University of Nottingham

The Dark Side of Customer Relationship Management in the Luxury segment of the Hotel Industry

Akshay Jaipuria

MA Management

Abstract
Today, service organizations are shifting their focus from transactional exchange to relational exchange for developing mutually satisfying relationship with customers. Extended relationships are reported to have a significant impact on transaction cost and profitability, and customer lifetime value. Serving the customers, in true sense, is the need of the hour as the customer was, is and will remain the central focus of all organizational activities. The hotel industry, especially the luxury segment hotels needs to be purely customer-centric and focus on the customer needs and duly fulfill them. Customers will not blindly accept poor service quality from a luxury hotel. They expect high quality of service in return for the money they spend on luxury hotels. This paper is an attempt to explain the dark side of CRM in the luxury segment of the hotel industry with the help of the gap model available in literature which suggests that gaps in service occur at various instances. The author explains that the gap model is a useful tool to explain the dark side partly. There is more to the dark side like privacy issues, unwillingness of customers to build a relationship with the service provider and changing tastes and preferences of the customer. Ritz- Carlton Hotel Company, L.L.C. has been chosen as a single case study and the research questions have been addressed for the industry at large using Ritz- Carlton as a classic example of superior service quality to the customers. Some simple measures to reduce the dark side have been mentioned, which addresses the third and last research question.

The project would contribute as a useful guide to luxury hotels, giving them some valuable information on what the customer expectations are and if they are duly met then service gaps shall not occur. This paper shall provide scope for luxury hotels to improve their overall service quality and strengthen their position in the industry. The relevant existing theory has been reviewed and the subject has been explored, using the gap model (Parasuraman et al 1998) mainly. Based on the research findings and analysis, recommendation has been given to reduce the dark side at Ritz-Carlton and luxury hotels in general.

Table of Contents
ABSTRACT ....................................................................................................................... 0 TABLE OF CONTENTS ................................................................................................. 2 ACKNOWLEDGMENTS ................................................................................................ 4 CHAPTER 1: INTRODUCTION .................................................................................... 5 CHAPTER 2: LITERATURE REVIEW ....................................................................... 7 2.1 WHAT IS CUSTOMER RELATIONSHIP MANAGEMENT? ......................................... 7 2.2 CUSTOMER SATISFACTION, LOYALTY AND BUSINESS PERFORMANCE ................... 9 2.3 CRM AND SERVICE QUALITY ............................................................................................13 2.3.1 Customers perception of quality: ................................................................ 13 2.3.2 The Perceived Service Quality approach ..................................................... 16 2.3.3 Gaps between customer expectations and perceptions: ............................... 17 2.3.4 Service Guarantee ........................................................................................ 24 2.3.5 Service Recovery ........................................................................................... 26 2.3.6 Complaints management ..............................................................................................28 2.4 DO ALL CUSTOMERS WANT A RELATIONSHIP WITH THEIR SERVICE PROVIDER? .. 29 2.5 SYNOPSIS .......................................................................................................... 31 CHAPTER 3: CRM AND HOTEL INDUSTRY ......................................................... 32 CHAPTER 4: METHODOLOGY AND RESEARCH DESIGN ............................... 34 4.1 OVERVIEW ........................................................................................................ 34 4.2 RESEARCH OBJECTIVES ...................................................................................... 34 4.3 RESEARCH DESIGN ............................................................................................. 35 4.4 CASE STUDY: AN INTRODUCTION ....................................................................... 36 4.5 HISTORY OF CASE STUDY ................................................................................... 37 4.6 TYPES OF CASE STUDY ..................................................................................... 37 4.7 CHOICE OF CASE: RITZ-CARLTON HOTEL COMPANY ......................................... 38 4.8 COMPONENTS OF THE CASE STUDY ................................................................... 38 4.9 DATA COLLECTION ...............................................................................................................39 4.9.1 Documentation .............................................................................................. 41 4.9.2 Focus Groups ................................................................................................ 41 4.9.3 Interviews ...........................................................................................................................43 4.10 DATA ANALYSIS ................................................................................................ 49 4.11 KEY ISSUES OF DATA COLLECTION: RELIABILITY AND VALIDITY ...................... 50 4.12 SYNOPSIS .......................................................................................................... 51 CHAPTER 5: CASE STUDY ........................................................................................ 52 5.1 5.2 RITZ-CARLTON: AN OVERVIEW ........................................................................ 52 RITZ-CARLTON AND THE GOLD STANDARDS OF SERVICE QUALITY .............. 54

5.2.1 The Credo..................................................................................................... 54 5.2.2 Motto ............................................................................................................. 55 5.2.3 Three Steps of Service .................................................................................. 55 5.2.4 Service Values ............................................................................................... 55 5.2.5 Employee Promise ........................................................................................ 56 5.3 RITZ-CARLTON: CURRENT REALITY .................................................................. 57 CHAPTER 6: RESEARCH FINDINGS ....................................................................... 59 6.1 FOCUS GROUPS FINDINGS ................................................................................... 59 6.1.1 Does the gap model explain the dark side of CRM? ..................................... 59 6.1.2 Is there more to the dark side of CRM than what is explained in the gap model? ........................................................................................................... 61 6.1.3 How can the dark side of CRM be reduced? ................................................ 62 6.2 IN-DEPTH INTERVIEW FINDINGS ......................................................................... 63 6.2.1 Customer Interviews ..................................................................................... 64 6.2.2 Employee Interviews ........................................................................................ 67 CHAPTER 7: ANALYSIS OF RESEARCH FINDINGS ........................................... 70 7.1 DOES THE GAP MODEL EXPLAIN THE DARK SIDE OF CRM?................................ 70 7.1.1 Ritz-Carlton and the Gap model ................................................................ 70 7.1.2 General Inference for the luxury hotel sector ............................................... 75 7.2 IS THERE MORE TO THE DARK SIDE OF CRM THAN WHAT IS EXPLAINED IN THE GAP MODEL? .................................................................................................................. 76 7.2.1 Willingness to build a relationship ............................................................... 76 7.2.2 General Inference for the Hotel Industry...................................................... 79 7.3 HOW CAN THE DARK SIDE OF CRM BE REDUCED? ............................................. 79 CHAPTER 8: CONCLUSION AND FURTHER RESEARCH ................................. 83 REFERENCES ................................................................................................................ 85 APPENDICES ................................................................................................................. 93 APPENDIX 1 CONSENT FORM ..................................................................................... 93 APPENDIX 2 CRM AND ATITHI DEVO BHAVA......................................................... 94 APPENDIX 3 ................................................................................................................... 97 APPENDIX 4 ................................................................................................................. 100 APPENDIX 5 ................................................................................................................. 108

Acknowledgments
Education is a progressive discovery of our ignorance. Will Durant (1885-1981) U.S. author and historian

I would like to thank all those who helped me through the project phase of the MA Management program. I would like to express my sincere appreciation to my supervisor, Prof. Dave Wastell for his enlightenment of my knowledge of CRM and the hotel industry, valuable advice and kind support throughout the process of dissertation completion Most importantly, I would like to thank my parents and sister who were always there to motivate me. I would also like to thank my close friends at Nottingham for being around to discuss my ideas and giving me emotional support when I was stressed.

I would like to thank all the focus group members for giving their valuable time and thoughts to my project.

I would like to thank all the customers and employees of Ritz-Carlton for sharing their valuable thoughts which helped me shape this project.

Lastly, I would like to thank the academic and library staff at University of Nottingham for their support throughout this year.

Chapter 1: Introduction
In the mid-twentieth century, mass production techniques and mass marketing changed the competitive landscape by increasing product availability for consumers. However, the purchasing process that allowed the shopkeeper and customer to spend quality time interacting with each other was also fundamentally changed. As a result, customers lost their uniqueness becoming an account number. Shopkeepers lost track of their customers individual needs as the market became full of product and service options. Many companies today are striving to re-establish their connections to new as well as existing customers to boost long-term customer loyalty (Chen and Popovich, 2003). The world has come full circle from selling to marketing and from sellers market to buyers market. The customer today has the option to buy what he thinks he should and from whom, being in his best interest. Product development, technological improvement, cost optimization and excellent service facility are very important for any organisation but their importance is only if the customer appreciates it. For example, both diamond and coal are carbon but they are priced differently due to different valuations by the customer. Therefore, any business begins and ends with the customer (Sugandhi, 2002). Thus, service organizations are shifting their focus from transactional exchange to relational exchange for developing mutually satisfying relationship with customers. Extended relationships are reported to have a significant impact on transaction cost and profitability, and customer lifetime value. Serving the customers, in true sense, is the need of the hour as the customer was, is and will remain the central focus of all organizational activities.

The paper explores The Dark Side of Customer Relationship Management (CRM) in the Luxury segment of the Hotel Industry using the gap model of Parasuraman et al (1985) and suggests generic strategies to reduce the dark side. The researcher was motivated to choose the hotel industry because of his deep rooted passion for luxury hotels. The importance of this research is that it helped the researcher familiarize himself with the use of primary with a blend of secondary research to analyze a given situation. This piece of

work shall contribute to the academic community as there is not much literature available on the dark side of CRM for the luxury hotels. It shall also benefit the management of luxury hotels to understand what the customer expects in terms of service quality.

The aim of this research is to highlight the dark side of CRM in the luxury segment of the hotel industry using The Ritz-Carlton Hotel Company as a classic example of high service quality. The research objectives are as follows:

1. Does the gap model explain the dark side of CRM?

2. Is there more to the dark side of CRM than what is explained in the gap model?

3. How can the dark side of CRM be reduced?

This paper is divided into seven chapters.

Chapter one is an introduction to the paper. Chapter two provides the reader with necessary literature available on CRM. Chapter three provides information on CRM and the hotel industry. Chapter four discusses the research design including interviews and focus groups that have been used for primary research. Chapter five provides an overview of The Ritz-Carlton Hotel Company . Chapter six provides a summary of the research findings. Chapter seven is an analysis of the research findings addressing the research questions, one of which provides recommendations to reduce the dark side. Chapter eight is a conclusion of the paper.

The following chapter provides the literature review.

Chapter 2: Literature Review

Modern marketers are rediscovering the ancient mantras for success in corporate world and blending them with contemporary marketing practices. Long term survival and competitive advantage can only be attained by establishing an emotional bond with the customers. A shift is taking place from marketing to anonymous masses of customers to developing and managing relationships with more or less well known or at least some identified customers (Gronroos, 1994).

This section shall provide general literature on CRM and its link with customer satisfaction, customer loyalty and business performance followed by literature on CRM and service quality in details. The gap model shall be introduced and literature on service guarantee, service recovery, and complaint management shall be provided. This would lead to the privacy issues related with CRM.

2.1

What is Customer Relationship Management?

Customer Relationship Management (CRM) is the core business strategy that integrates internal processes and functions, and external networks, to create and deliver value to targeted customers at a profit. It is grounded on high-quality customer data and enabled by IT (Buttle, 2004). CRM is a business strategy to identify, cultivate, and maintain long-term profitable customer relationships. It requires developing a method to select your most profitable customer relationships (or those with the most potential) and working to provide those customers with service quality that exceeds their expectations. (McDonald, 2002) An organizations survival depends largely on harmonious relationships with its stakeholders in the market. Customers provide the life-blood to the organization in terms of competitive advantage, revenue and profits. Managing relationships with customers is imperative for all types and size of service organizations. A sound base of

satisfied customers allows the organization to move on the path of growth, enhance profitability, fight out competition and carve a niche in the market place. Bennett (1996) described that CRM seeks to establish long term, committed, trusting and cooperative relationship with customers, characterized by openness, genuine concern for the delivery of high quality services, responsiveness to customer suggestions, fair dealings and willingness to sacrifice short term advantage for long term gains. Schneider and Bowen (1999) advocated that service business can retain customers and achieve profitability by building reciprocal relationships founded on safeguarding and affirming customer security, fairness and self esteem. It requires that companies view customers as people first and consumers second. Trust, commitment, ethical practices, fulfillment of promises, mutual exchange, emotional bonding, personalization and customer orientation have been reported to be the key elements in the relationship building process (Levitt,1986; Gronroos, 1994; Morgan,1994; Gummesson,1994; Bejou et al,1998 ).

CRM refers to all business activities directed towards initiating, establishing, maintaining, and developing successful long-term relational exchanges (Heide, 1994; Reinartz & Kumar, 2003). One of the results of CRM is the promotion of customer loyalty (Evans & Laskin, 1994), which is considered to be a relational phenomenon, (Chow & Holden, 1997; Jacoby & Kyner, 1973; Sheth & Parvatiyar, 1995; cited by Macintosh & Lockshin, 1997). The benefits of customer loyalty to a provider of either services or products are numerous, and thus organizations are eager to secure as significant a loyal customer base as possible (Gefen, 2002; Reinartz & Kumar, 2003; Rowley & Dawes, 2000). Recent developments in Internet technology have given the Internet a new role to facilitate the link between CRM and customer loyalty (Body and Limayem, 2004). It is common knowledge that a dissatisfied and unhappy customer will share his unfortunate experience more than a satisfied customer. It is also observed that a fraction of unhappy customers choose to complain while others simply switch their loyalty to others service providers. Loss of customer is loss of business along with the opportunity for business growth and profitability. Feedback collection from the customer is essential for the supplier to ascertain customer satisfaction and scope for improvisation (Sugandhi, 2002).

