History
The Ritz-Carlton is involved in the hotel industry providing luxurious hotel services and accommodation to international costumers. The name of the luxurious hotel was a combination of related hotels which existed in the early 20th century combining to form the Ritz-Carlton. These included the Cesar Ritz, Ritz hotels and Hotel Ritz Paris. The merge was an international success in the hotel industry with Horst Schuulze taking leadership of the hotel management in 1983. This was with the assistance of W.B. Johnson whose intelligence in hotel development and Horst hotelier management had a significant impact on the success of the hotel. The ownership of the hotel has changed since this time becoming s subsidiary of Marriott International, which is currently its host company. To ensure effective delivery of services to customers, the hotel has retained a high percentage of skilled staff with 38,000 employees internationally. These employees are managed by Hervey Humbler who attained president ship of the hotel currently leading the hotel to success in the international market. The hotel also conducts training sessions for hoteliers in The Ritz-Carlton leadership centre. Expansion for hotel in the international market has made it establish 79 properties in 26 different countries. Managing these hotels, employees and effective marketing of services to customers is a complicated process which requires an adaptation of different marketing strategies to ensure it remains competitive in the market.
The 4Ps of the hotel
Place
The 4Ps of marketing include the products offered by the company, prices charged to customers, promotion strategies used by the company, to attract customers and the location of the company. The Ritz-Carlton hotel is strategically situated in different areas internationally to ensure access of customers to the services offered by the hotel. With 79 hotels established in 26 countries globally the hotel has its headquarters in Chevy Chase, Maryland. These locations are accessible through public and private transport with beautiful scenery surrounding the location (Donaldson & O’Toole, 2007). Choice of the hotel location is made by engineering experts who conduct research and analysis of the public exposure expected after building the hotels in different locations. The luxurious 3 star hotel in Dubai has been strategically located in the capital city increasing the image of the hotel and its accessibility.
Product
The hotel provides different services and products to customers with accommodation and meals being the main services. The hotel setting is intended to revolutionize luxurious hostelling in America with private baths available in each guest rooms, and light fabrics, which include towels and other washing requirements provided in the rooms. The rooms are also accessible to other entertainment locations such as mini bars and restaurants. These services are offered by qualified staffs that have undergone several customer relations lessons to ensure they operate effectively. The rooms have been developed to accommodate a laptop compartment and large 32 inch T.V to increase the comfort of the customers. This is in addition to the hot water tabs and comfortable beddings available in the guest rooms.
Price
The hotel charges different prices for the guest rooms, but it has insisted in its standard initiation that price is not their first priority rather the customer satisfaction. The prices vary according to the services and products available in the guest rooms, with the private lounge being the most expensive. These prices are considerable with the aim of attracting high class customers to enjoy the luxuries of the hotel. The hotel has used different promotion strategies’ to advertise its products and services internationally. During holidays and peak period the hotel offers discounts to customers after residing in the hotel for a long time. These discounts are also determined by the products purchased and the rooms of accommodation. The Ritz-Carlton hotel also offers customer discounts to royal customers due to frequent visits to the hotels. This is attained through the improved record system which indicates the personal details and visits made by customers.
Promotion
The hotel has also established an online website through which it responds to customer’s queries and provides different information on the services offered. This is the main advertising area of the hotel as it is accessible to customers globally. It has also introduced a customer relationship management department through which customer’s queries and opinions on their services are received and analyzed. To ensure luxury for the guests, the hotel invests more than $ 500,000 in modeling each room and attaining high class services for the guests. The company has established Ritz-Carlton.com which is a company website open for customer enquiries and comments. Most visitors from the hotel share their experiences in this site spreading the necessity of visiting the luxurious hotel. This has increased the market share of the hotel.
International marketing
The Ritz-Carlton had enjoyed a large market share in America and desired to venture into the international market through expansion. International luxurious hotel were limited due to the financial outlay required to establish the hotels. This formed an advantage for the hotel which had stabilized in the American market offering it a chance to venture into the international market. This strategy, however, required prior research and analysis of the market situation to ensure the investments were viable. Luxurious services meant high prices to be charged to the customers thus it was essential for the hotel to analyze the financial status of the customers available (Donaldson & O’Toole, 2007). In 2011, the Ritz-Carlton hotel established the tallest hotel in Asia which involved extensive investment to build and manage. This hotel had 102-118 floors, which made it the tallest hotel in Asia improving the image of the hotel. International ventures for the Ritz-Carlton hotels have been successful due to the luxurious services offered and quality standards set. The management of these hotels is limited to orders provided from the headquarters offices in Washington to ensure achievement of similar goals. The hotels have future desires of increasing these expansions with the investment in Saudi Arabia being the latest international venture.
