Hotel industry CEO redefines luxury

Although I have met and interviewed many Tourism Ministers, CEOs and GMs, Horst Schulze has created his own c-suite niche that is based on his distinctive style, charisma, and intelligence, along with

Hotel industry CEO redefines luxury

Although I have met and interviewed many Tourism Ministers, CEOs and GMs, Horst Schulze has created his own c-suite niche that is based on his distinctive style, charisma, and intelligence, along with a unique understanding and commitment to excellence. Schulze’s current project brings us to a new hotel experience. In an exclusive interview, Chairman and CEO of the Capella Hotel Group, Horst Schulze discusses the formation of his luxury brand (Ritz Carlton) and his new market-maker in the ultra-luxury category (Capella).

Leading to Quality

Schulze was not born into the hotel industry. He grew up in the small German town of Winningen in the Mosel wine region of Germany, approximately five miles from Koblenz where the Mosel flows in the Rhine River. The region is noted for its outstanding wines and while he was only 14 years old when he left to start his career, the beauty of the region and its economic focus on excellent wines may have influenced his quest for perfection.

Lesson One. Although it is no longer fashionable, Schulze started on the path to excellence as a bus boy at a property over 100 miles from his home. Observing the relationships between the maître d’ of the hotel’s restaurant and the guests, he quickly recognized the art and science of managing staff and lodgers. He also understood the importance of personally meeting with guests: it linked hotel management with the guest experience – enriching both parts of the equation.

Lesson Two. Moving on to the Beau-Rivage in Lausanne the lesson learned here focused on the importance of beauty. From original works of art to painted ceilings and breathtaking lake views Schulze noted the significance of the environment to guest satisfaction.

Lesson Three. His next career stop was the Plaza Athénée in Paris. Surrounded by famous celebrities and successful business executives, he knew that this was the social / business environment where he felt the most comfortable.

Lesson Four. Schulze discovered America as a waiter onboard the Holland America Line. When the boat docked in Hoboken, New Jersey his first sightseeing trip was to the Waldorf Astoria Hotel. He had established his priorities and monuments did not attract his attention… he was all about hospitality.

Management Moves

He quickly moved into managerial positions with the Hilton and Hyatt only to quit in 1983 to join a small company (only three hotels) as a charter member and Vice President of Operations. It took Schulze merely four years to be promoted to the position of Executive Vice President and one more year to become President and CEO of what we know and recognize today as The Ritz Carlton.

Finally he had the opportunity to implement an objective he developed when he was a 15-year old bus boy in Germany: We Are Ladies and Gentlemen Serving Ladies and Gentlemen. According to Schulze, “In this business, we’re not servants; we’re professionals. If you want respect, you have to create excellence.” Today the Ritz Carlton is valued at $2 billion with 85 hotels in 30 countries and 35,000 employees.

Total Quality Management

Although Schulze has many accomplishments, one that has secured him a place in the hotelier Hall of Fame was his drive, commitment and ultimate success in leading the Ritz Carlton to becoming the first hotel to win the Malcolm Baldridge National Quality Award (1992 and 1999).

Against the Odds

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Gilbert Fuchsberg in The Wall Street Journal (May 14, 1992) reported that two-thirds of all quality-improvement programs ultimately fail because organizations simply don’t understand what quality really means or how to attain it. He found that, “Many quality-management plans simply are too amorphous to generate better products or services.” The problem is compounded by the reality that there is no right or wrong way to achieve quality. In fact, a 1991 Ernst and Young study conducted by the American Quality Foundation found that the 584 companies surveyed used a total of 945 different quality-management tactics.

Meet/Exceed Guest Expectations

The first step in developing the application for the Malcolm Baldridge Award is the need for management to recognize that quality starts at the top of the corporate hierarchy with the president and chief operating officer. To this end, Schulze and 13 Ritz Carlton senior executives met weekly to review and develop measurements for product/service quality, guest satisfaction, market growth and development, organizational changes, profitability and competitive status. Gold Standards were written into the hotel Credo with a customer care/comfort/service focus. The hotel motto concentrated on teamwork plus employee-to-employee contact and a positive work environment.

Malcolm Baldridge Award

The Malcolm Baldridge Award recognizes American businesses for excellence in applying the principles of Total Quality Management. The sponsor is the National Institute of Standards. Against all the odds, Schulze was able to address the challenges of Total Quality Management (TQM) and the hurdles presented by the rigid requirements of the Malcolm Baldridge. The Ritz Carlton Hotel Company received the award in 1992 and 1999.

Schulze required every employee to receive more than 100 hours of customer service training – every year. He recognized that positive points of guest/employee contact, exceptionally clean rooms (90-day maintenance program), and consistent reliable service are the hallmarks of the product that leads to guest satisfaction.

Moving Forward

Schulze stepped away from the Ritz Carlton in 2002. He spent a weekend enjoying his retirement and quickly realized that he had unmet objectives and needed to get back to work. He quickly found an office and began his association with the Capella Hotel Group. His mission this time: to provide even higher levels of guest satisfaction and financial rewards for owners and investors with excellence as the standard.

Capella responds to the wants/needs of the ultra-luxury market. While the infrastructure will be similar to large hotels, these properties are smaller and offer individualized personal services. Capella hires leaders not managers. People who become Capella employees must be able to thrive in an environment of belonging and purpose.

Current Capella properties are located in Dusseldorf, Germany; Ixtapa, Mexico; Singapore; Pedregal, Mexico; Washington, DC; Marigot Bay, St. Lucia and Bahia Maromo, Riviera Maya, Mexico (opening soon).

Recognition

HOTELS Magazine identified Schulze as the “corporate hotelier of the world” (1991). In 1995 he received the Ishikawa Medal for his quality movement initiative. Currently he serves on the boards of the Cancer Treatment Centers of America Inc., the Travel Institute, Georgia Family Council, and the InfiLaw System. In 1999, Johnson & Wales University presented him with an Honorary Doctor of Business Administration degree in Hospitality Management.

For additional information: www.capellahotelgroup.com

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