May 3, 2022

When Horst Schulze helped open the first Ritz-Carlton hotel in 1984, “the customer at the time was the father of today’s customer,” he said.

The contrast, generationally, says as much as anything about what it means to serve a luxury customer in 2022.

The man in 1984 “arrived in a suit and had kind of an arm’s length-distance attitude. ‘If I want something, I will tell you.’ There was a little bit of an air,” said Schulze, as he prepared to speak in Sioux Falls today for the annual luncheon of Experience Sioux Falls.

Back then, The Ritz-Carlton would time how long it would take a business traveler to become annoyed while waiting in line to check in.

“It was four minutes,” Schulze said. “So we knew we had to go out and serve a drink so they wouldn’t get annoyed.”

That was in the early ’80s. Today, “the son comes in in blue jeans with a hole and says, ‘Dude, I’m like you.’ It’s not totally true,” Schulze observed. “That’s how the son checks in: I’m a dude like you. But the truth is, if you get fooled by that, you will have a problem.”

The son — a member of the millennial generation — “wants more,” Schulze continued. “He much more wants to be told: ‘I respect you. I appreciate you. I will honor you.’ He needs much more recognition than the father ever did as he screams, ‘I’m a dude like you.'”

As for the acceptable time waiting in line before annoyance strikes?

“They get annoyed after 20 seconds,” Schulze said. “From four minutes to 20 seconds, so timeliness has changed.”

Times might have changed, particularly in a post-pandemic hospitality environment, but the fundamentals of employee engagement and customer service translate across the world and across industries, Schulze said.

His professional life began more than 65 years ago as a server’s assistant in a German resort town. He worked for Hilton Hotels and Hyatt Hotels Corp. before becoming one of the founding members of The Ritz-Carlton Hotel Co. in 1983. There, Schulze created the operating and service standards that have become world famous. Under his leadership as president and chief operating officer, The Ritz-Carlton Hotel Co. became the first service-based company to be awarded the prestigious Malcolm Baldrige National Quality Award — twice.

He went on to establish The Capella Hotel Group, a luxury hotel company managing some of the most elite properties worldwide.

SiouxFalls.Business sat down with Schulze earlier today:

What is the biggest change the pandemic has brought to the hotel industry, and how do you see that reflected as the industry rebounds?

I would hope that the hotel industry has to be more aware of its employees. The hotel and restaurant industry was an industry I was proud to be part of since I was 14, but the way we handled people was we just hired them to fulfill certain functions, and it was not very smart how we dealt with employees. I’m not in the business, but now I have to think they have a different appreciation that they really need people — that without people they are nothing, not unlike any company, but more so in tourism because it’s all people to people.

And, of course, you have to adjust and be more conscious of sanitary standards, which I don’t think was true in every hotel, so there’s no question a new conscious was established — quality service, employees and cleanliness.

If you were creating a new hotel brand today from the ground up, what elements would you incorporate?

I’m thinking about it. I started a new hotel company at 65, which was sold, and … no person who is sane at 83 would think about it, but I travel and I get totally frustrated. I would like to do it once more to try and teach the industry what it’s all about and the process of it — honor the employees and honor the customer. If I hire you as an employee and I don’t teach you properly, I’m really disrespecting you as an employee. My wife wouldn’t let me do it, but I’ve thought to myself I should do it. I would focus on what is the millennial really thinking because the rest of us are dead pretty soon. All brands are shifting to be sleeping commodities; there’s no hospitality. Is that wrong? Not necessarily because there has to be commodity in everything, but they’re all moving into that, and there is consequence and opportunity for hospitality.

What difference do you see generationally with millennial employees as well as customers?

The millennial customer says ‘Do it my way.’ Individualism has become a major issue. Business has to be aware there’s a huge market shift into individualization. If you cannot keep pace with that, you’re going to have a problem, and that’s very true in our business. Because of technology, I can identify your specific needs and deliver it to you. Once you were with me, I know you like chocolate cookies because you said so, and next time you check in, you’ll have chocolate cookies. For employees, everyone says they want money, and that’s a stupid statement. In the biggest survey (about what matters to employees), 3 million people in the U.S. and Europe, money was No. 6. No. 1 was a sense of belonging.

You have spoken to everyone from Chick-fil-A to Delta Air Lines, Estee Lauder to BMW – which is a diverse group in terms of customer service. Are there common challenges all industries face and common strategies they can use to elevate service?

It’s all the same. It doesn’t matter what business it is. Any business has a market, and what’s the market? Human beings. And any business produces something. With what? Human beings. It is human beings to human beings and how that comes together, and it’s dismissed. We have this deep obligation to give that thought as leaders, but there aren’t many leaders out there. There are managers. We have a leadership crisis in our country at all levels, and it is sometimes really depressing. We are human beings, and we should have high intent in life. That makes us human beings. Leadership has a responsibility to relay that and to help with that. There is no higher honor than to help positively impact people’s lives. That’s leadership. It’s not managing. But we are so much pulled by shareholders and Wall Street and so on that we concentrate on money rather than on what makes money.

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