Competitive advantage
The key competitive advantage of the hotel is its superlative services which it offers to customers. The Ritz-Carlton hotel has been rated as a luxurious accommodation place whose prices and services are extremely competitive. Establishing these services requires high financial outlay which are unavailable for most hotels. These investments also include skilled personnel to manage the operations of the hotels to retain the high standards. The longevity of the hotel in the hotel and tourism industry since the beginning of the 20th century offers it a competitive advantage against upcoming hotels. The hotel has established loyalty among its customers and services are available globally. This loyalty and awareness of its services increases its market share. To retain its customers from shifting to competitors the hotel introduced a customer’s relationship management program. This program was aimed at pleasing valued guests by listening to their queries and identifying their problems. The program also builds a profile for the customers indicating their residents, addresses and constant visits of the hotels.
The Ritz-Carlton has established mass customization to increase its competitive advantage against competitors. This involves formalizing the products and services to satisfy the clients. The major step in achieving this was employing courteous employees who interact with customers on a personal view making them feel comfortable. This involves personalizing the services by offering greetings and give help to customers where possible (Donaldson & O’Toole, 2007). The doorman, room attendants and clerks have been trained to personalize the services offering comfort and attention to the customers. The location of the hotels increases its market share as they are strategically located in city centers. The Ritz-Carlton hotel in Dubai has created mass attraction due to the luxury depicted by the building. This also makes them highly accessible as many people are aware of its location and services offered.
Customer segmentation
This is a marketing strategy used by the organizations to separate different customers according to their characteristics. Different services and products are offered to the segments in accordance to their desires, which are personalized to the segments. Customer segmentation is also conducted to differentiate the prices charged in the market by offering different prices to the different segments. The Ritz-Carlton hotel uses two different target customers which it intends to separate and offer different services. These groups are differenced by their composition and stay in hotels. The segments include the independent travelers and meeting planners. The independent travelers group includes individual visitors to the hotel who are led by the desire to reside in the luxurious hotels for pleasure (Donaldson & O’Toole, 2007). Thus this group includes couples on their honeymoon and sole visitors on different missions.
This group has been analyzed to have the highest financial benefits to the hotel as their aim is to enjoy their stay. This includes visiting different sections of the hotel which leads to increased spending. Segmentation of this group involves offering them private rooms and personifying the services to the desires of the travelers. Their prices are also differentiated from the meeting planners as they require small room and comfort in these rooms. The meeting planner is another segment of customers in the hotel which include different groups meeting in the hotel lounge to conduct their meetings. These meetings include business meetings, committee meetings and shareholders meetings. These segments require large areas of residing to ensure they have sufficient space to share their ideas. Accommodation of these groups is catered for by their companies, which in most cases involve large rooms which are shared among the members.
Global marketing strategy
Globalization involves trading among companies in different regions in the world through company establishment, mergers or FDI. This involves expansion of the operations of the organization to avail its services to different countries through any of the above strategies. The Ritz-Carlton hotel has been focused on establishing operations in the international market by investing in other regions (Knowles, Diamantis & El-Mourhabi, 2004). This strategy involves complex marketing strategies to ensure the hotel acquires sufficient market share within the regions. The main strategy used by providing employee training to ensure that they provide quality services to customers. According to the hotel’s standards the competence of the employees indicates the customer experience in the hotels. The management believes that the people of the company forms the principal memories carried by the customers from their residence in the hotels. To ensure these memories are positive, the hotel has developed learning programs for staff on customer relations and service personalization. The employees are also treated right to ensure their happiness, which is translated to the happiness of the customers. Development of Ritzcarton.com as the company website has been useful in marketing the hotels in the global front. This involves interactions of management and customers which offers customers a chance to share their experiences in the hotels. The hotel has introduced an expert team in social media to advertise the hotel services in the global market. This involves different advertising and promotion strategies for the company.
