Horst Schulze began in the hospitality industry more than 65
years ago as a server’s assistant in a German resort town.
Schulze went on to work for Hilton and Hyatt before becoming
one of the founding members of the Ritz-Carlton Company in 1983 and serving as
president and chief operating officer of the company’s worldwide operations.
After
leaving the Ritz-Carlton Hotel Company, Schulze founded another luxury brand, the Capella Hotel Group.
We spoke to
him about changes in the luxury category, the impact of technology, hospitality
brands moving into alternative accommodations and how his views on crowd-sourced
reviews have changed.
What are some of the main ways the luxury hospitality market
is different today than it was when you were launching the Ritz‐Carlton brand
in 1983?
When I started in the industry, luxury was more about the
hotel surroundings, chandeliers, marble finishing, etc. It was also about the
facilities such as the swimming pool and gym. Luxury back then was all about
seeing and feeling it.
Today, though, it is much more individualized, and
guests view luxury as personalized service and an experience that is tailored
to them. This could mean knowing the guest name as he or she walks into the
lobby, knowing (before they do) what they want, their favorite cocktail, type
of pillow or type of coffee they prefer in the morning.
Time and again we hear that millennials and younger
generations value experiences over things. What implications does that have for
hotels?
It means hotels have to go back to the basics when it comes
to service. As I alluded to earlier, nowadays having new, shiny facilities and
amenities are no longer enough. In order to stand out hotels have to provide
unforgettable experiences for their guests and this is done primarily through
superior, personalized service.
Service can mean designing a curated, personalized day out
for a newlywed couple, or it can mean understanding what the guest wants and
addressing their request in a timely and competent manner.
To date I think
hotels think that by providing iPhone charging points, free Wi-Fi and "Instagrammable" hotel decor is enough to attract the millennial traveler, but it is not.
Millennials demand the same level of service excellence as their forebears and
as you alluded to in your question, prioritize experiences over "things."
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It is true that millennials have grown up using technology
and so do expect the minimum when it comes to Wi-Fi, charging points, etc.
Hotels do need to reflect this as well as continue to innovate in this space,
such as allowing guests to access their rooms through their mobile phones,
introduce facial recognition to replace check-in, ordering food and extra
towels through mobile and other innovations. Anything that will remove
unnecessary pain points should be considered by hotels.
However, hotels will need to focus on service excellence and
providing a meaningful experience. There are few better and more meaningful
experiences for guests than connecting with a hotel employee who is kind,
friendly, helpful and motivated.
This is what really stays with the guest, as
you can see on the millions of TripAdvisor reviews that millennials (and other
generations) post.
What advice do you have for luxury brands trying to balance
high touch with high tech?
High tech and high touch are not necessarily mutually
exclusive, a perfect example is mobile training. I recently joined the mobile
training firm Boost as a director and board member precisely because I see
the power of mobile and how it can enhance guest service.
For example, you
cannot separate language from service, and it is vital that employees are able
to communicate effectively with their guests, understand their requirements and
deliver on them.
Mobile training allows employees to learn English and/or
Mandarin at a time and place of their choosing (unlike traditional
classroom‐based methods) and is much more effective at teaching languages.
Importantly, the modern "mobile-first" hotel employee is more used to reading
from a screen than from a book and so responds better to mobile training.
Mobile training does not replace the employee, rather it empowers the hotel
employee to perform better and provide better service.
So, my advice for hotels would be identify the technologies
that empower employees and truly make the life of the guest easier and more
pleasant.
Too often I see hotels (and companies in other industries) purchase
technologies almost, it seems, for the sake of it - iPads on the reception desk
that no one uses, lighting systems in hotel rooms that are too complex for more
guests to fully understand, I could go on.
General managers need to ask
themselves whether the technology they are about to invest in improves the
lives of the guest, or empowers service staff to improve the life of the guest.
If the answer is yes, then go ahead.
Will chatbots and other AI‐driven communication systems ever
become good enough to replace the need for human service in hotels?
I think technology will get very close, and possibly even
take on many roles traditionally done by a human in hospitality.
