Business Journal

How The Ritz-Carlton Is Reinventing Itself

A top executive with one of the world's most admired brands tells how Ritz is creating "guests for life"

The Ritz-Carlton is one of the best known, most admired brand names in the world, and it has been for decades. Movies have used the Ritz name to connote glamour, elegance, and luxury. The word Ritz has even become a part of our language -- just about everyone knows what ritzy means.

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Money can't buy this kind of brand recognition. But brand recognition alone doesn't keep hotel guests coming back. In fact, brand recognition is just the first step in a customer's journey toward engagement with the total experience that is The Ritz-Carlton brand, according to Simon F. Cooper, chief operating officer and president of The Ritz-Carlton Hotel Company, L.L.C. Gallup research shows that emotionally engaged guests spend much more money than loyal guests -- and emotionally engaged guests are the customers Cooper is most interested in. But engaging customers is hard work, and it's just as hard for the world's best known luxury brand as it is for any other business.

Cooper, however, is a master of turning a brand promise into customer love. A 30-year veteran of the industry, this hotelier has opened 25 of Ritz-Carlton's 61 locations. And he is spearheading the company's move into resorts, residences, and fractional ownership. There isn't much that Cooper doesn't know about hospitality, including the very real challenges facing The Ritz-Carlton. In this interview, Cooper discusses how Ritz-Carlton's fame can undermine its brand promise, how to train staff to be spontaneous, and why engagement is The Ritz-Carlton's most important commodity -- and the only thing its customers can't buy.

GMJ: The Ritz-Carlton is one of the best known brand names ever. What branding problems could your company possibly have?

Simon Cooper: One of our challenges is that Ritz-Carlton is probably more known as a traditional luxury brand because it's the most mature luxury brand in the market. The history of César Ritz is well known, and the expression "ritzy" has certainly been around for a long time.

QUOTE: Our ladies and gentlemen might not have the wealth, knowledge, or education of our guests, but they do have the same values.

But that expression probably is tied to the perception that Ritz offers traditional, "chandelier type" luxury, and that's a perception that we're trying to move away from. If Ritz-Carlton as a brand is going to be relevant to our customers in the future, we must balance traditional luxury -- or what would have been thought luxurious twenty years ago -- with how luxury is executed today, which is quite different. Today, the role of style and design is far greater than it was twenty years ago.

GMJ: How have luxury hotels changed?

Cooper: Twenty years ago, hotels were relatively alike. They were trying to emulate European chateaus, with brocade, crystal, that kind of thing. Today, the role of design and style, and of more contemporary products, has become much more important. I think this reflects changes in what consumers value.

GMJ: Have luxury consumers changed?

Cooper: If you had cast your eye across the lobby of The Ritz-Carlton Boston in 1982, it's likely that most guests would have been mature, formally dressed, and male. Today's guests are much more diverse -- younger, more casually elegant, and less formal. There are many more women guests, as well as more families.

GMJ: You've got a lot of competition in the luxury market, and they're all gunning for The Ritz-Carlton. What's your strategy?

Cooper: No matter how outstanding your ladies and gentlemen are, you've got to start with the right product and the right location. In a global portfolio of hotels, the entry stakes are having hotels in the right locations, then having the right product when guests get there. And it takes the right people. You start with where in Moscow your hotel is located, for example, then you animate it to create an absolutely outstanding memory.

GMJ: Speaking of the people, you call your staff "ladies and gentlemen." Why?

Cooper: Because our motto is: "Ladies and gentlemen serving ladies and gentlemen." We chose the motto because we don't want our ladies and gentlemen to think of themselves as servile. Our ladies and gentlemen might not have the wealth, knowledge, or education of our guests, but they do have the same values.

QUOTE: People create memories, not things. The real value comes from the ladies and gentlemen who bring the hotel to life.

GMJ: Can you tell me then what engaged employees do for your brand promise?

Cooper: They're critical to the image and to the execution. When we build a hotel and put in a physical product, that's the initial platform. Everything has to work perfectly, so there is an incredible focus upon functionality -- on the product, systems, and food and beverage. It's easy to say we've got great people who can overcome everything -- but in truth, they can't overcome everything. If things don't happen when guests want them to, then that creates a significant roadblock to creating emotional engagement.

Once the platform is right, then the challenge is animating that platform. At The Ritz-Carlton, ninety percent of the brand image is emotional: It's in how the ladies and gentlemen bring it to life.

As for the value proposition for our guests, they don't even notice there's a platform if everything works. So then the value promise becomes "making their stay memorable." Well, people create memories, not things. If we ask guests what color the carpet was in their guest room, they probably won't know. The real value comes from the ladies and gentlemen who bring that hotel to life. Ten percent is the platform, but the rest is people.