The fundamental reason for companies aspiring to build relationships with customers is economic. For survival in the global market, focusing on the customer is becoming a key factor for companies big and small. Establishing and managing a good customer relationship is a strategic endeavor. Having a CRM software installed does not ensure a successful customer relationship. For this to happen business processes and company culture have to be redesigned to focus on the customer. CRM software can be only a tool to implement a customer strategy. It is known that it takes up to five times more money to acquire a new customer than to get an existing customer to make a new purchase. Improving customer retention rates increases the size of the customer base. Thus, customer retention is essential. (Baumeister, unknown).

2.2

Customer satisfaction, loyalty and business performance

The rationale for CRM is that it improves business performance by enhancing customer satisfaction and driving up customer loyalty (see figure 4). There is a compelling logic to the model, which has been dubbed the satisfaction-profit chain (Anderson and Mittal, 2000). Satisfaction increases because customer insight allows companies to understand their customers better, and create improved customer value propositions. As customer satisfaction rises, so does customer repurchase intention (Anderson, 1994). This in turn influences actual purchasing behaviour, which has a significant impact on business performance.

Customer Satisfaction

Customer Loyalty

Business Performance

Understanding customer requirements Meet customer expectations Deliver customer value

Behavioural loyalty Attitudinal loyalty

Revenue growth Share of customer Customer tenure

Figure 4: Customer satisfaction, customer loyalty and business performance

(Buttle, 2004)

Customer satisfaction has been the subject of considerable research and has been defined and measured in various ways (Oliver, 1997). Customer satisfaction may be defined as the customers fulfillment response to a consumption experience, or some part of it. Customer satisfaction I a pleasurable fulfillment response while dissatisfaction is an unpleasurable one (Buttle, 2004). Satisfaction and dissatisfaction are two ends of a continuum, where the location is defined by a comparison between expectations and outcome. Customers would be satisfied if the outcome of the service meets expectations. When the service quality exceeds the expectations, the service provider has won a delighted customer. Dissatisfaction will occur when the perceived overall service quality does not meet expectations (Looy, Gemmel & Dierdonck, 2003). Sometimes customers expectations are met, yet the customer is not satisfied. This occurs when the expectations are low (Buttle, 2005). For example, the customer expects the flight to be late and it gets late.

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Customer satisfaction is considered to be one of the most important outcomes of all marketing activities in a market-oriented firm. The obvious need for satisfying the firms customer is to expand the business, to gain a higher market share, and to acquire repeat and referral business, all of which lead to improved profitability (Barsky, 1992). Studies conducted by Cronin and Taylor (1992) in service sectors such as: banking, pest control, dry cleaning, and fast food; found that customer satisfaction has a significant effect on purchase intentions in all four sectors. Similarly, in the health-care sector, McAlexander et al. (1994) found that patient satisfaction and service quality have a significant effect on future purchase intentions. (Kandampully and Suhartanto, 2000) Customer loyalty can be defines as customer behavior characterized by a positive buying pattern during an extended period (measured by means of repeat purchase, frequency of purchase, wallet share or other indicators) and driven by a positive attitude towards the company and its products or services (Looy, Gemmel & Dierdonck, 2003).

Practitioners and researchers have not clearly identified a theoretical framework, identifying factors that could lead to the development of customer loyalty (Gremler and Brown, 1997). However, there is a consensus amongst practitioners and academics that customer satisfaction and service quality are prerequisites of loyalty (Gremler and Brown, 1997; Cronin and Taylor, 1992). Those technical, economical and psychological factors that influence customers to switch suppliers are considered to be additional prerequisites of loyalty (Selnes, 1993; Gremler and Brown, 1997). Recent studies also indicate that the firms image may influence customer enthusiasm: value, delight, and loyalty (Bhote, 1996). (Kandampully and Suhartanto, 2000)

Loyalty behaviors, including relationship continuance, increased scale or scope of relationship, and recommendation (word of mouth advertising) result from customers beliefs that the quantity of value received from one supplier is greater than that available from other suppliers. Loyalty, in one or more of the forms noted above, creates increased

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profit through enhanced revenues, reduced costs to acquire customers, lower customerprice sensitivity, and decreased costs to serve customers familiar with a firms service delivery system (Reicheld and Sasser, 1990). Yis Critical review of customer satisfaction (1990) concludes, Many studies found that customer satisfaction influences purchase intentions as well as post-purchase attitude (p. 104).

Customer loyalty can be viewed in two distinct ways (Jacoby and Kyner, 1973). The first views loyalty as an attitude. Different feelings create an individuals overall attachment to a product, service, or organization (see Fornier, 1994). These feelings define the individuals (purely cognitive) degree of loyalty. The second view of loyalty is behavioural. Examples of loyalty behaviour include continuing to purchase services from the same supplier, increasing the scale and or scope of a relationship, or the act of recommendation (Yi, 1990). The behavioural view of loyalty is similar to loyalty as defined in the service management literature. In brief, there are two dimensions to customer loyalty: behavioural and attitudinal (Julander et al., 1997). The behaviour dimension refers to a customers behaviour on repeat purchases, indicating a preference for a brand or a service over time (Bowen and Shoemaker, 1998). Attitudinal dimensions, on the other hand, refer to a customers intention to repurchase and recommend, which are good indicators of a loyal customer (Getty and Thompson, 1994). Moreover, a customer who has the intention to repurchase and recommend is very likely to remain with the company. (Kandampully & Suhartanto, 2000 and Hallowell, 1996)

Customer attitude being difficult to measure, for financial and practical purposes, customer retention is widely used as an indicator of customer loyalty. Researchers have combined both views into comprehensive models of customer loyalty. Dick and Basu (1994) came up with a two-dimensional model of customer loyalty identifying four forms of loyalty according to relative attitudinal strength and repeat purchase behavior. The true loyal are those who have high levels of repeat purchase behavior and a strong relative attitude. Spuriously loyal customers tend to be more motivated by impulse, convenience

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and habit i.e. if the conditions are right. Latent loyalty applies to those customers who are loyal simply because they have no other choice. Lastly, there will always be some customers who shall not be loyal to any particular brand.

2.3

CRM and Service Quality

Service quality is essential for an organizations survival and growth. Interest in service quality emerged in 1970s. Ever since, the topic has attracted substantial attention among researchers and practitioners (Gronroos, 2001). Service quality is a form of attitude representing a long-run, overall, evaluation, which is different from customer satisfaction, a more short term, transaction specific judgment. The level of customer satisfaction is a result of the customers comparison of the service quality expected in a given service encounter with perceived service quality. This implies that satisfaction assessments require customer experiences while quality does not (Caruana, Money and Berthon, 2000).

2.3.1 Customers perception of quality:

Quality of a particular service is whatever the customer perceives it to be. Service quality as perceived by the customer may differ from the quality of the service actually delivered. Services are subjectively experienced processes where production and consumption activities take place simultaneously. Interactions, including a series of moments of truth between the customer and the service provider occur. Such buyer-seller interactions or service encounters have a critical impact on the perceived service. The Nordic Model, originated by Christian Gronroos and developed by others, adopts a disconfirmation of expectations approach. This claims that customers have certain expectations of service performance with which they compare their actual experience. If the expectations are met, this is confirmation; if they are over performed, this is positive disconfirmation; if they are underperformed this is negative disconfirmation. According to Gronroos (1984), the quality of service as perceived by customers has two dimensions; a technical or outcome dimension and a functional or process-related dimension.

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What customers receive in their interaction with a firm is clearly important to them and their quality evaluation. This is one quality dimension, the Technical Quality of the outcome of the service production process. However, as there are numerous interactions between the service provider and customers, including various series of moments of truth, the technical quality dimension will not count for the total quality which the customer perceives he has received. The customer will also be influenced by the way in which technical quality- the outcome of the process is transferred to him and this will have an impact on the process experience. Examples include the accessibility of ATM, a website, appearance and behavior of waiting staff, how service employees perform their task, what they say and how they do it. Interestingly, other customers simultaneously consuming the same or similar services may influence the way in which customers will perceive a service. Thus, the consumer is also influenced by how he receives the service and how he experiences the simultaneous production and consumption process. This is the second quality dimension, the Functional Quality of the process, closely related to how the moments of truth of the service encounters themselves and are taken care of and how the service provider functions. Illustrated in figure 1, there are the two basic quality dimensions, namely, What the customer receives and How the customer receives it; the technical result or outcome of the process (technical quality) and the functional dimension of the process (functional quality. An organizations image is an important variable that positively or negatively influences marketing activities. Image is considered to have the ability to influence customers perception of the goods and services offered (Zeithaml and Bitner, 1996).Thus, image will have an impact on customers buying behaviour. Image is considered to influence customers minds through the combined effects of advertising, public relations, physical image, word-of-mouth, and their actual experiences with the goods and services (Normann, 1991). Similarly, Grnroos (1983), using numerous researches on service organizations, found that service quality was the single most important determinant of image. Thus, a customers experience with the products and services is considered to be the most important factor that influences his mind in regard to image.

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For instance, if the service provider shares a positive or favorable image in the minds of the customers, minor mistakes will probably be overlooked or forgiven. However, if the image is negative, the impact of any mistake will often be considerably greater than it otherwise would be. This entire combination shall lead to total quality.

Total Quality

Image (Corporate/ Local)

Technical quality of the outcome: WHAT

Functional quality of the process: HOW

Figure 1: Two service quality dimensions (Gronroos, 2001)

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2.3.2 The Perceived Service Quality approach

Gronroos (1982) introduced a service oriented approach to quality with the concept of Perceived Service Quality and the model of Total Perceived Service Quality. This approach is based on research into consumer behavior and the effects of expectations concerning goods performance on post-consumption evaluations. In previous sections, the two basic quality dimensions (the what and the how) in the minds of the customers has been discussed. However, the quality perception process is more complicated. It is not the experiences of the quality dimensions alone that determine whether quality is perceived as good, neutral or bad. Figure 2 illustrates how quality experiences are connected to traditional marketing activities resulting in a Perceived Service Quality. Good perceived quality is obtained when the experienced quality meets the expectations of the customers i.e. the expected quality. If expectations are unrealistic, the total perceived quality will be low, irrespective of the experienced quality measured in an objective way being good. As illustrated in figure 2, the expected quality is a function of factors, namely, marketing communication, word of mouth, company/local image, price, customer needs and values. Marketing communication includes advertising, direct mail, sales promotion, websites, internet communication and sales campaigns. These are directly under the control of the company unlike the image and word of mouth factors which are indirectly controlled by the company. Image of the company plays a central role in customer perception of service quality. Thus, it is imperative that image be properly managed. External impact on these factors could possibly occur, but they are a basically a function of the previous performance of the firm, supported by for instance advertising. Lastly, the needs of the customers as well as the values that determine the choice of customers also impact on their expectations. Thus, the level of total perceived quality is not determined simply by the level of technical and functional quality dimensions, but rather by the gap between the expected and experienced quality.

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Image

Expected quality Total perceived quality

Experienced quality

Image Marketing communication Sales Image Word of mouth Public relations Customer needs and values

Technical quality: WHAT

Functional quality: HOW

Figure 2: Total Perceived Quality

(Gronroos, 2001)

2.3.3 Gaps between customer expectations and perceptions:

There exists a gap between expected service quality and perceived service quality. In an attempt to explain such gap, Parasuraman et al (1985), came up with a gap model which is intended to be used for analyzing sources of quality problems and help managers understand how service quality can be improved. The model is illustrated in figure 3.

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Word of mouth communications Customer

Personal needs

Past experience

Expected service

Gap 5 Perceived service

Gap 4 Company Gap 1 Service delivery (including pre and post contacts) Gap 3 Translation of perception into service quality specifications Gap 2 Management perceptions of customer expectations External communications to consumers

Figure 3: The Gaps Model (Source: Parasuraman et al, 1988)

Firstly, the model demonstrates how service emerges. The upper portion of the model includes phenomena related to customers, while the lower portion includes phenomena related to the service provider. The expected service is a function of the customers past experience and personal needs and of word of mouth communication. It is also influenced by the market communication activities of the firm. The service experienced, which in this model is termed as perceived service, is the outcome of a series of internal decisions

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and activities. Management perceptions of customer expectations guide decisions regarding service quality specifications to be followed by the company when service delivery (i.e. the execution of the service express) occurs. The customer experiences the service delivery and production process as a process-related quality component and the technical solution received by the process as an outcome-related quality component. As illustrated, marketing communication can influence the perceived service and also the expected service. This basic model demonstrates the steps that have to be considered during analyzing and planning service quality. The five discrepancies (so-called quality gaps) between the various elements of the structure are a result of inconsistencies in the quality management process. The ultimate gap (Gap 5) i.e. the gap between expected and perceived (experienced) service is a function of other gaps that possibly occurred in the process. The five gaps are discussed below:

1. The Management Perception Gap (Gap1): This gap occurs when the management perceives the quality expectations inaccurately due to inaccurate information from market research and demand analyses, inaccurately interpreted information about expectations, nonexistent demand analysis, bad or nonexistent upward information from the firms interface with its customers to management and numerous organizational layers which stop or change the information that may flow upward from those directly involved in customer contacts. Necessary action to open up or improve the various internal information channels has to be taken in such situations.

2. The Quality Specification Gap ( Gap 2): This gap signifies that service quality specifications are not consistent with management perceptions of quality expectations due to planning errors or insufficient planning procedures, bad management of planning, lack of clear goal-setting in the company and insufficient support for planning service quality from top management. The planning related problems vary depending on the size of the first gap. However, even if there is sufficient accurate information on customer expectations, planning of quality specifications may fail due to lack of real commitment to service

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quality among top management. Commitment, dedication and devotion to service quality among management as well as service providers are of highest importance and priority in closing the Quality Specification Gap.

