History of The Ritz-Carlton
In 1898, Cesar Ritz left his life as a shepherd in Switzerland and moved to Paris (Sucher & McManus, 2001). He worked in some of the finest hotels and restaurants in the city before opening up his own hotel (Sucher & McManus, 2001). A year later he opened the Carlton Hotel in London, which eventually became The Ritz-Carlton Hotel Company (Sucher & McManus, 2001).
Keeping with Mr. Ritz’s vision of excellent personalized service the Ritz-Carlton expanded to North America (Sucher & McManus, 2001). The only hotel to survive the Great Depression and two world wars was the Ritz-Carlton in Boston (Sucher & McManus, 2001). In 1983, the Atlantic-based Johnson Company bought the North American rights to the Ritz-Carlton name (Sucher & McManus, 2001). Between 1983 and 1997, the Johnson Company expanded the Ritz-Carlton domestically and internationally (Sucher & McManus, 2001).
“In 1997, Marriott International bought The Ritz-Carlton which operated as a wholly owned subsidiary (Sucher & McManus, 2001).” “By the end of 2000, The Ritz-Carlton was primarily a management company operating 38 hotels and resorts across the globe, with minority equity stakes in ten (10) properties and outright ownership of three (3) hotels (Sucher & McManus, 2001).” The Ritz-Carlton’s primary growth strategy was to obtain management contracts for new hotels and resorts around the world (Sucher & McManus, 2001).
Business Model
The Ritz-Carlton manages properties for hotel owners (Sucher & McManus, 2001). They charged management fees that were typically 3% of the gross revenues, supplementing their income with revenues from land rent, resort timesharing, franchise fees, management incentives, and profit sharing (Sucher & ...
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...rowth culture (Ulrich, Zenger & Smallwood, 1999). The Ritz-Culture does have that type of culture (Sucher & McManus, 2001). They look to the future, they hold individuals accountable but keep heroes visible, they ensure a high level of personal freedom and trust and encourage debate before consensus for example a no-fear environment/no retribution (Sucher & McManus, 2001). The Ritz also trains for growth and encourage their employees to advance in their careers (Sucher & McManus, 2001). President Schulz and the general manager, McBride most definitely lead by example and are both hands-on (Sucher & McManus, 2001).
Works Cited
Sucher, S.J., McManus, S.E. (2001). The Ritz-Carlton Hotel Company. Harvard Business School Publishing, Boston, MA.
Ulrich, D., Zenger, J., Smallwood, N. (1999). Results-Based Leadership. Harvard Business School Press, Boston, MA.
The hotel is continuously expanding and in year 2010 announced plans to add over 600 hotel properties by 2015 mostly from emerging markets like India, China and Southeast Asia (reuters.in) Marriottt thrived by operating utilizing many different brands, several of which incorporate the Marriottt name in them. However, one of its most famous brand names stands alone: The Ritz-Carlton, with luxury hotels and resorts around the world. In October 1993 Marriottt Corp. was divided into two companies: Host Marriottt Corporation, which owns real estate and operates airport concessions; and Marriottt International, the lodging business. By 2004 Marriottt had about 255,000 rooms, with revenues of more than US$10 billion. In 2004, Marriottt controlled 17 percent of all branded full-service hotel rooms in the United States. In fiscal year 2006, Marriottt International reported sales from continuing operations of US$12.2 billion.
In 1987, Marriott was focused on its cost of capital. The corporation was split into three divisions. The divisions were lodging, restaurants, and contract services. Marriott was also interested in focusing on four main points of business. They decided to focus on managing instead of owning hotel assets, invest in projects that increased shareholder value, optimize the use of debt in the capital structure and repurchase undervalued shares. They measured these new strategies and how they would affect the company with the weighted average cost of capital (WACC). Our group decided the most important question was, what is the most efficient calculation and usage of WACC for Marriot?
The Wyndham Hotel Corporation was founded in 1981 by Trammell Crow in Dallas, Tx. Its first hotel was opened in 1982 and by 1985 they had successfully held 14 upscale properties in their portfolio. Wyndham continued to grow throughout the years until in 1997 they agreed to be acquired by Patriot American Hospitality Inc., under a Real Estate Investment Trust or REIT. After the acquisition, they began an aggressive campaign to purchase several smaller companies to increase their holdings. Some of those companies included Williams Hospitality, Carefree Hospitality, and Summerfield Suites. Due to these major acquisitions, Wyndham experience an eruption in growth and profit, but that would become short lived. The REIT structure was going under increased pressure federal regulators as well as several of Wyndham’s competitors. They claimed that under the REIT structure, companies were receiving an unfair advantage over premiums for both lodging properties and real estate. In light of this information, their stock value began to decrease significantly and had lost over 80% of its value. For several years Wyndham struggled to pay down its debt and was forced to lose it REIT status and turn into a C-Corporation under the new title Wyndham International Corporation. The next several years involved major changes and IT incorporation in a process to restructure the company.
Mlls, D. Q. (2005). Leadership How to Lead, How to Live. Boston: Harvad Business School Press.
47% of Marriott’s rooms are in North American Limited Service, 30% are classified as North American Full Service, and the remaining 23% of its rooms are in the international segment (Marriott, 2015). Recognizing that travelers have a range of budgetary and amenities needs, Marriott operates its properties under a variety of different brand names, 19 in total, each of which has its own “price and service points” (Marriott, 2015). Most of Marriott’s brands are at the high end of the market, which includes such widely recognized luxury brands as the Ritz-Carlton, JW Marriott, Renaissance Hotels, Bulgari Hotels, Marriott Executive Apartments, Marriott Vacation Club, Edition Hotels, Autograph Collection Hotels, Gaylord Hotels, and Marriott Hotels (Marriott, 2015). These properties often command nightly rental rates that can run several hundred dollars a night and offer a wide range of amenities well suited for both business and pleasure travelers. These properties are classified as “Full-Service.” Marriott also offers a range of “Limited-Service” brands that do not contain as many amenities and tend to be much cheaper than the Full-Service line. Examples of these properties include Courtyard, Residence Inn, SpringHill Suites, and Fairfield Inn & Suites (Marriott, 2015). Even though these properties are considered Limited-Service, they do offer considerably nicer accommodations and more amenities than other types of budget motels and hotels. In contrast to many of the other hotel brands, Marriott International does not operate any midscale, economy, or budget
Hotel Ritz was an immediate success. A year later Ritz and Escoffier returned to London to complete the Carlton Hotel and open it on July 1, 1899. Once again Escoffier runs the kitchens, only this time he stays until 1920. Between 1899 and 1920 Escoffier publishes Le Guide Culinaire and Livre des Menus, organizes the kitchens on ocean liners and opens the Ritz-Carlton in New York. In 1920 Escoffier retired to Monte Carlo, where he lived out the rest of his years, despite a few trips to America.
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