GMJ: But you're making a lot of changes to the platform, all over the world. You're changing physical locations and losing some of the employee scripting that Ritz is known for, as well as lots of other behaviors traditional to Ritz-Carlton.

Cooper: Despite the fact that we're the number-one brand, we're making significant changes. That's a tough row to hoe, because we're an organization that's winning accolades left, right, and center -- and we have great guest scores, great employee satisfaction scores -- nothing but positive results on every single metric. My challenge is to convince our people that we need to make all these changes. Now, instead of focusing on process, we're concerning ourselves with outcomes. Though the "scripting" for staff worked so well for so many years, we're focusing on the emotional connections between our ladies and gentlemen and our guests.

QUOTE: We look for leaders who, even with the biggest win or the greatest satisfaction, are happy for only fifteen seconds.

Frankly, what was inhibiting us was a mechanical service delivery -- some would even call it robotic. It wasn't that our employees didn't mean that it was a pleasure for them to serve you. But if guests heard that same phrase ten times from ten different people, they thought, this must be part of the training -- which was true. Now what we want from our ladies and gentlemen is a genuine response that's also spontaneous.

GMJ: But emotional connections depend on uncountable, even subconscious, human interactions. How do you train that?

Cooper: You can't train it at all.

GMJ: So how do you get the outcomes you want when you can't train people how to spark genuine emotional connections? And how do you do it without killing their spontaneity?

Cooper: We try not to kill spontaneity, because spontaneity is what creates the perfect outcome we're looking for. For example, when I'm talking to a group of ladies and gentlemen, especially new employees, about how to open a hotel, I ask them what guests can buy. Then I write down their answers. I write down things such as a room, or food and beverage service, or a spa treatment, and the like. Then I ask, "Now tell me what they can't buy." Obviously, guests can't buy things like smiles or relationships or caring service. Then I ask the simple question, "What do you think the guest values?" That's the value proposition -- that's how you engage a customer. You engage them emotionally by giving them things they just can't buy anywhere else.

A majority of our guests are well-traveled, wealthy, well-informed, have high expectations, and can buy anything. What they're really looking for are things they can't buy, and many of those things come from spontaneity. So you train your ladies and gentlemen that the most important thing they can do is create a guest for life, and if that means that they must drop what they're doing to help a guest, if that means that they must empathize, they should do it.

We actually compensate our general managers and leaders on customer engagement now, rather than customer loyalty, because we're trying to win the hearts and minds of our guests. And this is good for our business. We have researched what an engaged guest spends versus what a less engaged guests spends, and engaged guests clearly spend more money.

GMJ: Who is your greatest competition?

Cooper: The Four Seasons. From a global competitive point of view, they're the only serious player as we speak. They have about seventeen percent of the distribution, and we have about seventeen percent. Locally, we tend to find the competition is often a great independent hotel, especially in Europe. Often, its advantage is that its sole focus is being a great hotel in a great location. The great hotels in Paris or London are in iconic locations, and economics of scale are not important to them. They're in iconic locations, and they can charge iconic prices.

GMJ: The Ritz-Carlton has hotels all over the world, some in places that may have a very different workplace culture than hotels in the United States or Europe. How do you train people to respond with genuine emotion in, say, Beijing?

Cooper: Even in China, they understand empowerment in our hotel.

GMJ: How do you get to that point?

Cooper: Through encouragement. You can't just script responses, so we encourage the right behaviors through reward and recognition. Now, we only reward through recognition, so we reinforce the actions we're looking for through the kind of stories we tell and the kind of actions we write thank-you cards for. If an employee does something for a guest that is very personal -- for example, he leaves work for two hours to take a guest's broken suitcase to someone he knows can fix it, then brings it back in time for the guest's flight -- we recognize that. We constantly remind people of the kind of actions that we want to see.

GMJ: Why don't you reward with money?

Cooper: Because we don't think that money sponsors the kind of behavior we're looking for. We believe ladies and gentlemen should be making each guest's stay memorable because they want to do that, not because they get compensated for doing that. At one hotel chain, employees get, like, five bucks if they're mentioned in a comment card. So what do you think happens? "Here's your guest comment card, sir, which I've filled out for you." Also, once you quit paying, people are just stymied.

GMJ: What's the perfect Ritz-Carlton manager like?

Cooper: First off, they aren't managers, they're leaders. The perfect leader is someone who continually balances the constituencies -- employees, guests, owners, the brand, the community -- that he or she serves. We look for a leader who is personally never satisfied, who is able to continually improve the organization. We look for people who, even with the biggest win or the greatest satisfaction, are happy for fifteen seconds. Then they think, "How do I do it better next time?"

-- Interviewed by Jennifer Robison

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