3. The Service Delivery Gap (Gap 3): This gap means that quality specifications are not met by performance in the service production and delivery process due to specifications which are too complicated and/or too rigid, employees not agreeing with the specifications and therefore not fulfilling them, specifications not being in line with the existing corporate culture, bad management of service operations, lacking or insufficient internal marketing and technology and systems not facilitating performance according to specifications. The possible problems here are many and varied and usually the reasons for the existence of a Service Delivery Gap are complicated and so are the cures. The reason for this gap can be divided into three categories: management supervision, employee perception of specifications and rules/customer needs and wishes, and a lack of

technological/operational support.

Management and supervision related problems may be varied too. For instance, supervisors may not be encouraging and supportive of quality behavior or the supervisory control systems may be in conflict with good service or even with quality specifications. In an organization where control and reward systems are decided upon separately from the planning of quality specifications, which is the case often, there is inherent risk of a Service Delivery Gap occurring. Often nonessential or important activities are controlled, perhaps even rewarded; and activities that contradict quality specifications are encouraged by the control system. Control and reward systems partly determine the corporate culture, and goals and specifications that do not fit the prevailing culture tend not to be well executed. The cure here involves changes in the way managers and supervisors treat their subordinates and in the way supervisory systems control and reward performance.

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Since the way in which performance requirements of the specifications, on one hand and existing control and reward systems on the other hand, are in conflict with each other, an awkward situation may arise for personnel when a customer contact person realizes that a customer requires different behavior on the part of the service provider than that expected according to the companys specifications. It must be noted that situations where the service provider is aware of the fact that the customer is not receiving what he expects and may feel that the demands and wishes of the customer are justified and perhaps could be fulfilled, however, the service provider is not allowed to perform accordingly, may ruin the motivation for quality-enhancing behavior among personnel. The skills and attitudes of personnel may cause problems if the wrong people are recruited. For instance, the firm may have employees who are unable to adjust to the specifications and systems that guide operations. Furthermore, the workload perceived by employees may be a problem. For example, there may be too much paperwork or some other administrative tasks involved, so that quality specifications cannot be fulfilled and a result of which, the service provider does not possess time to attend to customers as expected.

Lastly, the technology or the systems of operating, including decision making may not be suitable to employees. The problem may be the employees, but it is quite probable that technology and operational and administrative systems have been introduced inappropriately. Perhaps the technology and systems do not support quality behavior, or they have been improperly introduced to the employees. To close the Service Delivery Gap, the problems need to be dealt with effectively and efficiently.

4. The Marketing Communication Gap (Gap 4): This gap occurs when promises given by market communication activities are not consistent with the service delivered due to market communication planning not being integrated with service operations, lacking or insufficient coordination between traditional external marketing and operations, the organization failing to perform according

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to specifications, whereas market communication campaigns follow these specifications and an inherent propensity to exaggerate, and, thus, promise excessively. The reasons for Marketing Communication Gap can be divided into two categories: the planning and executing of external market communication and operations and a companys propensity to over-promise in all advertising and marketing communication. The cure in the first situation could be creating a system that coordinates planning and execution of external market

communication campaigns with service operations and delivery. For instance, every major campaign could be planned in collaboration with those involved in service production and delivery for Dual goal to be achieved. First, promises in market communications become more accurate and realistic and second, a greater commitment to what is promised in external campaigns could be achieved. The second category of problems i.e. over-promising can be dealt with by improving planning of marketing communication and/or closer management supervision.

5. The Perceived Service Quality Gap (Gap 5): This gap signifies that the perceived or experienced service is not consistent with the expected service resulting in negatively confirmed (bad) quality and a quality problem, bad word of mouth, a negative impact on corporate or local image and lost business. However, this gap may also be positive, which leads either to a positively confirmed quality or over-quality. If a Perceived Service Quality Gap occurs, the reason could be any one or a combination of those discussed above or other additional reasons. Addressing these gaps could be a basis for developing service processes in which expectations and experience consistently meet and a good perceived service quality will enhance.

Some of the possible strategies that could be adopted by organizations to close these quality gaps are tabulated in Table 1.

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Gaps

Possible strategies to close gaps

Change of management (in extreme situations), otherwise normally, learn from front-line customer contact staff, flatten the hierarchical structure, include expectations data in consumer records, market research for improvement in the knowledge of the characteristics of service competition, etc.

Change in firms priorities, Commitment to develop service standards wherever possible, feasibility assessment of customer expectations, develop a standards documentation process, automation of processes wherever possible and desirable, activities outsourced wherever competencies are lacking, development of service quality goals, etc.

Investment in people: (recruitment, training and retention), investment in technology, redesigning workflow, encourage self organized teams; improve internal communication, clear job specifications to avoid ambiguity, reward service excellence, etc.

Brief the advertising agency of the company, external communication of what the customer can expect through advertising, training employees not to over-promise, penalize employees who over-promise, encourage customers to sample the service experience, excel at service recovery, encourage and manage customer complaints, etc.

(Buttle, 2004; Gronroos, 2001 and Looy, Gemmel & Dierdonck, 2003)

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2.3.4

Service Guarantee

An organization tries to balance its customers expectations with the delivered service. A service guarantee promises the customers a certain service quality and backs up such promise with a payout, making services more tangible, reducing the perceived risk of purchasing a service. A service guarantee makes the customer a meaningful promise and specifies a payout and an invocation procedure in case the promise is not kept. Each of these elements is equally important in making a guarantee successful (Looy, Gemmel & Dierdonck, 2003)

The key elements of this definition are discussed below:

The Promise

Through introduction of a service guarantee, an organization makes a credible promise to its customers. For example, PTT Telecom promise to connect new telephones within three working days and to fix telephone lines within a day and a half. This promise is a credible one in a European context, where shorter lead times are highly desirous by customers (Looy, Gemmel & Dierdonck, 2003). In defining a promise, a company should be careful not to promise what would be expected anyway. This may negatively signal that service failures are likely to be expected. Some promises are limited in scope i.e. guarantee only less important service aspects or are highly conditional, excluding all major causes of service failure. For example, Lufthansa guarantees that its customers will make their connecting flights if there are no delays due to weather or air-traffic control problems. Ironically, these two problems cause in total 95 percent of all flight delays. Furthermore, the guarantee is applicable only if all flights including connecting flights are with Lufthansa (Lufthansa airlines, 1987). The presence of a service guarantee can support the perception of service reliability, which is one of the most critical determinants of customer satisfaction. However, sometimes a guarantee may give out a negative message, indicating that service failures may occur due to customers wondering why it is necessary to provide a guarantee. For example, Lufthansa promises its customers that 24

their luggage will arrive with them. However, this created the perception that lost luggage is more a problem with Lufthansa than its competitors (Lufthansa airlines, 1987). The effectiveness of communicating a service guarantee also depends on the source of the message, especially if the form has a history of service problems, making it difficult for a service firm with bad service reputation to send out credible message.

The Payout

In a situation where promises are not kept, the customer shall receive a payout which will encourage the customer to communicate all service failures, which has a double effect:

Service recovery: The customer who claims his payout is less likely to defect or spread a negative word of mouth. Hence, service recovery becomes a possibility.

Service quality improvement: Each claim represents valuable information about quality errors and their possible causes, but the avoidance of future payouts functions as an incentive to all staff to participate in improvement projects.

In order to achieve service recovery, the payout has to be meaningful to customers. It should not only make up for all the damage and inconvenience suffered but also make the customer whole. For example, the payout offered by the Dutch bus service organization, Interliner, makes their customer whole by guaranteeing that their passengers will reach their connecting flights and buses. A refund would not adequately compensate the passenger who missed a connection. Therefore, any passenger who would have to wait for more than fifteen minutes for a connection due to delay by Interliner would be taken to his destination by taxi at Interliners expense (www.interliner.nl). A payout can also be too high. For example, in India atleast, Dominos Pizza offers customers its pizza free of charge if they were not delivered within thirty minutes from ordering.

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The Invocation Procedure

The final aspect of the service guarantee is the invocation procedure. Invocating a guarantee should be either easy or proactive. For example, supermarkets Hoogvliet (Netherlands) and Match (Belgium) promise short queues at their checkouts. If all tills are not manned and if some customer is the third one (Hoogvliet) or the fourth one (Match) in the queue, he does not have to pay (Hoogvliet) or receives a significant discount (Match). An example of unconditional satisfaction guarantee which is easy to invoke is that of Superquinns Goof Card System. Superquinn is the leading supermarketing chain in the Greater Dublin area. Periodically, customers who participate in the loyalty saving system called Superclub receive a Goof Card. Each time Superquinn goofs i.e. produces a service failure, the customer simply has to point it out to any member of staff, and he shall receive thirty bonus points worth 1. The guarantee offers unconditional satisfaction guarantee as customers are able to define the goof themselves, however, for further help to customers, Superquinn lists ten examples of goofs. The invocation of PTT Telecoms guarantee for example is proactive as well. After each connection or repair, PTT Telecom makes an after-sales call to the customer trying to assess customers satisfaction. If there is a failure of promise, the customer is immediately informed of the payout (Looy, Gemmel & Dierdonck, 2003).

2.3.5 Service Recovery

The real test of the customer orientation of a service provider takes place when service failure has occurred. Ideally, quality should be high throughout and failures should not occur in the service processes. However, in reality employees makes mistakes, systems break down, customers in the service process may cause problem for other customers, etc. Service recovery is a strategy for managing mistakes, failures and problems in customer relationships (Gronroos, 2001). As defined by Tax and Brown (2000) (in gronroos 2001), Service recovery is a process that identifies service failures, effectively resolves customer problems, classifies their root cause(s), and yields data 26

that can be integrated with other measures of performance to assess and improve the service system. Service recovery includes all actions taken by company when there has been a service failure. Services fail for different reasons- sometimes technical service fails; sometimes functional service quality (Keaveney, 1995 in Buttle, 2004). Problems caused by a service failure are two-fold; factual and emotional problems (Gronroos, 2001). In a problematic situation when service recovery is called upon, customers are often frustrated, possess high expectations and tend to have a narrower zone of tolerance that normal (Tax et all, 1998). Therefore, service recovery could be risky (Smith and Bolton, 1998) and needs to be well managed. Service recovery performance can be better if the employees are more committed to the visions, strategies and service concepts of the firm. Moreover, empowered employees can be expected to perform better in recovery situations, inclined to deal quickly and effectively with service failures (Boshoff and Allen, 2000). When companies resolve problems quickly and effectively there are positive consequences for customer satisfaction, customer retention and word-of-mouth (Tax et al, 1998). Service recovery process should be developed and exercised to maximize fairness as perceived by the customer (Ruyter and Wetzels, 2000). In addition to mistake correction, quick response and adequate compensation are considered crucial elements of service recovery (Johnston and Fern, 1999). It has been discovered that customers who have been let down, then well recovered, are more satisfied than customers who have not been let down all (Hart et al, 1990). A well managed recovery has positive impact in development of a trusting relationship between a firm and its customer and may also deepen the customers commitment towards the service provider (Tax et al, 1998). Service recovery is an important factor influencing perceived service quality and is a criterion which can have a positive effect on functional quality. Satisfaction with the service can be increased through good service recovery (Spreng, Harrell & Mackoy, 1995). According to Patrick Mene, Director of Quality at the RitzCarlton Hotel Company 1-10-100 rule of service recovery, what costs the firm one pound, euro or dollar to fix immediately will cost ten the next day and hundred later on (Patlow, 1993). An example of quick service recovery is an incident that took place at the Ritz-Carlton Hotel in Phoenix, Arizona. A group of four MBA students from Europe had attended a seminar at the hotel and wished to spend a few hours of leisure time at the

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swimming pool before leaving for the airport. When they arrived at the swimming pool around mid afternoon, they were politely told that the pool area was closing because the area was to be prepared for an evening reception and dinner. The students explained that during their stay at the hotel, that was the only time they could spend at the pool before returning to the freezing temperature of their country and they had been looking forward to this opportunity. The waiter requested them to wait while he sorted out the situation. After a short while, a supervisor arrived to inform them that the hotel unfortunately had to close the entire pool area for evening preparation. However, he added that a limousine was waiting for them outside the main entrance to take them and their luggage to Biltmore Hotel where the pool area would be at their disposal. This limousine was at the Ritz-Carltons expense undoubtedly. This delighted the group and their already favorable perception of the hotel was improved further. They also engaged in considerable amount of positive word-of-mouth communication (Gronroos, 2001).

2.3.6

Complaints management

Customers complain under one or both of the conditions: their expectations being underperformed to a degree that falls outside their zone of tolerance or unfair treatment. Complaints management process should be developed to take a positive view of customer complaints. Customers who complain provide an opportunity for the service firm to identify root causes of problems as well as win back unhappy or dissatisfied customers to retain their future value (Buttle, 2005). A complaints management process should allow company to capture complaints before customers spread a negative word-of-mouth or take their business elsewhere (Buttle, 1998). Up to two-thirds of customers who are dissatisfied do not complain to the organization (Richins, 1983). However, they may complain to their social networks. Dissatisfied customers are likely to inform twice as many people about their experience than customers with a positive experience (TARP, 1995 in Buttle, 2005). According to Wilson (1991), only 4 percent of the dissatisfied customers actually complain, providing valuable feedback to the company. The remaining 96 percent choose to simply leave the business and go elsewhere. Companies choose to deal with complaints efficiently to bring about customer retention, continuous 28

improvement in service quality and build a customer- focused organization (Looy, Gemmel & Dierdonck, 2003).