4Ps in the Saudi Arabia market
The Ritz-Carlton hotel established operations in Saudi Arabia, in 2011 with the construction of the hotel in Riyadh. Saudi Arabia is a developing country with customers being faced with financial constraints, and this led to the differentiation of the 4Ps of marketing implemented in the region. The hotel was established to cater for dignitaries and other wealthy customers who could afford the luxurious services. Lack of luxurious hotels in the region to accommodate heads of states during their visits increased demand for the Ritz-Carlton hotel to establish operations in Riyadh. The hotel is situated along the capital city which makes it accessible to most dignitaries. The key target customers for the hotel were diplomats and heads of states which led to its location near the diplomats’ quarters. It was, therefore, accessible to these customers with high awareness by advertisement in these regions. Different services are offered in the 493 roomed hotels making it luxurious and satisfying to the diplomats (Knowles, Diamantis & El-Mourhabi, 2004). High quality services are personalized by the staff to resolve any problems encountered through the stay. The prices charged for the services differ with the rooms accommodated with an average of $ 230 per room. This price has been argued as high by most residents, but the diplomats are willing to pay it to ensure they access the luxurious services.
Challenges in Saudi Arabia
International trade involves different regulations set by the host countries which control the operations of the foreign company. This was a substantial challenge faced by the Ritz-Carlton hotel while establishing operations in Saudi Arabia. The Middle East countries are resistant to investments from America due to the strenuous relation between the two regions. This hindered the establishment process as tight regulations were set by the government. The hotel industry also has different standards to be met before running the hotels to ensure safety and health of the customers. These were set by the government making it complicated for the Ritz-Carlton hotel to meet these standards. The luxury of the Ritz-Carlton hotel is not suited for the Saudi Arabia market which led to resistance from other competitors. This included local hotels, which were afraid of the foreign competition to be faced from the Ritz-Carlton hotel. Insecurity in the region was a significant challenge during the establishment of the hotel due to the loss expected to the company in case of an attack. Making this decision was therefore, prolonged by this fear leading to stagnation of the project. Overcoming these challenges increased the time taken for the hotel to construct and start operations in the region.
Quality standards
The Ritz-Carlton hotel has been renowned for its quality services through implementation of its gold standards. These standards include the hotel motto, promise to employees, service values and 3 steps followed in offering services to customers. The hotel believes in quality service to customers through employing competent staff. This will ensure that customers have memorable experiences in the hotel due to respectful interactions with the employees. The mission of the company is guest satisfaction, which has offered it a competitive advantage over other hotels globally (Peng, 2009). The first step in achieving this is to understand the needs of the customers and implementing different processes to achieve these needs.
The implementation process involves the employees and management in structuring the most appropriate method of service delivery. This quality is not limited to the specifications of the management rather employees are given the freedom to serve the customers in accordance to their opinions. This freedom makes them independent and capable to improve the services through customer relations. They are also offered an opportunity to use $ 2,000 to ensure satisfaction of customers. Constant review of these processes increases the probability of keeping the standards operative and thus the quality of the services is not reduced. It is essential to ensure a continued quality service delivery to reduce the probability of failure in the market. The management believes that it is easy to acquire quality standards for the customers, but retaining these standards requires additional efforts. This has been achieved by using ‘ladies and gentlemen’ to deliver these services.
Quality standards in Saudi Arabia
The Ritz-Carlton hotel has established a standard accomplishment strategy which should be observed by all hotels established worldwide. This is to ensure the company retains its image in the international market increasing customer loyalty (Peng, 2009). The introduction of the hotel in Saudi Arabia was a significant step in venturing into the Middle East market. This market has indicated high potential hence increasing the need to ensure quality standards are retained. The company has expatriated top managers from America to endure effective operations in the hotels especially during the initial introduction phase. This phase forms the foundation of the hotel in the market making it vulnerable thus advanced skills are required to ensure success. The regulations introduced by the government have prevented employment of expatriates as the staff rather the company is expected to mix both local and international employees.
Recommendations
To ensure standard services by the local employees the company should introduce employee training programs during which they are trained on different customer relation behaviors. The international employees are also expected to learn several communication skills from the local employees especially the native language. These lessons involve understanding the culture of the society to increase efficiency and ensure the provision of quality services. The hotel can also form different business relations such as mergers with local companies to improve the services offered through outsourcing.
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