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Ritz-Carlton's Cooper On Marriott Restructuring

November 18, 2009

Travel Weekly’s Jeri Clausing broke a story on November 16 about Marriott International restructuring its hotel business into four regional divisions around the world, which will lead to “significant reshuffling” yet “not very large” job losses, according to Marriott President Arne Sorenson.

Sorenson told Travel Weekly this decentralization, which won’t be finalized until the beginning of 2011, will streamline corporate structure and allow each regional office to operate more independently and more agilely take key decisions.

What was a bit more loosely defined in the story was how the Ritz-Carlton brand — which has operated relatively autonomously from other Marriott brands and will still keep its own headquarters in Chevy Chase, Maryland — will operate under this structure. One thing the story made clear was that the luxury brand will lose its svp of sales and marketing, Bruce Himelstein—who many in the industry considered an integral component to Ritz-Carlton’s success.

What is not changing at the moment is top leadership at Ritz-Carlton as Simon Cooper will remain as president. I sent a quick e-mail to Simon to get some further clarification on the changes and their impact on Ritz-Carlton. Here is what he had to say:

HOTELS: Can you offer me the good, bad and indifferent as it pertains to Ritz-Carlton and this restructuring news?

Cooper:
"The Good: Many key leaders have greatly broadened their responsibilities in the new organization (e.g. Ritz-Carlton brand leader now heads all luxury brands for Marriott, including Ritz-Carlton, Edition and JW Marriott). The Bad: I cannot comment but can certainly say that the challenge for me and my team is to safeguard the service culture that is such a defining factor of Ritz-Carlton’s success while accessing a robust global organization that will be providing global functional support. The Indifferent: Nothing is indifferent at Ritz-Carlton!"

HOTELS: Can you offer any details on how this will streamline back-of-house operations?

Cooper: "A great example would be Loss Prevention (Security). We had a single individual responsible for all our hotels in a world that is increasingly hazardous. We are now served by a network of 13 Loss Prevention leaders around the world who are fully integrated with our hotel teams and obviously able to respond more quickly to incidents and able to visit our hotels more frequently."

HOTELS: How much autonomy will you continue to have under the new structure that still gives you a separate building to operate from but now under four different theaters of operation?

Cooper:
"In the new structure, Marriott is decentralizing operations and on each continent Ritz-Carlton will have regional leaders (area vice presidents) who report back to the global COO based in Chevy Chase, who has responsibility and accountability for Ritz-Carlton’s worldwide operations."

It will be interesting to watch this shift at Marriott—a major move by the man who now seems to be running the show—Arne Sorenson. No doubt, there were some financial considerations taken into account here and who could blame any hospitality company for reconsidering its operating platforms in times like these.

I am not quite sure how this makes Marriott more global as I think its brands already have strong global recognition, but if this gives leadership teams in regional theaters more freedom to act and react to market conditions, this should bode well for the bottom line in the long run. What do you think?

Posted by Jeff Weinstein on November 18, 2009 | Comments (12)

November 29, 2009
In response to: Ritz-Carlton's Cooper On Marriott Restructuring
Frmr RC leader commented:

Sad to see another trickle-down effect shake-up brought on by the Marriott infiltration. Since the takeover, us insiders have heard and had to comply with bits and pieces of the Marriott restructuring in some shape or form, and many times, the creative top-level leaders have either been forced to jump ship, or submit to sub-standard compromises of business practices not preciously considered, just to save a nickle or dime here or there while sacrificing the clientele base. The RC clientele is a sophisticated one, and Marriott's charades of cost-cutting/restructuring are becoming more and more noticeable on a quality basis to the public. Glad I got out while the getting out was good. I wish the best for the RC, but it is in a sad decline nonetheless.


November 28, 2009
In response to: Ritz-Carlton's Cooper On Marriott Restructuring
ms. hospitality commented:

The Ritz Carlton brand has and hopefully will continue to focus on offering the highest levels of customer service. With the integration of Ritz Carlton under the Marriott umbrella, this may no longer be possible. If the Ritz Carlton is held to the same financial standards as the Marriott, then the focus will shift from providing excellent customer service to providing financial results in the short term. The restructuring of the sales force is a good example. Although this new sales force is supposed to be customer focused, the reality of it is that the customer now has one sales manager that they speak with about their business, but another manager who contracts with them, and if they need a sight tour of a specific property, this will be handled by yet another individual. And yes, many Marriott managers with long tenure have lost their jobs due to this restructuring and have been replaced with new managers brought in at entry level salaries.


November 25, 2009
In response to: Ritz-Carlton's Cooper On Marriott Restructuring
Luxury commented:

Marriott have take a once magnificent "Rolls Royce" brand Ritz Carlton and turned it into a "lexus" which below the leather seats is still a Toyota. It's a shame which is why many of their top people have left. Agree another nail in teh Ritz Carlton Coffin.