The customers choose not to complain for some reasons listed in table 2 below.

They do not know how to register a They believe complaining will be useless complaint because the company dont care about them or their complaints

They believe it is not worth the time They fear retribution. For example, many or trouble people are reluctant to complain about the police.

(Wilson, 1991 and Buttle, 2005)

Now, we shall move into the section of the literature review where we shall highlight the privacy issue with CRM.

2.4

Do all customers want a relationship with their service provider?

It is clear that companies want relationships with customers, but it is far less clear that customers universally want relationships with their suppliers. In a business to customer context, relationships may be sought when the customer seeks benefits over and above those directly derived from acquiring, consuming or using the service. The benefits include recognition, personalization, power, risk reduction, status and affiliation (Buttle, 2004). Examples of each such benefit are mentioned below

Recognition: A customer may feel more valued and important when recognized and addressed by name 29

Personalization: For example, over time, a hotel manager may understand a customers particular preferences or expectations

Power: For instance, some of the power asymmetries in relationships between banks and their customers may be reversed when customers feel that they have personal relationships with their bank officers and managers.

Risk reduction: Risk may be in the form of performance, physical, financial, social or psychological. High levels of perceived risk are uncomfortable for many customers. A relationship has the ability to reduce, or even eliminate risk. For example, a customer may develop a relationship with a garage to reduce the perceived performance and physical risk attached to having a car serviced. The relationship provides the assurance that the job has been skillfully accomplished and the car is safe to drive.

Status: For example, customers may feel that their status is enhanced by a relationship with an organization, say, the Hilton.

Affiliation: peoples social needs can be met through relationships. For example, many people join particular forums or associations to be a part of a community.

However, there are some customers who would be satisfied with the service quality and perhaps decide to be loyal, but not want a relationship as such with the supplier for privacy issues. It is a known fact that suppliers wish to increase their sales to customers. In order to know and analyze their customers, companies collect extensive data on their customers through various channels. One popular rather common channel is through loyalty programs and cards. Examples include Tesco loyalty cards, Hilton hhonors program, British Airways frequent flyer cards, etc. The companies provide some benefits to customers and collect data like contact name, history of purchase, money spent in the

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past on companys services, etc. However, if the data is mishandled or incorrectly handled, it can destroy the trust and loyalty in the relationship. (Vargas, 2006)

Privacy and data protection are key concerns of customers, who are increasingly concerned about the amount of information that organizations have about them and the uses to which information is put. In reality, most customers are unaware of the quantity of information available to companies. Some customers may wish to simply not join any loyalty programs in order to secure their privacy and prevent intrusion into personal information.

2.5

Synopsis

This section has provided available literature about CRM. The gap model explained shall be a strong basis for explaining the dark side of CRM. Privacy issues shall be given importance as well. The customers perception of service quality is to be given supreme priority by the hotel industry. It is important how customers perceive the service quality to be. What they receive and how they receive corresponding to their expectations helps them judge the service quality to a large extent.

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Chapter 3: CRM and Hotel Industry

The hotel industry today has been recognized as a global industry, with producers and consumers spread around the world. The use of hotel facilities such as: room, restaurant, bar, nightclub or health club; are no longer considered a luxury. For many people these services have become an integral component of lifestyle. Moreover, in the last two decades, demand for and supply of hospitality services beyond that of the traditional services intended for travelers have escalated the growth of the hospitality industry globally, leading to intense competition in the market-place. One of the greatest challenges facing hotel organizations today is the ever-growing volume and pace of competition. Competition has had major implications for the customer, providing increased choice, greater value for money and augmented levels of service. Additionally, there is little to distinguish one hotels products and services from another. Thus it has become imperative for hotel organizations to gain a competitive advantage. There are two strategies most commonly used by hotel managers in order to gain a competitive advantage, which are low-cost leadership through price discounting and developing customer loyalty by providing unique benefits to customers. Hotels that attempt to improve their market share by discounting price run the serious risk of having a negative impact on the hotels medium- and long-term profitability. As a result, it is quality of service rather than price that has become the key to a hotels ability to differentiate itself from its competitors and to gain customer loyalty. Getty and Thompson (1994) studied relationships between quality of lodging, satisfaction, and the resulting effect on customers intentions to recommend the lodging to prospective customers. Their findings suggest that customers intentions to recommend are a function of their perception of both their satisfaction and service quality with the lodging experience. However, satisfying customers alone is not enough, since there is no guarantee that satisfied customers will return to purchase. It is now becoming apparent that customer loyalty is significantly more important than customer satisfaction for success.

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Numerous examples illustrate that it is important that the hotel industry develop customer loyalty, as opposed to relying solely on pricing strategies. Researchers have shown that a 5 per cent increase in customer loyalty can produce a profit increase of 25 per cent to 85 per cent (Reichheld and Sasser, 1990). Hence a dedicated focus on customer loyalty is likely to become a necessary prerequisite for the future survival of hotel organizations.

In the hotel industry, Customer relationship management (CRM) is more than the practice of collecting guest-centric data. Its the art of using historical, personal, and experiential information to personalize a guests stay while generating incremental revenue opportunities. For instance, knowing a traveler is an avid sports fan creates the opportunity to market tickets to a game; knowing a guest had a less-than-memorable experience in the hotel restaurant gives you a chance to win them back the next time they are in town. With the latest offerings in CRM, hoteliers can develop comprehensive guest profiles from reservation information and demonstrate to guests that the property is in touch with their needs, drive guest-centric data down to the transaction level, allowing employees and guest-facing technology to deliver greater value to the guest, generate a realistic profile on the spending and stay patterns of guests, allowing the property to create guest-centric marketing for increased loyalty and spending, etc.(Microsoft, 2006).

To summarize, the shift in the sales and marketing landscape requires the hotel companies to be as advanced as technology will allow in managing their customer relationships. There will be a sea change from management of customer data to management of customer relationships. Hotel companies must carefully consider how they store, track, analyze and act upon every aspect of their relationships with their guests and booking customers. The emphasis should be on using the data intelligently to predict consumer behavior, such as loyalty and usage patterns, and to use the customer knowledge to anticipate the customer needs or problems (EURHOTEC, 2000).

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Chapter 4: Methodology and Research Design

4.1 Overview

Methodology can be defined as (i) a body of methods, rules, and postulates employed by a discipline, (ii) a particular procedure or set of procedures or (iii) the analysis of the principles or procedures of inquiry in a particular field, the common idea being the collection, the comparative study, and the critique of the individual methods that are used in a given discipline or field of inquiry (Wikipedia, 2006).

This chapter of the paper provides an overview of the research design (i.e. the case study) used for research about the hotel industry. The objectives of the research have been mentioned followed by a definition of research design and the qualitative approach of the case study. The researcher then presents his justification for choosing Ritz-Carlton Hotel Company as his case example leading to methods of data collection for the research conducted along with each methods strengths and weaknesses. This chapter concludes with discussion on data analysis and the reliability and validity issues with data collection

4.2

Research objectives

A review of the present literature is a stepping stone in compiling the objectives behind the research. In this regard, the literature review enabled an understanding of how can the hotel industry improve its business performance through service quality, customer satisfaction and customer loyalty. The service quality is provided by hotels to ultimately satisfy the customers and the hotel managers must know what their customer wants rather than blindly assuming. Even though the service quality may be satisfactory, there may be a gap between the expected service quality by the customer and their experienced service quality. The hotel management has to strive to bridge these gaps to improve service quality and customer satisfaction and attempt to bring about customer loyalty which in turn would impact business performance. The literature review also highlighted that there is possibly a dark side of CRM which refers to privacy issues of the customer and

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doubts about customers willing to build relationships in the long run. There is also not ample literature available on the customers perspective i.e. how the customer feels about what the hotel provides him with, if the hotel actually provides them with what they promise to deliver, if the customers value all they receive and how much, the privacy issues and possibly customers reaction to certain experiences during their stay, just to name a few not so explored sides of CRM. Inspired by the above, the research objectives are as follows:

1. Does the gap model explain the dark side of CRM?

2. Is there more to the dark side of CRM than what is explained in the gap model?

3. How can the dark side of CRM be reduced?

4.3

Research design

A research design can be explained as the detailed blueprint used to guide a research study toward its objectives (Aaker, Kumar and Day, 2003). Research design provides the glue that holds the research project together. A design is used to structure the research, to show how all of the major parts of the research project -- the samples or groups, measures, treatments or programs, and methods of assignment -- work together to try to address the central research questions (Social research methods, 2006)

The process of designing a research study requires some interrelated decisions to be made. The most significant decision is the choice of research approach which determines how the information will be obtained. The choice of research approach is dependant on the nature of the research to be conducted. Research approaches can be categorized into one of the three general categories of research i.e. exploratory, descriptive and casual (Aaker, Kumar and Day, 2003).

Exploratory research: This type of research is undertaken when one is seeking insight into the general nature of a problem area, the possible decision alternatives and relevant 35

variable that are to be considered. The research methods are loosely defined, highly flexible, unstructured and qualitative. The researcher begins without firm preconceptions as to what will be the outcome. The absence of structure allows a thorough pursuit of ideas and clues about the problem situation. Such research is conducted because a problem has not been clearly defined. Exploratory research helps determine the best research design, data collection method and selection of subjects. Such research often relies on secondary research such as review of available literature and/or data, qualitative approaches like informal discussions with customers, employees, management or competitors, and more formal approaches like in-depth interviews, focus groups, projective methods, case studies or pilot studies. The outcome of this type of research can provide significant insight into a given situation and provide some explanation as to why, how and when something occurs. However, exploratory research may not be typically generalizable to population at large (Aaker, Kumar and Day, 2003 and Wikipedia, 2006)

Descriptive research embraces a large proportion of marketing research, the objective being to provide an accurate snapshot of some aspect of the marketing environment. Casual research approach is used when it is essential to show that one variable causes or determines the values of other variables. In such case, descriptive research is insufficient as it can only show that two variables are related or associated (Aaker, Kumar and Day, 2003). There are various research methods that can be adopted which include case studies, experiments, surveys, histories and archival information.

4.4

Case study: An introduction

Case study is an ideal methodology in a situation where a holistic, in-depth investigation is needed (Feagin, Orum, & Sjoberg, 1991). A case study is a particular method of qualitative research. Instead of using large samples and following a rigid protocol to examine a limited number of variables, case study method involves an in-depth longitudinal examination of a single instance or event: a case. It provides systematic approach of looking at events, data collection, data analysis and reporting the results. 36

Resultantly, the researcher may gain a sharpened understanding of why the instance occurred and what might be important to look at extensively in future research (Wikipedia, 2006). Case studies lend themselves to generating and testing hypotheses (Flyvbjerg, 2006)

Yin (2002) suggests that case study should be defined as a research strategy, an empirical inquiry that investigates a phenomenon within its real-life context. Case study research means single- and multiple case studies, may include quantitative evidence, relies on multiple sources of evidence and benefits from prior development of theoretical propositions. He notes that case studies should not be confused with qualitative research and points out that they can be based on any mix of quantitative and qualitative evidence. Case studies tend to be selective, focusing on one or two issues that are fundamental to understanding the system being examined.

4.5

History of case study

The use of the case study originated only in the early 20th century as a distinct approach to research. The Oxford English Dictionary traces the phrase case study or case-study back as far as 1934, after the establishment of the concept of case history in medicine. The use of case studies for creation of new theory in social sciences was further developed by sociologists Barney Glaser and Anselm Strauss who presented their research method, Grounded theory in 1967. The popularity of case studies as a research tool developed in recent decades. One area in which case studies have been gaining popularity is education and in particular educational evaluation. If used in (non-business) education and professional development, case studies are often referred to as critical incidents (Wikipedia, 2006).

4.6

Types of Case Study

Yin (1993) identified three specific types of case studies: Exploratory, Explanatory, and Descriptive. Exploratory cases may be considered as a prelude to social research.

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Explanatory case studies may be used for conducting causal investigations. Descriptive cases require a descriptive theory to be developed before starting the project. Stake (1995) included three other types: Intrinsic i.e. when the researcher has an interest in the case; Instrumental i.e. when the case is used to understand further than what is obvious to the observer and Collective which is when a group of cases are studied. Each of the above types of case studies can be single-case or multiple-case applications.

4.7

Choice of case: Ritz-Carlton Hotel Company

Ritz-Carlton was chosen as a case example, mainly because the researcher was aware of the high brand reputation of the hotel chain in the hotel industry worldwide. Instead of choosing a leading hotel group from a particular country or region, the researcher decided to pick a globally renowned hotel chain for addressing the global issue of service quality. Hotel industry being a classic example of service companies attracted the researcher to conduct a research on service quality in the luxurious hospitality sector. The researcher is awestruck by the glamorous hotel properties and wondered if they provide an extremely high level of service quality to the customers or simply provide facilities without concentrated service. This led the researcher to investigate if what is promised by the hotel and expected by the customer in terms of service quality is actually fulfilled, and if so, to what extent.

4.8

Components of the Case Study

Yin (1994) proposed five components of case studies: (1) a studys questions, (2) its propositions (if any), (3) its unit(s) of analysis, (4) the logic linking the data to the propositions, and (5) the criteria for interpreting the findings (Yin, 1994, p. 20). The proposition of this research work is (a) to investigate if the service quality received by the customer meets the expectations of the customers and the promises made by the hotel and (b) to bring to light the dark side of CRM in this industry (if any). The unit of analysis is the organization i.e. Ritz-Carlton. In this case study, the customers perception of service

38

quality is observed highlighting what the customers want and expect from the hotel. To link the data to the propositions, pattern matching is adopted where various pieces of information from the case is related to theoretical propositions.

