Putting on the Ritz
Landmark hotel succeeds by selling luxury

For the ordinary Joe, a hotel conjures up the image of a bed, closet, and maybe a color TV. Whether he is on vacation or a business trip, Joe's primary concern is likely to be that when he leaves, he still owns his shirt.

But for ordinary Joes, the Ritz-Carlton Montreal may not be the best choice. "We are not in the room rental business," said Alan Federer, the Ritz-Carlton hotel's recently appointed general manager. "We are in the luxury business."

Throughout the years, the Ritz, which is celebrating its 90th anniversary this year, has stayed at the top of Montreal's tough hotel industry by a hard-nosed formula that caters to high-wealth individuals such as business travelers, entertainers and politicians.

It's a formula that's still working today. According to Ritz officials, the hotel generated approximately $30 million of revenues during 2001 from its 299 rooms, an increase of 5.3 per cent from the previous year. That works out to average revenue per room of $204.00 per night, a substantial total, since empty rooms are included in the average.

More impressive, the hotel's occupancy rate during 2001 exceeded 70 per cent, compared to an average of 67.9 per cent for the 60 members of the Associations des Hôtels du Grand Montréal.

The Ritz, is one of 42 hotels operated by the Ritz-Carlton Hotel Company L.L.C. of Atlanta. According to Federer, the household income of a typical Ritz-Carlton customer is $235,000, a level that puts Ritz clients among the richest in the world.

But serving the rich is really quite simple. They want what everyone else wants. Only more. So the Ritz constantly has to reinvest in it facilities to stay on top. According to Federer, the hotel is in the midst of a $20 million four-year renovation and infrastructure renewal program. All rooms the are being redecorated with Egyptian cotton sheets, draperies and carpets.

New furniture is also being installed including 27" color TVs and high speed Internet access connections. Hotel infrastructure is also being upgraded with high-speed elevators and other improvements. And that's not the end of it. The banquet halls and Ritz Bar are next.

But the Ritz is about more than just hardware. According to Michel Huet, president of Ventes Piranha, a sales trainer who regularly conducts meetings at the downtown hotel, a big key to the hotel's success is the atmosphere - which Ritz staff call "contemporary excellence" -- that is created.

"You can't beat the Ritz," Huet said. "The staff always remembers your name. And the (hotel's) luxurious vibe seems to make all the participants in my meetings a little bit more motivated to succeed."

It's no accident that Ritz staff members can recall clients' names. The hotel maintains a detailed computerized log of guests (or pseudonyms for celebrities who prefer to remain anonymous), along with a list of their preferences and history.

According to Federer, a graduate of Cornell University's prestigious school of hotel administration, it's crucial that each client be made to feel special.

That often boils down to small things. For example hotel employees are encouraged deal with guests who ask for directions by escorting them directly where they want to go, instead of just pointing. When a hotel employee gets a complaint, he is encouraged to solve the problem himself, rather than passing the buck by referring it to another staff member.

But it's not just hotel employees that create the Ritz atmosphere. It's the guests themselves. Ritz restaurants, bars and seminar rooms have become places for Montreal's high-powered businessmen to meet and schmooze. On a recent tour we spotted former Montreal Canadian's president Ronald Corey, and Pierre Trudeau's ex-finance minister Marc Lalonde hanging around. Queen Noor was also a recent guest.

In a strange and effective way, the stiff prices the hotel must charge to maintain top-notch service, acts as a deterrent to keep out the rabble of middle-managers, photocopier salesmen and also-rans who are gunning for "chance meetings" with key power brokers. That means the élites get to relax, socialize and do business with their own kind.

The result is an effective meeting zone, where Montreal's top businessmen can get things done. "Whenever there is a big deal about to happen in this town, I usually know about it before anybody," Federer said. "That's because the investment bankers and lawyers are renting suites to conduct secret negotiations."

When it comes to the hotel guests, ironically it's not the businessmen, but their wives and girlfriends who play the key role in selecting where the couple will stay. So the hotel caters its design, menu and decoration strongly toward women.

In fact Federer strongly denies that the hotel is just for the wealthy. "We have scores of regular clients who just want to spoil themselves," Federer said. "Just about every week I get a call from someone who celebrated a wedding or honeymoon here several decades ago, and they want to come back for the anniversary."

And if you ask Federer, a lot more guests are going to be coming. According to Tourisme Montreal close to 6 million tourists visited the city during 2000, and the long-term trend is up. While Montreal took a bit of a hit last year due to the 9-11 events, Ritz revenues actually rose during the downturn.

Demographics also favor the Ritz. Canada's population is aging and as people get older they tend to accumulate more money. Unlike previous generations, today's retirees are less shy about spending some of that money on themselves.

"Montreal is undergoing a period of substantial renewal, and a lot of new business is coming here," Federer said. "We seem to have worked out a lot of our problems as a city and I see good things ahead."

 

Sidebar: Staying Ahead
o The Ritz-Carlton hotel chain targets high-wealth individuals with family incomes averaging $235,000
o The Ritz-Carton Montreal is investing $20 million in a four-year room and infrastructure renovation.
o By catering to the wealthy, the powerful and successful, the hotel has created an ambience among guests, that goes beyond its traditional hard assets.

 

Photo caption: Allan Federer, Ritz-Carlton general manager, knows whenever a big business deal is about to happen before anyone else, because Montreal's top investment bankers and lawyers start renting out meeting rooms to conduct secret negotiations.

Diekmeyer can be reached at peter@peterdiekmeyer.com

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