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Ritz Carlton - Luxury Hotel Industry

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Aoife Geraghty

on 9 December 2013

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Transcript of Ritz Carlton - Luxury Hotel Industry

Luxury Hotel Industry
Key Success Factors
Porters Model of Competitive Forces
Threat of New Entrants
Threat of Substitutes
Bargaining Power of Consumers
Bargaining Power of Suppliers
Competitive Rivalry
Ritz – Carlton is a luxury hotel chain

It is 99% owned by the Marriott International Inc.

Established in 1983

Operating 73 luxury hotels in more than 20 countries
The AIG affect explained:
Sept 2008: AIG received $85 billion bailout

$443,000 spent on retreat

Public outrage

Companies downsized retreats and conferences
Close to places of interest and/or city center

Business travelers; convenient for meet colleagues/clients, company conferences

Tourists; close to attractions, important factor when booking

Luxurious location to meet standards

More enjoyable experience
Vital to provide both high quality customer service and a personal services

Business amenities: conferences, meeting, event, business rooms and for guests who are at the hotel as a

Tourist amenities; restaurants, lounges, swimming pools, spa facilities, fitness centers, tennis courts and golf courses

Impact on
2008/2009: Lost 24% of Top Line management

Major group account: Financial institutions
Decrease of 17% decline in business
Closure of 5 diamond property in Las Vegas
Price reductions to attract new customers
Primary focus on employees (Ladies & Gentlemen)
Threat of new entrants
Barriers to entry
start-up costs
brand identity
consumer loyalty
high quality expectation

High threat of existing and established
diagnosis: LOW
Threat of Substitutes

Self-catering luxury apartment

Luxury cruise ship

Lower Star hotels
diagnosis: LOW
Bargaining Power of Customers
High consumer dependency; business, travel, corporate meetings and international visitors

High standards; value exclusivity and reward

Economic downturn impact
diagnosis: MEDIUM
Bargaining Power of Suppliers
Dependency on resources to be high quality
Food suppliers

Excellence is essential, variety of luxury hotels in need of top suppliers
diagnosis: MEDIUM
Competitive Rivalry
Exit Barriers
contracts; rent, legal, employee

Strategic stakes are high
threat to market position

Low levels of product differentiation

Use of online mediums to attract customers

Industry growth/decline

Downturn caused 15% decline in bookings
Highly competitive market
diagnosis: HIGH
Porter's Conclusion
New Entrants
Buyer Power
Supplier Power
Comp. Rivalry
Overall: MEDIUM

Attractive Industry
Ritz Carlton
case study
Advice for
Top Management
Most important aspects

Differentiate from rivals
Focus on consumer satisfaction and loyalty program
Utilise strengths of brand
Exemplifies the first–class service provided by all staff members
‘Ladies and Gentlemen serving Ladies and Gentlemen’
‘the Ritz-Carlton is a place where genuine care and comfort of our guests is our highest mission’
Offering guest different packages and becoming more flexible on price. People who stay at luxury hotels look for style, service quality and the amenities that the hotel has to offer

Downsizing staff, reducing hours and closing some dining outlets throughout their 72 hotels. This is in an effort to reduce cost and increase the efficiency of the operations.

Engaging with their clients on an emotional level by continuing to promote their brand as a first class service within the industry.

How Ritz-Carlton are combating the recession
• Contact corporations who have stayed with Ritz-Carlton before for business events - 60% of guests in luxury hotels are business travelers.

• Leisure travelers the Ritz–Carlton could try to differentiate themselves by offering them packages that center around the local culture of the location on both the website and on site
New Techniques to retain existing guests and obtain new ones
Sanchez. M (2013) The Importance of Your Online Reputation and How to Influence it, Retrieved December 7th 2013 from http://www.hospitalitynet.org/news/4061302.html

McCarthy, J (2013). Luxury hotels should use local culture to attract guests Retrieved December 7th 2013 from http://www.luxurydaily.com/luxury-hotels-capitalize-on-local-environment-to-rise-above/

West, D., Ford, J., & Ibrahim, E. (2010). Strategic Marketing Creating Competitive Advantage (2nd ed.). London: Oxford University Press

Mark Lewis. (2010). The AIG Effect. Available: http://www.forbes.com/2010/02/16/aig-business-travel-leadership-meetings-10-corporate-conferences.html. Last accessed 1st Dec 2013.

Duff McDonald. (2011). Luxury is back, but not everywhere. Available: http://finance.fortune.cnn.com/2011/06/10/luxury-is-back-but-not-everywhere/. Last accessed 4th Dec 2013.

Franchise Direct. (2013). Marriott International. Available: http://www.franchisedirect.com/travelfranchises/marriott-international-franchise-08393/ufoc/. Last accessed 6th dec 2013.

Ritz-Carlton. (2013). Offers, Rewards and Meetings. Available: http://www.ritzcarlton.com/en/Rewards/Promotions/RewardingEvents.htm. Last accessed 6th Dec 2013
Adaption of Ritz-Carlton to retain customers
Primary Focus: Employees
Decrease Hotel rates
Introduction of new packages
Emotional customer engagement

Rewards for individuals
Rewards for Businesses
Discover with
Overnight Accommodation
Breakfast for two each morning
Daily resort credit $50-$100
One Destination experience
Overnight stay on Club level
Valet parking or Airport transfer
Daily internet access
One complementary night stay
Overnight Accommodation
Hotel Credit
Breakfast for Two
Overnight Accommodation
Spa Treatment
One Lunch for two
One Recreation activity for two
Customer Retention in Franchising
Customer Retention
in Franchising
Extensive owner and operations experience
Minimum of three mid-price brand name hotels
Real estate net worth of at least $5million
Culture of excellence and customer satisfaction, shared values and strong associate engagement
Common Packages in all hotels
Extras offered on top of existing packages
Common Packages in all hotels
Extras offered on top of existing packages
Impact cont...

Oct 2009: AIG hosted 200 investment advisers
Some public backlash but they were prepared
Conspicuous consumption: Luxury of retreat symbolises talent and quality of advisers

2010: 180,000 group nights
10% increase from 2009
Occupancy rates still low
Rewards for Individuals

Hotel Stays
Partner Airlines
Event Bookings
Ritz-Carlton Credit Card

Hotel stays
Partner Companies
Room Upgrades
Air miles
Travel Packages
Donate Points
Merchandise and Gift Cards
‘It’s not extravagant if it produces results’
Ritz-Carlton 2013
Clodagh Gannon C10311875
Aoife Geraghty C09649042
Ciara Moles C09710256
Thank you for listening!
Full transcript