For this project, the single case study approach was chosen by the researcher and qualitative methods of data collection were adopted. The reason for opting qualitative methods was to allow the researcher to conduct in-depth interviews which would prove as an opportunity to receive information on what is it that customers actually want and expect from the hotel and narrate incidents or instances where the service quality left an impression on their mind, positive or negative. Quantitative approach would be more suitable and appropriate had the researcher desired to measure customer satisfaction or loyalty. The researcher aims to research on service quality and the possible dark side to CRM which is definitely linked to customer satisfaction and loyalty, however, his aim for this project is not to measure customer satisfaction. Focus groups and direct observations were also appropriate ways to research which would be classified under qualitative methods.

4.9

Data collection

In case studies, data collection is treated as a design issue that shall enhance the construct and internal validity of the study as well as the external validity and reliability. Yin (1994) identified six primary sources of evidence for case study research which are documentation, archival records, interviews, direct observation, participant observation and physical artifacts. It is to be noted that not all sources are essentially required in every case study; however, the importance of multiple sources of data to the reliability of the study is well established. No single source has an absolute advantage over the others; rather, they might be complementary and could be used in tandem. Thus, a case study should use as many sources as are relevant to the study. Table 3 indicates the strengths and weaknesses of each type.

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SOURCE OF EVIDENCE Documentation

STRENGTHS

WEAKNESSES

stable : repeated review unobtrusive : exist prior to case study exact: names etc. broad coverage: extended time span

retrievability: difficult biased selectivity reporting bias : reflects author bias access : may be blocked

Archival Records

Same as above precise and quantitative

Same as above privacy might inhibit access

Interviews

targeted - focuses on case study topic insightful - provides perceived causal inferences

bias due to poor questions response bias incomplete recollection reflexivity - interviewee expresses what interviewer wants to hear

Direct Observation

reality - covers events in real time contextual - covers event context

time-consuming selectivity - might miss facts reflexivity - observer's presence might cause change cost - observers need time

Participant Observation

Same as above insightful into interpersonal behaviour

Same as above bias due to investigator's actions

Physical Artifacts

insightful into cultural features insightful into technical operations

selectivity availability

Table 3: Types of evidence, their strengths and weaknesses

Source: Yin (1994, p. 80) 40

In this project, data collection has been both primary and secondary. Initially, secondary data was collected through the medium of existing articles, journals and books on the available research relating to CRM in general, service quality, customer satisfaction and customer loyalty. The data was filtered and sorted and relevant portions pertaining to the hotel industry were focussed on by the researcher. The advantage of collecting secondary data was it was monetarily cheap and easily accessible. The secondary data collected was helpful in addressing the research questions in combination with the primary data collected. Primary data was collected by the researcher through in-depth interviews conducted and focus group discussions on what the customers really want and expect, what is the dark side to CRM and how can it be reduced.

4.9.1 Documentation
In a generalized way, documentation is any communicable material such as text, video, audio, etc, used to explain some attributes of an object, system or procedure (Wikipedia, 2006). Documents include letters, memoranda, agendas, study reports, or any items that could add to the data base. The validity of the documents should be carefully reviewed in order to avoid incorrect data being included in the data base (Yin, 1994).

The documentation for this research includes data in the form of articles and journals providing information on CRM, website information on the case i.e. Ritz-Carlton, journals and articles on the hotel industry, about the hotel and its service quality and customer satisfaction surveys conducted.

4.9.2 Focus Groups

Focus groups are a form of qualitative research whereby a group of people are questioned about their attitude towards a product, service, concept, advertisement, idea, or packaging. The questions are asked in an interactive group setting where participants are free to discuss their opinions, thoughts and views with other group members (Wikipedia, 2006). Focus groups are under-used in social research, although they have a long history

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in market research (Morgan 1988), and more recently in medical research (Powell & Single 1996). There are several definitions of a focus group in the literature, but features like organized discussion (Kitzinger 1994), collective activity (Powell et al 1996), social events (Goss & Leinbach 1996) and interaction (Kitzinger 1995) identify the contribution that focus groups make to social research. Focus groups can be used at some of the following instances. 1. Preliminary or exploratory stages of the study (Kreuger 1988); 2. During a study, to evaluate or develop a particular programme of activities (Race et al 1994); or after a programme has been completed, to assess its impact or to generate further avenues of research. 3. Either as a method in their own right or as a complement to other methods, especially for triangulation (Morgan 1988) and validity checking. In the present study, the researcher moderated focus groups to understand what do customers really want and expect from a luxury hotel, if there is a service failure of any sort due to expectations being under-met or the company not providing what they promised, what is the service recovery the customer expects, gain some interesting information and knowledge about their previous experiences with luxury hotels and also identify the possible dark side to CRM in context to Ritz-Carlton and luxury hotel industry at large. Focus groups help to explore or generate hypotheses (Powell & Single 1996). The researcher gained different perspectives about customer wants and expectations which helped him analyze the case deeply. The recommended strength per group is usually six to ten (MacIntosh 1993), however, some researchers used upto fifteen people (Goss & Leinbach 1996) or as few as four (Kitzinger 1995). Numbers of groups vary, some studies conducting only one meeting with each of several focus groups (Burgess 1996), others meeting the same group several times. Focus group sessions usually last from one to two hours. The researcher for his study met the two focus groups just once with an average strength per group of five. The average duration of focus groups was one and half hours, wherein the members were

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deeply engrossed in their discussion and the researcher gained useful information from the deep-rooted, passionate and heart-to-heart discussion. The main topics of discussion at the focus groups were as follows. What the customer wants and expects from a luxury hotel? What is the dark side to CRM in the luxury segment hotel industry? Is it only the gaps in service quality or there is more to the dark side? In case of service failure, what is the expected service recovery from the customers point of view? Does Ritz-Carlton live up to the customer expectations? If you were a customer of Ritz-Carlton, what would your expectations be? What recommendations would you give to possibly reduce the dark side of CRM for hotel industry at large?

4.9.3 Interviews
An interview is a conversation between two or more people i.e. the interviewer and the interviewee, where interviewees are questioned by the interviewer to obtain information. Interviews can be divided into two rough types, interviews of assessment and interviews for information. Interviews can also be divided into three forms- structured, semistructured and non structured (Wikipedia, 2006) The researcher chose to conduct semi structured interviews after weighing the advantages and disadvantages of the method (tabulated in Table 4). This method suited the research most appropriately and the researcher was able to collect data on the case through in-depth semi structured interviews consisting of few open ended questions which allowed a two-way communication between the interviewer and interviewee and the interviewee gave unbiased opinions which proved to be a useful pool of resources for the researcher to analyze the situation and provided him with deeper understanding of the subject and enabled accurate comprehension. The semi structured interview is a frequently used qualitative method. In its Piagetian version, the clinical-critical method, has been well described and discussed (Castorina et

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al. 1989; Honey 1987; Piaget 1926, 1947; Turiel 1983; Vinh-Bang 1966). The semi structured interview can be defined as a method of data collection which involves an interaction between an interviewer and interviewee for which the purpose is to obtain valid and reliable information (Neitzschman & Neitzschman, 2002). In brief, it is a conversation with a purpose (Kahn and Cannell, 1957). In-depth interview is an open-ended, discovery-oriented method that is well suited for describing both program processes and outcomes from the perspective of the target audience or key stakeholder. The goal of the interview is to deeply explore the respondents point of view, feelings and perspectives. In this sense, in-depth interviews yield information. Some of the key characteristics that differentiate an in-depth, qualitative research interview from a regular interview include: Open-ended Questions: Questions should be worded so that respondents cannot simply answer yes or no, but must expound on the topic. For example, the question should be what makes you as a customer feel that you are satisfied with your stay at the hotel? rather than asking do you as a customer, feel satisfied? Semi-structured Format: Although there should be some pre-planned questions to ask during the interview, the researcher must also allow questions to flow naturally, based on information provided by the respondent. The researcher should not insist upon asking specific questions in a specific order. In fact, the flow of the conversation dictates the questions asked and those omitted, as well as the order of the questions. Seek understanding and interpretation: The interviewer should try to interpret what he/she is hearing, as well as seek clarity and a deeper understanding from the respondent throughout the interview. Conversational: The interviewer should be conversational, even though his/her role is primarily of a listener. There should be smooth transitions from one topic to the next. Recording responses: The responses should be recorded, typically with audiotape and written notes (i.e. field notes).

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Record observations: The interviewer should observe and record non-verbal behaviors on the field notes as they occur. Record reflections: The interviewer should record his/her views and feelings immediately after the interview as well. In essence, in-depth interviews involve not only questioning, but the systematic recording and documenting of responses coupled with intense probing for deeper meaning and understanding of the responses. Thus, in-depth interviewing often requires repeated interview sessions with the target audience under study. Unlike focus group interviews, in-depth interviews occur with one individual at a time to provide a more involving experience.

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Advantages The semi structured interview is the most adequate tool to capture how a person perceives a particular domain. Its combination of faith in what the subject says with the scepticism about what she/he is saying, about the underlying meaning, induces the interviewer to continue questioning the subject in order to confirm the hypothesis about his/her beliefs (Honey 1987).

Disadvantages It is a time consuming method, requiring not only more time to collect the data but also to analyze them.

Some training is essential in order to avoid two different possible effects in the interview: a) the suggestion of answers or b) not asking enough due to a certain fear to bore the interviewee.

Allows deepening, discriminating, and clarifying customers conceptions on any general subject and on maltreatment in particular.

While the original script of the interview guarantees uniformity of topics across the whole sample, each interview is different due to the new questions elicited by the particular answers given by the interviewee.

The semi structured interview can incorporate different material: dilemmas, practical situations to be solved, stories, object manipulation, etc, as a basis to ask on a particular topic.

The use of semi structured interviews serves also to test other types of material.

Table 4: Advantages and Disadvantages of Semi structured interviews (Creswell, 1997; Denzin & Lincoln, 1998 and Silverman, 2000)

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The Process The foremost task to be accomplished by the researcher was to find interviewees. The researcher was successful in finding some interviewees from different countries and culture. The researcher interviewed travelers staying at luxury hotels and gained important knowledge about the research subject. The researcher also managed to interview some staff members of the luxury hotels to gain a diversified perspective to his research and add another dimension to his work. The in-depth interviews conducted brought out some unique customer responses which further helped in deeply analyzing the subject. The interviewees were requested to sign a consent form stating that they were willingly being interviewed (Appendix 1). The interview began with an attempt to minimize the hierarchical situation so that the subject feels comfortable talking with the interviewer. An interview script was used, consisting of a set of questions guiding the interaction. Nevertheless, as the aim was to capture as much as possible the subjects thinking about the topic, the interviewer followed in depth the process of posing new questions after the first answers was given. The interview lasted averagely for forty five minutes to one hour. The researcher bought the interviewees (travelers) a drink each and some snacks for volunteering to be interviewed. The outcome of the interview was a mixed bag of responses and views on the topic which allowed the researcher to analyze the research subject with a diversified perspective. The interviewers felt free to interact with the interview and gave some frank and honest views. The researcher was successful in encouraging most of the interviewees to engross themselves deeply into the conversation. There were some respondents who were not convinced enough to participate whole heartedly, however, some valuable information was collected through their half hearted participation as well. The details of interviews conducted are tabulated in Table 5. The main questions asked to interviewees (customers) that helped in addressing the research questions are as follows. What would you as a customer expect from your stay at Ritz-Carlton? To what extent Does Ritz-Carlton meet your expectations?

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Is there a dark side to CRM at the Ritz-Carlton? Does Ritz-Carlton have any gaps in service quality? Are there any other negative aspects of the service delivered at Ritz-Carlton? In case of service delivery not meeting your expectations, what is the service recovery you desire? What recommendations would you give to possibly reduce the dark side of CRM at Ritz-Carlton and for hotel industry at large? Anything else, you would like to share about Ritz-Carlton?

The main questions asked to the employees of Ritz-Carlton when interviewed were as follows. Why do you work at Ritz-Carlton? Are u happy working with this hotel? Do gaps in service quality exist at Ritz-Carlton? How are they dealt with? Is there anything you would like to mention as a negative aspect at RitzCarlton? Do customers appreciate the efforts made by the hotel to ensure superior service quality? Anything else that you would like to share?

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Location

Travelers interviewed

Staff interviewed

Ritz-Carlton, Dubai Burj Al Arab, Dubai Ritz, London

4 2 3

1 Nil 1 Nil

Various Hilton properties in 5 London Ritz, Paris Le Meridean, Paris 2 1

Nil Nil 1

Hotel Arts, Barcelona (Ritz- 4 Carlton property) Hilton, Barcelona 2

Nil

Table 5: Details of interviews conducted across four popular holiday destinations The analysis section shall provide deep insight into the findings through the methodology adopted by the researcher. The limitations of the methodology and the difficulties faced by the researcher shall be discussed towards the end of this paper.

4.10 Data Analysis

Data analysis consists of examining, categorizing, tabulating, or otherwise recombining the evidence to address the initial propositions of a study (Yin, 1994). The researcher relied on experience and the literature to present the analysis using various interpretations. The methodology adopted i.e. direct observations, documentation, focus groups and in-depth interviews helped the researcher to achieve the research objectives and propositions and helped structure the analysis and provide some dark side to CRM in the luxury hotel segment. The research conducted also put the researcher in a position to voice recommendations to the managers of the luxury hotels discussed in later portions of the paper. The data was analyzed in depth to interpret the customers perspective regarding the service quality and their responses to the dark side.

