Table of Contents
1.5Execution to the Solution6
220.127.116.11Cost Implication of extended training period (14 days)7
Mr. James McBride is under tremendous pressure to prove his mettle. He has been appointed as the General Manager of the Ritz Carlton which will be shortly opening at Washington D.C. the major challenge he faces is from Millennium partners who are the property partners along with Ritz Carlton and are equally responsible for the successful opening of the hotel. There are various issues that have risen out of this management contract is that Millennium accuses Ritz opening with far lower occupancy against their competitors which yields lesser revenues. They want the hotel to directly open at the 80% occupancy. Ritz on the other hand believed that as per their tradition it was necessary to open only after seven days of training and induction of the employees for which additional cost had to be incurred. This did not help them to generate revenues at all. Thus, Millennium partners did not want them to delay the opening of the hotel due to extensive training period. Through this research work the researcher would like to suggest possible solution for overcoming the conflict between Millennium Partners and management of Ritz Carlton so that neither of them ends up losing. Every possible alternative is evaluated and the best alternative is chosen to overcome the challenges and thus gain competitive advantage.
1.2 Issue Identification
In the following table the researcher will examine why Millennium Partners were unhappy with the Ritz Carlton.
From the above table one can conclude that Four Seasons has been driving the market as far as revenue generation is concerned. Four Seasons gained the ADR of US$ 252.3 while Ritz Carlton could only manage to earn US$194.3. Four Seasons also led the market in terms of the RevPAR generation. Though Ritz Carlton (74.86%) had more occupancy compared to Four Seasons (71.36%) it was very marginal with the difference of only 3.5%. thus, the real issue out here was not to increase the occupancy but to generate more revenue through increased RevPAR and ADR.
Ritz Carlton was under constant pressure from the Millennium Partners to make quick opening instead of traditional opening of 7 days of training process. They also wanted Ritz to make 80% occupancy and to carry it for a period of time. It was facing severe competition from Four Seasons which was affecting the revenue inflow of Ritz Carlton. Some of the challenges, alternatives, solution and execution are as follows: Challenges| Alternatives| Solution | Execution| |
Clash of ideologies| Increase Volume| Increase revenue by increase in price| New quality standards | Power of Governance| Reduced Price| | Budget Relocation| Desired target of 80%| Increased Volume| | | |
Stiff competition| | | | |
Ritz Carlton was often questioned over their 7 day’s training because of lower revenue generation as compared to Four Seasons. Therefore, the researcher has built the alternatives around the issue which could solve issues pertaining to lower revenues. The best alternative was an increase in volumes which is possible through increase in prices or lowering price of the rooms. The consequences of this are: 18.104.22.168 Reduced Price
The researcher feels that by reducing the price, the Ritz Carlton would be able to achieve higher occupancy. This could be possible since lower prices would attract customers from the...