Ritz-Carlton training process was undeniable. The seven day training process was just one key element in implementing The Ritz-Carlton philosophy that was founded on customers, employees, and quality. Therefore, it is recommended to keep the training process in place. There are three primary reasons for keeping it in place.
The first reason is that the training process immediately helped to transform the employees’ behavior. The Seven Day Countdown was the training period prior to a new property opening. This seven day training period was the only training the staff would receive prior going live. The training was kicked off with a welcome from management and the President of the company. The first two days of training were dedicated to orienting employees to The Ritz-Carlton values and culture. The company believes that it is critical to take time to enforce these values slowly and immediately. They feel that behaviors can only be changed as a result of a significant emotional change, such as a new job. During the two day orientation employees learn about the company, each other, Gold Standards, service and leadership philosophy. The focus of the remaining 5 days is on skills training.
During the training staff employees were taught the importance of the guest experience. The Ritz-Carlton philosophy to achieving excellence in customer...