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4.11 Key issues of Data collection: Reliability, Validity and Limitations

In the general sense, reliability is the consistency or repeatability of the research measures (social research methods, 2006). Reliability and validity, in research, refer specifically to the measurement of data as they will be used to answer the research question. In most cases, the instrument that measures your variables is the central issue in determining the reliability and validity of the data; however the data analysis process often is also an issue if the data unstructured. Whatever data collection method is used, the intent must be accuracy. The reliability of data collection refers to its consistency, stability, and repeatability-all of which determine how much you can rely on the results (Nettom, 2006). The potential for over-reliance on document as evidence in case studies has been criticized. There could be a danger of this occurrence if the researcher is inexperienced and mistakes some types of documents for unmitigated truth (Yin, 1994). The reliability of direct observation is a main concern. Using multiple observers is one way to guard against this problem. The researcher ensured that he was unbiased in all direct observations, interview interpretations and focus group outcome analysis, providing information as he collected without any personal changes or biased analysis. The researcher provides assurance that the data collection and analysis was done in a manner that would be reliable and valid for future references. Qualitative research has been criticized on grounds of reliability and validity; however, it was the most appropriate approach for the research and was carried out religiously and sincerely. This study was subject to certain limitations that shall be discussed in this section. Some of the major limitations are as follows.

The researcher did not have sufficient time to conduct a further detailed research on the dark side of CRM in the hotel industry. The method used for primary data collection was focus groups and in-depth interviews and due to time constraints, only two focus groups and a few interviews could be conducted.

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There was not sufficient time and word availability to have multiple case studies for the research. In addition, conducting a further detailed study requires highly expensive data collection and thus, this was beyond the authors financial reach.

Since qualitative research is characterized by subjectivity, interviewees and focus group members might have been biased in their responses. However, the author was sensitive to this issue and adopted all the possible measures to counteract this aspect. The following section leads the reader into the case study and analysis which shall provide the reader with valuable knowledge on the customers perception of service quality and what they view as the dark side to CRM.

4.12

Synopsis

This section covered the literature on research methods and design and explained the approach adopted by the researcher for data collection. Primary and secondary data was collected over a period of two months and the findings have been analyzed and interpreted in the following section. The reliability and validity issue was kept in mind. The following section leads the reader into the case study and analysis which shall provide the reader with valuable knowledge on the customers perception of service quality and what they view as the dark side to CRM and how the dark side can be reduced. The limitations of the data collection have been mentioned briefly.

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Chapter 5: Case study

Now, the researcher shall introduce the service provider Ritz-Carlton Hotel Company, L.L.C. and provide a brief background of the hotel chain before discussing the service quality at Ritz-Carlton and highlighting some dark sides which have been discovered mainly through customer reactions during interviews, focus group discussions and direct observations.

5.1

Ritz-Carlton: An Overview

Background: The story of luxury hotel chain Ritz-Carlton begins with Csar Ritz (picture given below), well known in the hotel industry as the king of hoteliers and hotelier to kings and who believed that the customer is king, similar to the Indian belief Atithi devo bhavah(Appendix 2). His name was associated with the most renowned hotels of his day, including the Grand Hotel in Monte Carlo, the Savoy in London, and then as manager of The Ritz in Paris, starting in 1898, and The Carlton in London, opened in 1906. Paris and London hotel names combined ultimately for the Ritz-Carlton combination we know. Cesar Ritz established the benchmark for luxury hotels in Europe, forming for the the Ritz-

framework

Carlton service philosophy, with comments like: Never say no when a client asks for something, even if it is for the moon. You can always try. As for the instantly recognizable logo (picture given alongside), Cesar Ritz selected the crown, symbolic of the British royal seal, and the lion, signifying a financial backer. Despite his death in 1918, his wife Marie continued the tradition of opening hotels in his name.

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The original Ritz-Carlton hotel was built in Boston, Massachusetts and opened on May 19, 1927. The Ritz-Carlton Boston exemplified the vision of Cesar Ritz, reflecting the royal atmosphere and treatment, room rates soared to the then sizable sum of $15 per night. Soon other Ritz-Carlton hotels followed in major cities like New York, Philadelphia, and Pittsburgh. However, only the Boston hotel survived the Great Depression. An interesting historical note states that Edward Wyner, the Boston hotels founder, knew the Ritz-

Carlton must maintain an aura of success, despite the gloom of the Great

Depression. His answer was elementary. He kept the

lights on in vacant rooms, to suggest one hundred percent occupancy.

The Ritz-Carlton, Boston was an innovator and

revolutionized hospitality in America by creating in a luxury setting, a private bath in guest room , lighter fabrics in the guest room to allow for more thorough washing, white tie and apron uniforms for the wait staff, black tie for the Maitre d' and morning suits for all other staff, conducive to a formal, professional appearance , extensive fresh flowers throughout the public areas, A l carte dining, providing choices for diners, gourmet cuisine, utilizing the genius and cooking methods of Auguste Escoffier(the culinary genius)and intimate, smaller lobbies for a greater personalized guest experience

The takeover: A corporate milestone occurred in 1983, with the sale of the Boston RitzCarlton and the establishment of The Ritz-Carlton Hotel Company, L.L.C. Over the next ten years, the company expanded rapidly, adding thirty hotels. In 1995, Marriott

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International purchased a 49% stake in The Ritz-Carlton Hotel Company and in 1998 purchased an additional 50% stake in the company giving it 99% ownership of the company. The Ritz-Carlton Hotel Company partnered with Bulgari in 2001 to operate a chain of hotels owned by and operated under the Bulgari brand. . Today fifty nine hotels located in major cities across 20 countries worldwide, scattered from San Francisco to Seoul, Korea, from Boston to Bali, display the Ritz-Carlton logo (Appendix 3).

(Ritz-Carlton, 2006; Wikipedia, 2006 and Lampton, 2003)

Ritz-Carlton and Quality Awards: Since its incorporation in 1983, The Ritz-Carlton Hotel Company, L.L.C received all the major awards the hospitality industry can bestow. The Ritz-Carlton Hotel Company is the first and only hotel company honored with the Malcolm Baldrige National Quality Award from the United States Department of Commerce. The Ritz-Carlton is also the only service company to receive this prestigious award two times, in 1992 and 1999 and has won various other awards as well. (Appendix 4)

5.2

Ritz-Carlton and the Gold Standards of Service Quality

The foundation of the Ritz-Carlton is a set of gold standards by which they operate and it encompasses its values and philosophy and includes the Credo, Motto, Three Steps of Service, Service Values and Employee Promise.

5.2.1

The Credo

The highest mission as stated by Ritz-Carlton is genuine care and comfort of our guests. They pledge to provide the finest personal service and facilities to their guests who would enjoy a warm, relaxed, yet refined ambience. The Ritz-Carlton experience enlivens the senses, instills well-being, and fulfills even the unexpressed wishes and needs of the guests.

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5.2.2

Motto

The Motto of the company is that at Ritz-Carlton Hotel Company, L.L.C, We are ladies and gentlemen serving ladies and gentlemen, which exemplifies the anticipatory service provided by all staff members of the hotel.

5.2.3

Three Steps of Service

The three steps of service that are instructed to all staff members are as follows. 1. A warm and sincere greeting. Use the guests name. 2. Anticipation and fulfillment of each guests needs. 3. Fond farewell. Give a warm good-bye and use the guests name.

5.2.4 Service Values

The service values are such that the staff members feel proud to be providing service rather than simply employed at Ritz-Carlton because of the following reasons. 1. They build strong relationships and create Ritz-Carlton guests for life. 2. They are always responsive to the expressed and unexpressed wishes and needs of their guests. 3. They are empowered to create unique, memorable and personal experiences for their guests. 4. They understand their rule in achieving the Key Success Factors and creating The Ritz-Carlton Mystique. 5. They continuously seek opportunities to innovate and improve The Ritz-Carlton experience.
6. They own and immediately resolve guest problems. 7. They create a work environment of teamwork and lateral service so that the needs

of the guests and the staff members are met. 8. They have the opportunity to continuously learn and grow.

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9. They are involved in the planning of the work that affects them. 10. They are proud of their professional appearance, language and behaviour. 11. They protect the privacy and security of their guests, fellow employees and the companys confidential information and assets. 12. They are responsible for uncompromising levels of cleanliness and creating a safe and accident-free environment.

5.2.5 Employee Promise

The Ladies and Gentlemen (staff members) serving Ladies and Gentlemen (guests) are the most important resources in the service commitment of the company. Applying the principles of trust, honesty, respect, integrity and commitment, the company nurtures and maximizes talent to the benefit of each individual and the company. The Ritz-Carlton fosters a work environment where diversity is valued, quality of life is enhanced, individual aspirations are fulfilled, and The Ritz-Carlton Mystique is strengthened. Figure 5 is a simple illustration of how the employees functionality and emotional engagement help in creating the Ritz-Carlton Mystique. Figure 5: The Ritz-Carlton Mystique

Mystique

Emotional Engagement

Functional 56

5.3

Ritz-Carlton: Current Reality

This section tabulates (Table 6) some current facts about the company which includesheadquarters, executive officers, number of hotels and employees, sales office, marketing partners and brand extensions.

Headquarters

Located at 4445 Willard Avenue, Suite 800, Chevy Chase, Md. 20815, United States. Chief Operating Officer and President: Simon F. Cooper; Chief Financial Officer and Executive Vice President, Operations: Ken Rehmann; President, International: Herve Humler 59 hotels worldwide in 20 countries (37 city hotels and 22 resorts)

Executive Officers

Number of Current Hotels Number of employees Sales office

28,000 11 International Sales Offices: Atlanta, Chicago, Los Angeles, New York, Washington D.C., Frankfurt, London, Tokyo, Hong Kong, Singapore and Dubai Ritz London and Hotel Ritz Madrid

Marketing Partner Hotels Brand extensions

Spas: Plans for spas continue at new or existing hotel locations expanding the companys leadership position in the hotel industry. Golf: World class golf offered at 15 Ritz-Carlton locations and the golf courses have been designed by the most respected names in golf including Greg Norman and Tom Fazio, and have hosted many PGA1 and Senior PGA events. The Ritz-Carlton Club: There are luxury residential condominiums located at 9 Ritz-Carlton hotels and resorts. Features include marble foyers, walk-in closets, custom kitchen cabinetry and the services of The Ritz-Carlton, including twice daily maid service, valet, 24-hour room service, access to extensive fitness and facilities.

The Professional Golfers Association

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Leadership centres

The Ritz-Carlton Leadership Centre, launched in 2000, has welcomed thousands of senior executives, managers and line staff from a various industries. The Leadership Centre has flourished as a resource centre for leading organizations interested in benchmarking many business practices that led to The Ritz-Carlton receiving the Malcolm Baldridge National Quality Award twice.

Table 6: Current reality of Ritz-Carlton Hotel Company, L.L.C

At this point, the reader would have a basic knowledge about the Ritz-Carlton Hotel Company, L.L.C. The following sections would provide the reader with details about the research findings leading into the analysis.

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Chapter 6: Research Findings

This section provides the reader with the key findings related to the research conducted through qualitative approach of in-depth interviews and focus groups

6.1

Focus groups findings

This section shall provide the reader with the key findings and outcome summarized from the two focus groups conducted. The findings are presented relating to each of the research questions.

6.1.1 Does the gap model explain the dark side of CRM?
The gap model attempts to explain the gaps in the service quality provided by a service company. A customer expects a certain level of service quality from the luxury hotel, which may not be duly met. This would be regarded as a gap in service quality. The researcher tried to highlight the dark side of CRM considering the gaps in service quality as one of the main dark sides to CRM. The members of the focus groups pointed out that there are loopholes in every system which can also be called as gaps in the system. For the luxury segment hotels, the main constituent of the dark side to CRM is the gaps in service quality. The focus group members felt that it was essential for the hotel to enquire about customer needs. The group members felt that the hotel should know what they want and must make all efforts to know what they expect. The customers expect a certain type of service quality from the luxury hotels for which they are willing to pay a certain price. If the customers are not satisfied with the level of service quality provided then they would undoubtedly demand an explanation from the hotel. As one of the members of the focus group said,
If I pay 200 quid for a night at a luxury hotel, I expect high class service. If I fail to receive the desired level of service Id rather pay 75 quid at a lower considered hotel and receive the same kind of service as I received from the so called classy 200 quid a night hotel.

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This statement well expresses the fact that when a customer pays a certain price for a room, he desires a certain level of service experience. The failure in receiving the desired level of service is a constituent of the dark side to CRM. Sometimes, there exists a communication gap between the hotel and its customers which may lead to a service gap. The members are of the view that luxury hotels promise a certain level of service quality through various channels including advertisements, publicity, marketing, etc. Such a promise is made by the hotel in order to gain business and ultimately profits. This indicates that customers mean business for the hotels. Service gaps indicate a gap in profits to a considerable extent. The gap in service quality may arise due to a gap in management perception, quality perception, service delivery and/or marketing communication gap. The combination of these four gaps can ultimately leads to the perceived service quality gap. The members of the focus group were of the opinion that gaps may exist due to the hotels strategy to promise more than they can actually deliver in order to simply gain business. Such a strategy may adversely effect the reputation and business of the hotel. The focus group members felt that the hotel must promise only what they can deliver. One member was of the view that, If you cant deliver dont offer. Gaps in service quality do exist but if the gaps are negligible the customers may overlook it and consider the larger image. One member said that, We as humans are bound to make mistakes. But the size of the mistake really matters. If the mistake is once, it may be forgiven. Repeated mistakes are simply misbehaviour. Another member made a point that If the hotel promises say a luxury swimming pool for leisure, it cannot provide simply a bath tub sized pool for its guests. The group members agreed that sometimes the gap could be due to over-expectation from the hotel and they might misinterpret the situation calling it a case of service failure or gap. Some of the customers may possess a high expectation from the hotel in terms of service, which may not be met duly but if the hotel has provided a standardized luxury service, it cannot be blamed for causing a service failure which resulted in a service gap. Thus, service gaps may occur due to hotels inability to meet the desired service quality to its customers broadly due to two reasons: 1) The hotels failure to live upto the promise it made to its customers. 2) The hotels inability to live up to the expectations of the customers.

