The Ritz Carlton Hotel Company was founded in 1899 by Cesar Ritz. After a successful first hotel opening in Paris, he decided to make the attempt to open a second hotel in London this time. Taking the acquired experience, Cesar Ritz made the big step to expand to the North American market. Today the Ritz Carlton Company counts 38 hotels and resorts across the globe (Sucher, S. J. & McManus, 2002). Following a growth strategy of increasing the number of management contracts as quick as possible, the Ritz Carlton adopted the business model of hotel chains.
Their actual revenues therefore come from management fees as well as from land rent, resort timesharing, franchise fees, management incentives, and profit sharing (Sucher, S. J. & McManus, 2002). One important partner for whom Ritz Carlton managed the hotel opening in Washington, D. C. , are the Millennium Partners. Ritz Carlton actually manages the properties and the Millennium Partners are the legal owners of the hotel.
This influential partner is at the same time involved in business activities with Ritz Carlton’s biggest competitor, The Four Seasons.
Doing business with one of the two biggest luxury hotel chains in the world, the Millennium Partners’ aim is to develop residential areas through the hotel business in order to create “luxury apartments, for individuals who are looking for second or third homes in world-class cities” (Sucher, S. J. & McManus, 2002). In terms of segmentation (Sucher, S. J. McManus, 2002), Ritz Carlton has two main B2C target customer groups: independent travellers and the meeting event planners.
Independent travellers are defined as people benefiting from the luxury service quality for business reasons from individual initiatives or simply for pleasure to resident in a luxury hotel. Meeting event became an interesting way to attract independent business travellers as well. These group of target customers quickly became the biggest source of revenues for the company, representing 40% of their annual sales income.
B2B customers such as the Millennium Partners, are the legal hotel owners for whom Ritz Carlton manages properties. The Ritz Carlton Hotel Company is a well-known customer-oriented organization. It has succeeded in achieving highest customer satisfaction in the industry through one of their strong core competences: superior luxury customer service. The Ritz Carlton experience is based on the value the company delivers to its customers.
To explain in detail what Ritz Carlton offers in terms of value, the superior value proposition is used (see figure below). As the company focuses strongly on its employees besides the customers, the value proposition can be split into en external and internal one. The external superior value proposition actually shows what Ritz Carlton delivers to their hotel guests. The internal one, shows what value the company offers for its employees, which are treated as customers as well (Sucher, S. J. & McManus, 2002).