November 20, 2009
In response to: Ritz-Carlton's Cooper On Marriott Restructuring
Mr. Hotelier commented:

To Thelnside; the new model has yet to show any data, so who knows how effective it will truly be. In fact, it might prove to be a train wreck. I suspect, Marriott is now realizing it cannot continue with its current model due to the economy, so they cut corners. I'm pretty sure, cutting your sales force is the last thing you would do in an economy like this, operations yes. Moreover, if this new model is better in any way, how in the world did they just figure it out? Clearly, this is at the very least a cost cutting move. Maybe they should try something even more outside of the box and hire a 3rd party sales force and save even more money by not having to pay medical benefits! This economy is separating out the boys from the men. We'll see who comes out of this first in the best shape. My guess Choice and Starwood.


November 19, 2009
In response to: Ritz-Carlton's Cooper On Marriott Restructuring
Tell It Like It Is commented:

to "fromtheinside": while I appreciate your fervor with the company you work for, I am not spreading false information as you stated because you too have agreed this is what is occuring with Marriott i.e., taking them off property (job loss, reapplying for jobs at a much lower wage, etc) and putting them where the customers are... but my point is two-fold: 1) those salespeople as you say who are where customers are in fact, representing how many hotels in their area? and please tell me how much detailed knowledge they have of the plethora they represent? This is where the "stuck in a building" sales force comes in and actually can speak to correct knowledge when the planner asks "how far from my GS to breakouts" or "are my meeting rooms close to my sleeping rooms" or "how close to the nearest shopping district" etc. Mr Hotelier has it correct where both property and in the field is a much more "robust" model but this is not what Marriott is doing...they are taking most if not all away....add to this the company's continued hiring of positions that will say, be on board next week yet will go away in 3 months when this "change" begins to occur? 2) while the model might have merit in addressing customer needs, it really is about a drastic cost-cutting measure so why not be transparent about it? While I may not be privy to your insider information and don't have the reach you do, I do speak to customers who have been affected by this Marriott change and they are not happy about it but like all big hotel chains, every 4-6 years, they change their sales model and then in another 4-6 years, they change it all back. I wish you/them luck.


November 19, 2009
In response to: Ritz-Carlton's Cooper On Marriott Restructuring
Correction commented:

Mr. Himelstein's name has now been spelled wrong in a couple of articles. Should be Bruce Himelstein -- one M.


November 19, 2009
In response to: Ritz-Carlton's Cooper On Marriott Restructuring
beentheredonethat commented:

Marriott does not do anything unless there is a financial gain or a significant streamline of operations. Marriott only shows a few "cards" at a time. Trust me...there is more beneath this.


November 19, 2009
In response to: Ritz-Carlton's Cooper On Marriott Restructuring
Yossi Fischer commented:

On Israel's 2nd. largest newspaper web site appeared an article speculating that ELAD group -owners of the Plaza hotel NY is looking to buy Ritz Carlton. Any relation to the new restructure move by Marriott?


November 18, 2009
In response to: Ritz-Carlton's Cooper On Marriott Restructuring
Andy Stephens commented:

Ritz have been increasingly falling short of market leader Four Seasons and I see this as another nail in the coffin of a once great luxury hotel company


November 18, 2009
In response to: Ritz-Carlton's Cooper On Marriott Restructuring
Mr. Hotelier commented:

Interesting move on Marriott's part. I view this as something that probably could have happened much sooner, why now? The econonmy has been bad for a few years. I like the idea of decentralization, especially for a global company like Marriott. I think having sales deployment on property and in the field is "robust."


November 18, 2009
In response to: Ritz-Carlton's Cooper On Marriott Restructuring
FromTheInside commented:

"tell it like it is" you obviously have no idea what you are talking about! The changes taking place to our sales organization greatly enhance our ability to reach far more customers that we currently do. And far more efficiently. This change is completely customer focused...having sales deployment where our customers are and not stuck in a building doesn't make sense to you? And Hilton, IHG, Starwood et al will have not be able to even comtemplate the extent of our reach moving forward. So stop spreading false information. Marriott is the number one lodging sales organizaiton in the world and we will reamain as such.


November 18, 2009
In response to: Ritz-Carlton's Cooper On Marriott Restructuring
Tell It Like It is please commented:

what you should be asking Marriott is why (or how)this restructure in its current form which takes 95% of sales people (and quite a few other departments) off property that in fact DOES result in job loss or re-applying for their same jobs at a 10-20% reduction in salary, is going to result in more revenue for them.....all in the name of "streamlining" operations? I think not...how about a bit of transparency on Marriott's part?....sad to see this happening to many good people around the country and harder yet is its impact on the customer. Hilton, IHG, Starwood et al I'm sure are paying attention and garnering Marriott's lost customers.

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