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To summarize, the hotel cannot afford to have service gaps in the long run for any reason whatsoever because then it will simply run out of business.

6.1.2 Is there more to the dark side of CRM than what is explained in the gap model?
The focus groups conducted helped the researcher confirm that the gaps model well explain the dark side to CRM. However, there is more to the dark side of CRM than simply service gaps. The two other main constituents of the dark side are privacy issues and changing tastes and personal preferences of customers.

From the discussions of members in the focus group, the researcher was able to realise two other components to the dark side of CRM which are mentioned above. The members of the focus group were of the opinion that customers do not like intrusion into their privacy at any cost, especially when they are paying for comfort. The luxury hotels record all possible data bout the customers in order to know them well. This according to some members could be a case of intrusion into a customers privacy and personal space. The customers stay at the hotel for a few days to attain comfort and relaxation not irritation. As one member commented, I would not pay a bomb to get irritated by the hotel who notes each and every interaction they have with me. This shows that all customers may not prefer to allow the hotel to know them in-depth by recording interactions.

The hotel may attempt to build a good relationship with its customers through data storing but this may prove adverse for the hotel as some individuals simply do not want to build a relationship with the hotel. Another significant dark side to CRM is that the taste and preferences of the customer may change over time. For this reason, it may prove useless for the hotel to keep data about preferences of the customers in order to know their customers. As one of the members said I want a comfortable stay at the hotel, not a relationship with them. Another member commented that I dont want the hotel to

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know a lot about me as a person, in terms of habits and personal likes and dislikes. I like to enjoy my personal space and privacy.

To summarize, the researcher realises that service gaps, privacy issues, customer preferences and the customers unwillingness to build a relationship with the hotel put together can be called the dark side to CRM. The hotels must know what their customers want and not simply do what the hotel wants to do to keep the customers happy.

6.1.3 How can the dark side of CRM be reduced? Research shows that there exists a dark side to CRM. The dark side exists mainly due to gaps in service, customers unwillingness to build relationships with the hotel, the customers preferences changing over time and privacy issues. In general, when there is a problem there needs to be a solution. If the problem is not solved, it grows in size and ultimately causes complete failure of the organization.

In the hotel industry, the dark side to CRM needs to be addressed. The focus group members were of the opinion that service gaps can be reduced by providing efficient service quality of a standard which shall be accepted by a wide range of customers. The hotel must well understand the needs of individual customers and cater to them accordingly. They must not assume about the customers which leads to a gap in service quality. To reduce the gap, the hotel must enquire instead of assuming. The privacy issues must be taken care of in order to reduce the dark side. As one member said, I dont want the hotel to peep into my pants and say that Sir, we are simply trying to know what is in your pants. This statement well explains that customers dislike their privacy being invaded into and hampered as it completely disturbs and annoys some customers.

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The hotel must seek permission of the customer before keeping track of his preferences. The preferences of the customer may change over time and it is the hotels duty to keep itself updated. As one member said,
If the hotel does record my likes and preferences during my stay, it is their responsibility to keep updating my likes and preferences over time. It is not necessary that if I like a particular wine during my stay at one time, I will also want the same wine during my next stay. They should update my preferences by asking me instead of presenting me with the wine I liked previously when I check into my room the next time.

The hotels in the greed to get regular business choose to build a long lasting relationship with their customers and try to know them in order to please them. However, they should respect some customers decision to not build a relationship. If the hotel discovers that the customer does not want to build a relationship it should not make an effort to attempt building one. As one member said if I dont want to provide personal information about myself to the hotel, they must respect my point of view instead of noting interactions between the hotel and me at all possible instances.

To summarize, the hotel must make the effort to reduce the darker side of CRM by providing the customers with what they have promised to them, what the customers want and expect, update knowledge about their customers, respect the customers point of view, not intrude into the customers personal privacy and not attempt building a relationship when the customer chooses to not build one. Following this section, are the key findings of the interviews conducted by the researcher.

6.2

In-depth interview findings

The researcher interviewed customers as well as some employees at the hotel to highlight the dark side of CRM in the luxury segment hotel industry. The key findings of the interview are presented below relating to the research question.

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6.2.1 Customer Interviews 6.2.1.1 Does the gap model explain the dark side of CRM?

The researcher interviewed travellers in Barcelona, Dubai, London and Paris to discover the dark side of CRM in the luxury segment hotel industry. After interviewing a number of travellers, the researcher noted that a considerable chunk of the dark side is the gaps in service quality i.e. gaps between expected and experienced service quality. The interviewees pointed out that a traveller has a certain image in mind of the luxury hotel they have booked along with a set of expectations which differ from individual to individual. When a traveller pays a considerable amount of money they expect a certain level of service in return. One interviewee said If I pay 250 quid a night for a luxury hotel, I want much more than a bed, breakfast and toilet. The customers are willing to sacrifice an amount in return for luxury as they perceive it themselves. One interviewee claimed that When I pay for a stay at a luxury hotel, I want luxury as defined by me and not by any other person.

Often luxury hotels promise or guarantee a certain level of comfort which they measure and define according to the decisions of the management of the hotel and not necessarily customers. This aspect may lead to a gap in service quality where the customer expects much more from the term luxury than is actually provided by the hotel. One traveller told that he recently booked a luxury hotel and was promised high class service. When he actually stayed there, he was disgusted to such an extent that he decided to vacate the hotel immediately. The management of the hotel did not cooperate much and the traveller lost his time, money and a looked forward to holiday. This service gap was not even tried to be closed by the management who promised high class service. The traveller disappointed from his experience, commented that it is an old saying that promises are made to be broken. The dark side of CRM is the variation in the promised service quality and the actual delivered quality of service. Some travellers when deeply involved in the interview mentioned that there is a dark side to everything and what is more important is to see the larger picture. The dark side in the hotel industry is the inability

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to live up to expectations to each and every guest at the hotel. Miscommunications do occur in the hotel industry between the management and guest or the guest and members of staff. This communication gap can often lead to situations where the relationship with the guest is spoilt forever. As one interviewee shared, I dont care how they manage to deliver the service I expect them to. I am paying for them to be alert about what I want and aware of my expectations and fulfil the same.

Thus, the researcher after interviewing the travellers observed that the gap model surely does explain the dark side of CRM to quite an extent but not completely. The interviewees mentioned other aspects which are also a part of the dark side and cannot be neglected by the hotel industry.

6.2.1.2 Is there more to the dark side of CRM than what is explained in the gap model?

The gap model discusses that there exists gaps between experienced and expected service quality which has been considered as one of the main reasons for the dark side prevailing in the hotel industry. However, there are some other important issues to be dealt with by the hotels in order to reduce the dark side. Most of the interviewees spoke about privacy issues which should be an area of concern for luxury hotels. In general, most of the luxury hotels note down customer preferences, likes, dislikes, etc to understand their customers better. What they fail to understand is that some customers may simply dislike the hotels to note each and every interaction between the guest and the hotel. One of the interviewee said that I dislike the hotel trying to get to familiar with my personal preferences. I do not like intrusion into my personal space and privacy. One of the interviewees said that she does not mind the hotel keeping a record of her details like name, address, contact details, birthday and anniversary. However, she would not want the hotel to note if she has accessed a pay channel to watch pornographic movies on the television during her stay at the hotel. This would be strongly offensive to her and she would probably never go back to that hotel. Some customers do not like the hotel to know too much about them. One of the interviewee said that a particular hotel noted his

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preference for Davidoff cigars during a previous stay. On his next stay the hotel presented a box of Davidoff cigars to the guest before he checked into his room. The interviewee surely appreciated the hotels efforts to try to know what his preferences are. At the same time, he informed the hotel that he had quit smoking. This highlights that the hotel does not keep its records updated about the customers all the time. Tastes and preferences of customers may change over time and interviewees felt that often the information the hotels have about their customers is not up-to-date. One of the interviewee expressed that there is a certain distance that needs to be maintained by the hotel towards its customers in terms of trying to know them. He said that I would not want a hotel to know what type and brand of condom I use. Some hotels are capable of noting the brand and type of used condom found in the dustbin in order to know more about their customers. The hotels must not intrude into my privacy at any cost.

The researcher found through interviewees that customers get annoyed if the hotel tries to know them more than they want the hotel to know them. Intrusion into privacy is not tolerated by customers. Customers appreciate the hotels efforts to know their tastes and preferences if they want the hotel to know about it i.e. it does not offend them and also if the notes about the customers are up-to-date. Some customers may not want to have a relationship with the hotels and would be highly agitated if the hotel does not respect their decision.

6.2.1.3 How can the dark side of CRM be reduced?

The interviews confirmed that there surely is a dark side to CRM in the hotel industry. The interviewees highlighted the main components that make up the dark side to be gaps in service quality, privacy issues, unwillingness of customers to build relationships with hotels and their changing tastes and preferences which are not kept updated by the hotel. The interviewees suggested some ways which could possibly reduce the dark side. One of the interviewees said that if there is a gap in service, the hotel must make sure that it closes such gaps. Many of the interviewees were of the opinion that the hotels can provide what they promise and guarantee in order to reduce gaps in service quality. Some

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interviewees felt that the hotel must comprehend what the customers expect from their stay and by providing whatever the customers need, the hotels can possibly reduce the dark side. The interviewees strongly recommend that hotels must respect the privacy of the guests and not note information about the guest which is somewhat personal. They should respect the fact that some customers stay at the hotel for a holiday only and not to build a long lasting relationship with the hotel. The hotel should not try to know more about the customer in hope for future business if the customer does not want so. One interviewee recommended that, the hotels must do what the customers want and not what they want. If the hotel tries to intrude into the privacy of the customer, they shall probably lose the customer forever. The interviewees suggest that service recovery is essential to reduce the dark side when there are gaps or service failures. Some interviewees were of the opinion that if there is a gap in service or any privacy issue or whatsoever; the customer may choose to complain to the management about it. Such a situation is a golden opportunity for the hotel to reduce the dark side immediately by appropriate complaint handling and ensuring that the customers are pleased.

The researcher learnt that the possible ways to reduce the dark side are not too complicated to practice. However, the existence of dark side could be complicated for the hotel industry. The next portion of this chapter shall be a summarized description of the findings through interviews conducted with some members of staff at the luxury hotel properties. 6.2.2 Employee Interviews

The interviews conducted with the members of staff were essential in order to know about the dark side of CRM from the service providers point of view. The employees were of the opinion that the main dark side to CRM is that there many a times exist gaps between service expected by the customer and service experienced. The members of staff honestly admitted that sometimes it is not practically possible to please each and every customer.

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The employees shared some experiences with the researcher relating to the dark side of CRM. One employee said that, Once I was serving breakfast to this gentleman at his room. I knocked on his door and awaited permission to entry. The guest did not respond and I knocked again in a minute or two. I heard an angry voice asking me why I havent come in after knocking once. I apologized as soon as I entered the room and received no response again. I served the food at the round table in one corner of the room. The guest in an agitated manner asked me to serve on the bed instead. I apologized again and served on the bed requesting permission to leave him to enjoy his breakfast. This incident shows that sometimes customers expect certain behaviour from the hotel staff which may be surprising to the staff. The staff must do as the customer wants to please him, even if it is not what the staff is trained to do by the management.

One employee informed that supposing a customer enquires about the toilet, the employees are not supposed to point out where it is and give them directions. Indeed, they are expected to escort the guest till the door of the toilet. Some customers do not like this and want the directions verbally. The employees told that they are not supposed to let the guest carry the luggage under any circumstances. However, there are some guests who prefer to carry a part of their luggage like a briefcase or laptop bag on their own. They do not wish the luggage to be touched by any member of staff. An employee said that sometimes petty incidents may irritate the guest even if it is done by the hotel for the guests well being and comfort. Such situations have to be dealt with carefully and tactfully in order to please the customer.

Sometimes, the staff makes an attempt to be friendly with the guests and the guests misinterpret it to be intrusion into personal space. One employee said that while serving one lady guest at the hotel he tried to be friendly with her in order to make her feel comfortable and warm at the hotel. However she misinterpreted it to be flirting. The employee said that she actually complained to the manager saying that he was trying to flirt with me because Im hot and sexy. The employee said that if he had not been warm and friendly she would probably complain that he was extremely rude and inhospitable. The researcher learnt that often members of staff have to serve the

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customers to please them out of mere duty rather than willingness. One of the employees confessed that, Many times I have had to serve the customers in a particular matter merely out of compulsion. One of the dark sides to CRM is also the fact that employees may not be serving whole-heartedly.

The following chapter shall be an analysis section where the research questions shall be addressed blending all the information gathered by the researcher through various channels. The reader shall also find some interesting quotes by interviewees and focus group members which have not been mentioned earlier in the research findings section. The analysis shall lead to the conclusion of the paper.