Hotels think that by providing iPhone charging points, free Wi-Fi and "Instagrammable" hotel decor is enough to attract the millennial traveler, but it is not.
Horst Schulze
Today, there
are "robots" such as Amazon’s Alexa and Apple’s Siri who can call up
restaurants and make bookings, often with the person at the other end of the
line not knowing that they’re speaking with a robot!
So, I do think that as artificial
intelligence becomes more sophisticated and capable, we will see it take on
more tasks, especially repetitive, rules‐based work that employees currently
do.
However, hospitality is a very personalized industry. At the
end of the day guests (especially repeat guests) book with a certain hotel not
only due to its facilities and location (although these are important), but
because of the service they receive.
People like to speak with other people
because, unlike machines, we have empathy and sincerity.
While budget hotels
may rely on technology more to take on most (or possibly all) service
functions, for most hotel segments I do not believe technologies such as AI and
chatbots will replace human service.
Ritz‐Carlton’s parent company, Marriott, has made some
considerable moves into the private accommodation arena. Give us your thoughts
on the rise of that sector and the role of hotel brands to serve consumers’
demand for it.
Airbnb has really driven and developed the market for home
rentals and in general I think this is great, giving the consumer more choice
and options. It is also not surprising that larger hotel brands are entering
this space which I also think is positive especially if they raise standards
and provide innovation.
Personally, I still have some concerns about renting someone
else’s apartment. This is due to security reasons – hotels have sprinkler
systems and other safety features – but also the fact that when I am on
business or on vacation, I would prefer not to make my own bed and clean up!
However, if Marriott and others find a way to overcome these then I may be
tempted to try them out.
I read an interview you did several years ago where you said
that initially you didn’t think travelers would really rely on crowd‐sourced
reviews from sites such as TripAdvisor to inform their travel decisions. What
are your thoughts on these sites now and the impact they have on the
hospitality industry?
I think online review sites have clearly made an impact on
guest opinion and decision‐making. This is also reflected in the attention that
many general managers pay to such sites. I would say that the impact is less
pronounced on the ultra‐luxury segment which relies on travel agents and other
experts.
And what about the online intermediaries ‐ did you imagine
they would become so powerful in distribution of hotels and their huge role in
customer acquisition?
Thirty years ago, I would not have imagined this, no. In
general, though, I think such intermediaries have been positive especially for
smaller, independent hotels.
General managers want business and online
intermediaries are able to provide this, smaller hotels with less powerful
brand names are now able to reach a much wider audience so this has certainly
benefited them.
Looking back on your long career in hospitality, what have
been some of the your proudest or most memorable moments?
My proudest moments have been when I have see my own
employees move on to leadership positions within the industry.
When I was
recently in Bali, Indonesia, I ran into a general manager of a hotel there who
told me that he was a line employee (a banquet server) when he first started in
the industry. His first hotel was a Ritz‐Carlton property in Bali, which I
opened.
I would open all Ritz‐Carlton properties and part of my role
was to teach and guide the leaders. So, at that particular property I was
teaching the hotel management – this man was just in the background listening
in – using flipcharts. When we all left the room took the flipcharts and used
those teachings throughout his career.
He is now a general manager of a hotel
in Bali. This is the kind of story that really inspires me.
If you could go back to your time at Ritz‐Carlton, is there
anything you would do differently?
There are a few things, but I prefer to keep them to myself!
What advice do you have for young people entering the
hospitality industry today?
There are a few pieces of advice I would like to give.
Firstly, you must have a vision that drives you, a purpose. This is important
because employees want to be connected to a purpose and the role of any
employer is to lead them to that purpose.
Secondly, work hard. This seems
obvious but you will not achieve your vision or reach your destination unless
you put in hard work. Additionally, it makes success that much more satisfying.
Thirdly, work to create something excellent and understand
that whatever it is you do ultimately defines you. Lastly, have fun! Again,
this seems very obvious and of course, you will not have fun all day every day.
However, try to find a role that you enjoy and can look back on with
satisfaction.