Introduction
The standard “seven day countdown” prior to a hotel opening is currently used by The Ritz-Carlton Hotel Company as a state of the art blitz, to acclimate new employees to the principles and standards of hotel operations. However, pressure from Brian Collins, parner and current chief operating officer for Millenium Hospitality Partners, is questioning the validity and effectiveness of such a routine procedure. These concerns are primarily focused around the opening of the Washington, DC’s historical Foggy Bottom Ritz-Carlton hotel. James McBride has been selected as general manager of the new hotel and is a veteran in the Ritz-Carlton hotel business. Utilizing the “seven day countdown”, McBride has successfully opened several …show more content…
As it stands, following the high-stressed, jam-packed “seven day countdown”, the Ritz-Carlton estimates to open the hotel with 50% occupancy, with the anticipation of reaching 80% occupancy within a few months. Their reasoning for doing so is due to the fact that “flawless execution is the goal, and then speed will come”. The Ritz-Carlton company also believes that opening at 50% capacity will help offset turnover costs that are experienced after opening. The Ritz estimates that is takes about four months to reach occupancy capacity of 80%, which is the desired occupancy. Based on data from Exhibit 3 (Ritz-Carlton, 2001 First Year Monthy Budget), in January when occupancy is 57%, revenue from rooms is $1.6 million, versus 2.2 million in May when occupancy is 76%. At the front end of opening, the Ritz-Carlton is losing money in the range of $0.6 million dollars of uncaptured revenue due to their opening at 50% capacity. Despite their rationale for this, one may question whether or not this loss is necessary, and could it be augmented by a more through opening training process that exceeds the routine “seven day countdown”.
Recommendations
1. Evaluate the effectiveness of the “Seven Day Countdown”
Despite the pressures from Collins in recommending changes to the “seven day countdown, The Ritz-Carlton must first evaluate the effectiveness of the program they already have in place. Based on the case analysis, it is not clear as to what metrics the company uses to