Horst Schulze Created Luxury Standard As Co-Founder Of Ritz-Carlton| Investor’s Business Daily

Eleven-year-old Horst Schulze surprised his parents when he announced plans to go into the hospitality business in postwar Germany.

It was an unusual goal for the time and place. Frankly, his folks didn’t understand or approve. His small German village did not have a hotel, just a local beer hall. So where, they wondered, could the youngster have gotten such a crazy idea? Moreover, in the difficult years after the war, his folks hoped their son would have more practical ambitions.

“At the time, the honor was to work in a technical shop or at a real trade,” Schulze, 80, said in a phone interview with IBD. “If I’d said I wanted to be a carpenter, they would have been happy. A real honor would have been (to become) an engineer.”

Even today, over 60 years later, Schulze has no idea how he came up with the idea. But he remained true to his dream. And eventually his parents relented.

When Schulze was 14, they found him a six-month boarding school for hotel work. After that, he accepted an apprenticeship at a small hotel near a mineral bath. His mom sent him off with this practical advice: “Take your shower, wash your underwear and do not do anything out of line.”

Early Success

It turns out he did better than that. He rose swiftly in the industry. Schulze worked for some of the most prominent hotels and hotel chains in the world, including the Plaza Athenee in Paris and properties run by Hyatt and Marriott, among others.

He went on to co-found the Ritz-Carlton Hotel group, a company that managed luxury hotels. His experience there is at the center of his new book, “Excellence Wins: A No-Nonsense Guide to Becoming the best in a World of Compromise.”

When he joined the company in 1983, it consisted largely of a brand whose reputation had faded since it was founded over a century ago by Swiss hotelier Cesar Ritz, who managed both the Ritz (Paris) and Carlton (London) hotels. But a wealthy investor, William B. Johnson, thought the brand had promise. He purchased the name and brought Schulze in to make it happen.

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Schulze had built a reputation on his ability to motivate staff to provide personal service. It’s something he learned at that very first apprenticeship, where he was supervised by Karl Zeitler, the hotel’s maitre d.

“(Zeitler) was a major influence and an exceptional human being,” Schulze said “He didn’t just make us work. He was a teacher to us. He’d sit us down and say, ‘Don’t come to work; come to do something excellent, come to be excellent.’ “

Tenacity And Honor

Schulze admits he didn’t get it in the beginning. He was washing dishes and bussing tables for 12 to 14 hours a day and the only reason he didn’t quit was because “it would have been an embarrassment to my family, and jobs were not easy to come by.”

 “In the first year I defined myself by my jobs, washing dishes and cleaning ashtrays,” Schulze said. “But I slowly got it.”

At the end of their three-year stints, all the apprentices were asked to write an essay about their experiences. In his, Schulze expressed pleasure at his discovery that “I can be proud of myself here. I can be respected by others, and I can respect myself. I can be a gentleman.”

At the heart of his essay was the phrase “Ladies and Gentleman Serving Ladies and Gentlemen,” a mantra he took with him at all his subsequent jobs.

Defining Luxury

A company that managed super-luxurious hotels was a rarity. So pretty much everything Schulze introduced was exploring new ground. Some of it seemed obvious.

Folks paying higher room rates, he felt, deserved to be pampered. Little things mattered. For example, he instructed doormen to look at customers’ luggage tags as they pay for their cab and then greet them by name.

And he listened to their complaints. More than just listening, his team reacted. When customers at one of the hotels complained about a noon checkout, he changed it to 3 p.m.

There were other, more expensive changes as well. The first Ritz-Carlton Hotel, proud to be at the cutting edge of the technology of the time, was an early user of electronic lock entry systems. That was great — except its customers weren’t ready for it. They responded: “What is this little piece of plastic. You’re a luxury hotel. You can’t afford a key?” So the hotel switched back to keys for three years. Then customers caught up with the technology, and the electronic system was reinstalled.

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Sparing No Expense

Spending money to keep customers happy is standard fare at the Ritz. Every employee is allowed to spend up to $2,000 to right a wrong — or keep a guest happy. Usually, an employee will just buy a meal for an unhappy guest. But sometimes they go well beyond the call of duty.

Four workers at Ritz-Carlton in Cancun, Mexico, used the money to purchase metal detectors to search for a wedding band a young honeymooner lost on the beach.”

Hermann Elger, a former Ritz-Carlton general manager who now serves as general manager of the prestigious Baccarat Hotel in Manhattan, told IBD: “That everyone gets the money to spend lets them (employees) know they have the power to fix any issue on the spot, and that’s a powerful approach to customer service.

“At the same time, it’s empowering for employees. They can’t kick a problem down the road.”

Maintaining Accountability

Ironically, when serious problems develop, it’s the managers who are held accountable, not workers. Owen Dorsey, a former Ritz-Carlton human resources executive who currently serves as a hotel industry consultant, recalls coming back to R-C headquarters after attending an award ceremony where the company had been honored.

“We were all in a good mood until Horst found these complaint letters,” Dorsey said. “Schulze called a meeting and said, ” ‘From this time forward, any time there’s a service complaint, I’m holding human resources responsible.’ Everyone looked at me.

“He went on, ‘If we’re selecting our people properly and explaining who we are and they accept it and want to be part of us, we won’t have service issues. But if we have service issues because we didn’t get their buy-in or their manager is a horse’s petunia to them, then something is wrong in HR and it’s your fault.’ “

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Creating High Standards

Schulze believes it’s important to treat his workers as he wrote in his essay years ago, as ladies and gentlemen serving ladies and gentlemen.

“These are minimum-wage positions. So when you get (a young kid from an impoverished background) and suddenly the next day he’s facing the chairman of the board of a bank, it’s a big adjustment. We give (them) a first-class uniform and teach them how to interact,” Schulze said. “When a guest comes within nine feet of you, look them in the eye and say welcome. Never say hi. If they ask you for something, never say OK. Say ‘my pleasure.’ In this way, you become an elegant professional, not a silly boy.”

Schulze calls the process “alignment” — aligning employees’ goals with those of the hotel. He thinks it important enough that every time a new hotel signed up with Ritz-Carlton, he went personally to address the staff and urge them, echoing his mentor, “Don’t come to work; come to do something special, come to excel.”

While that may sound like hyperbole, it worked. Turnover in the hotel industry, he said, is typically 120%. But at the Ritz-Carlton under Schulze it was about 20%, because employees came to recognize “they could grow with the company if they did a good job.”

Schulze’s Keys

Created the ultraluxury hotel market.

Overcame: Resistance from some hotels about necessary spending.

Lesson: Sometimes you have to walk away.

“If I let the standards slip, it will go against the interests of all the other hotel owners. I walked away from four hotels to protect the brand.”

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