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Chapter 7: Analysis of Research Findings

This section shall provide the reader with analyses of the research findings. The research questions have been addressed to a large extent through the help of the research conducted.

7.1

Does the gap model explain the dark side of CRM?

Parasuraman et al (1988) came up with the gap model which explained the five gaps i.e. The Management Perception Gap, The Quality Specification Gap, The Service Delivery Gap, The Marketing Communication Gap, and The Perceived Service Quality Gap that exist in service quality of a service provider. These five gaps have been described in the literature review section. The model has been applied to Ritz-Carlton to investigate if there is a dark side to CRM in the case of Ritz-Carlton, and to what extent does this model explain the dark side. The following portion of this chapter shall provide analysis based on the individual gaps mentioned in the gap model.

7.1.1 Ritz-Carlton and the Gap model

1. The Management Perception Gap

This gap occurs when the management perceives the quality expectations inaccurately due to various reasons as mentioned earlier in the literature review section. In the case of Ritz-Carlton, primary research conducted proves that management perception gap does occur to some extent. The motto of the hotel is, We are ladies and gentlemen serving ladies and gentlemen. This motto definitely sounds promising and dignified but there is a gap that exists here. The hotel may undoubtedly recruit fine quality staff and train them appropriately to deliver high quality service. However, some customers may simply not want such treatment while they are on holiday. For example, one customer interviewed at The Ritz, London said, I am expected to wear a jacket and tie in some areas of the hotel like the dining room. I am here on holiday and I would be most comfortable in a pair of

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casuals strolling around the hotel. I dont want to pay 400 pounds a night to not be able to wear what I want on holiday.

The management of Ritz-Carlton surely tries its level best to deliver service of high quality, but they must understand that some customers do not want to be so elegantly dealt with all the time. Some customers expect a casual atmosphere while they are on holiday and a very classy and formal set up could make them feel uneasy and uncomfortable. One customer interviewed at the Hotel Arts, Barcelona expressed that,

The hotel is classy and elegant. The service is remarkable. However, I wish the hotel atmosphere was slightly casual and relaxed. Sometimes, an elegant set up may bring you discomfort mentally. Barcelona is a relaxed city and I feel conscious moving around the hotel in a relaxed manner because it is a bit too glamorous for a destination like Barcelona.

Some of the focus group members felt that it was most important for a luxury hotel to be customer oriented in practice. The management must make all the efforts to know accurately what the customers expect.

These examples highlight the fact that there surely is a management perception gap that exists and the management must try to close this gap. Management must know what the customers at their hotels want and not try to provide an extra classy ambience if it is not desired by all the customers.

2. The Quality Specification Gap

This gap signifies that service quality specifications are not consistent with management perceptions of quality expectations earlier explained in the literature review chapter. In the case of Ritz-Carlton, the management is surely a team of expert professionals. However, a minute quality specification gap does exist. Primary research shows that some employees when interviewed confess that many-a-times they have to behave in a manner they do not wish to behave in. The members of staff have to be prim and proper

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all the time and respond to customers in a certain manner even if the customer is outright rude towards them. This surely hampers the inner motivation of employees and they perform just because they are supposed to and expected to behave and serve in a particular manner and not because they wish to. The expectations of service differ among individual customers and the hotel must be aware of what is the expected service. One of the focus group members said, Service quality is what the customer defines it to be or wants it to be. It is not what the management perceives it to be. It should be purely based on the perception of the customers. This gap was found to be minute in the case of Ritz-Carlton from whatever primary research that was conducted. However, this gap must be filled in order to ensure service quality as desired by the customers.

3. The Service Delivery Gap This gap means that quality specifications are not met by performance in the service production and delivery process due to reasons that can be divided into three categories as discussed earlier: management supervision, employee perception of specifications and rules/customer needs and wishes, and a lack of technological/operational support. In the case of Ritz-Carlton, such gap does not really exist at a considerable scale as seen from primary research. The customers interviewed across the four properties mentioned nothing about mismanagement or supervision. In fact, they appreciate the overall management. The point they mentioned was that sometimes the employee perception of customer needs and wants may differ from what the customers actually want. The employees are trained to deliver service of high quality but may lack capability to have complete knowledge of what the customers want. The customers pass down requests like hypoallergenic pillows, particular wines, chocolates, etc which is met by the hotel staff. However, the customers will not request the hotel about each and every expectation they have in mind. The hotel staff must be strongly observant to know what the customers really want in terms of service. All employees may not be efficient enough to observe accurately and this leads to a gap.

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The Ritz-Carlton believes in the three steps of service which is: A warm and sincere greeting. Use the guests name. Anticipation and fulfillment of each guests needs. Fond farewell. Give a warm good-bye and use the guests name.

Some of the interviewed customers said that they were surely greeted personally by members of staff during their stay. However, at times they felt that, the greeting was not warm enough. It seemed that they greeted us simply because they were supposed to and not out of willingness. Another interesting point one customer mentioned was that, I dont like to be addressed by my name in a hotel. I prefer to be called Sir, not Mr. So and So. The service values that Ritz-Carlton claims that all its employees believe in does not exist in practice unanimously. This was discovered through the employee interviews conducted.

The Ritz-Carlton is well equipped with technological/ operational support. As informed by the employees during interviews, the observations made by members of staff are fed into the system to be used for future reference by any member of staff in any RitzCarlton property worldwide. Once a note is made it exists in the system easily accessible to all employees as and when required. The special requests and preferences of customers are noted in the system and saved for future. The customers confirmed the fact that their special requests were met throughout Ritz-Carlton properties worldwide. One customer told that he was staying at Ritz-Carlton in Singapore where he had requested a particular wine during his stay. After a few months he stayed at Ritz-Carlton in Puerto Rico, where he found the same wine presented to him at his room upon check-in. However, there is one gap identified, which is the fact that the entries made to the system are manual i.e. made by employees which suggests that there is always a possibility of errors that the employees may commit due to faulty observational notes or simply manual mistakes. One focus group member commented, A human being is prone to committing mistakes, but he must learn from his mistakes and not repeat them. Repeated mistakes are

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misbehavior. I can forgive a mistake but not misbehavior. Another issue is that updating information about the customers is essential to know them as of date. Most customers said that the information the hotel possessed about them such as preferences, special requests, etc was up-to-date unlike many other hotels.

Ritz-Carlton must ensure that the service delivery gap which hardly exists is closed to further improve its already renowned reputation for high class service quality.

4. The Marketing Communication Gap

This gap occurs when promises given by market communication activities are not consistent with the service delivered, discussed earlier in literature review section. From the primary research conducted, there was no mention of any market communication gap as such. Ritz-Carlton seems to be delivering overall service that it promises through various channels of communication to the population. As one of the employees said, Ritz-Carlton stands in such a position globally that it cannot afford to spoil its reputation by faulty marketing communication strategies.

5. The Perceived Service Quality Gap

As mentioned earlier in the literature review chapter, such gap occurs as a net result of the four gaps mentioned above. This gap signifies that the perceived or experienced service is not consistent with the expected service. Interestingly, this gap could be positive or negative. A positive gap suggests that the service delivered over-met the expectations of the customers, while negative gap obviously suggests expectations being under-met. In the case of Ritz-Carlton, such gap exists as a result of the four gaps mentioned above, but not at a large scale. As a matter of fact, most customers rated the overall service quality experienced to be satisfactory. One of the focus group members, an actual customer of Ritz-Carlton said that he was over-satisfied with the overall service delivered. None of the customers interviewed at the four properties expressed dissatisfaction from the overall service they experienced. One customer at The Ritz, Paris

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commented that, I would rate the overall service delivered 11 on 10. This remark clearly shows that customers are delighted staying at the Ritz-Carlton. The average rating of experienced service quality was eight and a half on ten which implies that although there are some gaps in service quality, the overall service experienced and delivered is appreciable by customers. However, it is not absolutely perfect. Customers have mentioned a few points about the hotel which could be considered as the dark side even though they felt that the overall service is extra-ordinary.

7.1.2

General Inference for the luxury hotel sector

This model does explain the dark side of CRM to a large extent but not completely. The focus group members as well as the interviewees mentioned gaps in service quality as a major dark side to CRM in hotel industry. Issues of service quality are top priority for many customers. The customers are unwilling to accept service that does not meet their expectations by far. Hotel industry certainly suffers from service quality problems with the exception of some renowned hotel chains where service quality problems are in minute number. One such classic case of high class service is Ritz-Carlton Hotel Company. Focus group members were of the opinion that, no institution can measure the service quality of a luxury hotel. The measurement of service quality should be based purely and solely on customers point of view. The customer experience is most important in judging the service quality of a hotel. Some interviewees said that the overall experience with the hotel counts in judging the service quality. The interviewees informed that many-a-times customers could be disappointed or dissatisfied by the overall experience they have with a luxury hotel. Service guarantee is ensured by most of the luxury hotels, but what is guaranteed may not me fulfilled all the time and by all the luxury hotels. The management of the hotels is responsible for the low service quality. Many customers feel that the member of staff is delivering poor service, but if analysis is done, the real story could be something else. The management is responsible for training the staff and explaining their roles, duties and responsibilities. If the management is particular about

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every aspect of service delivery, then the members of staff will not gather the courage to deliver low quality of service. The staff shall fear adverse consequences and would not have the audacity to not serve as expected. The focus group members and the interviewees mentioned gaps in service quality as one of the key constituents of the dark side to CRM in hotel industry. However, there is more to the dark side which shall be addressed in the next research question.

7.2

Is there more to the dark side of CRM than what is explained in the gap model?

The gap model explained the dark side of CRM in the luxury hotel industry to a large extent. However, analysis of facts derived from research throws light upon some other aspects as well which shall be discussed in this section. The information collected shall be applied to the case of Ritz-Carlton and the reader shall also receive deeper knowledge about the dark side for the hotel industry in general.

There is not sufficient literature available on the dark side to CRM except for the gap model. Some books have mentioned about privacy issues which was discovered to be an important issue apart from the service gaps. Some authors have written that it is not necessary that all customers would desire to build a relationship with the service provider. 7.2.1 Willingness to build a relationship

In the case of Ritz-Carlton, most of the customers said that they would love to build a relationship with the hotel company. The reasons for desiring a relationship are mentioned below:

1. Recognition: Most customers shared that they felt valued and recognized building a relationship with Ritz-Carlton. One customer said that, I feel recognized and valued when I receive a birthday or anniversary greeting from

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Ritz-Carlton. It makes me feel important being wished by such a glamorous hotel company. Another customer said that he feels like a V.I.P. when the members of staff at Ritz-Carlton recognize him and greet him. Most of the focus group members expressed their desire to be recognized by Ritz-Carlton. One speaker said, I would love to be recognized by a hotel chain as sophisticated as RitzCarlton.

2. Personalization: Most customers wished to build a relationship with the hotel chain because they felt that by doing so that could receive personalized service. The individual needs of the customers and their special requests would be catered to. One customer said, I would not have to inform the hotel about my special requests and preferences each and every time I check in to a Ritz-Carlton property. They have my requests on their information system and that eases my stay and increases my comfort level. One focus group member said that a relationship can help receive the customer his/her desired level of personalized service. Literature available on Ritz-Carlton mentions that once a customer has stayed at any Ritz-Carlton properties, his/her guest profile is created and all data about the customer including special preferences and requests is noted and used for future stays of the guest at any Ritz-Carlton.

3. Status: Another strong reason for customers to build a relationship with RitzCarlton is the social status attached. Most customers reveal that it is a status symbol to share a relationship with a prestigious hotel chain like Ritz-Carlton. One customer informed that, I get an ego boost when Ritz-Carlton has information about me. It increases my status and is a feel good factor for me. One of the focus group members commented that, If information about me was with Ritz-Carlton, I would feel I have high social status.

However, it is not true that all customers want a relationship with Ritz-Carlton. This is a dark side to CRM. The Ritz-Carlton cannot cater to the needs of the customers if they do not have sufficient information about the customer because of the customers

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unwillingness to build a relationship. One of the customers said, I enjoy staying at RitzCarlton but I dont want to build a relationship with them. I would not want them to know too much about me. I dont mind informing them of my requests and preferences every time I stay at Ritz-Carlton. Another dark side identified is that Ritz-Carlton does not have any loyalty card of its own to provide mileage to the customers. Most of the luxury hotel chains have a loyalty card to provide points to the customers that can be redeemed later for room upgrades, free stays, etc. One customer said, I wish Ritz-Carlton had a loyalty programme. It would please me further.

Privacy Issues and Changing tastes and preferences of the customers

Research shows that privacy issues are an area of concern for customers. The RitzCarlton notes all requests and preferences of the customers and interactions at all instances. The employees interviewed confirm the literature available that each and every interaction, requests and preferences of the customers must be noted and fed on the information system to help them serve the customers better. The customers when interviewed did mention that privacy issues are one of their concerns. Some customers do not want their privacy intruded into at any cost. They appreciate the fact that their requests and preferences are met by the hotel during their stays. However, they do not approve of the hotel noting each and every interaction and observation. One customer said, It is irritating if someone knows too much about me. I would not want the hotel to know each and everything about me and my personality. Some customers feel offended when they realize that the hotel knows too much about them. This portion of the dark side is again minute in the case of Ritz-Carlton because none of the members interviewed mentioned any sort of misusage of information the hotel has about them. One customer said that the Ritz-Carlton provides comfortable service to its customers but sometimes, they note too much about the customers and it could make the customers feel insecure about their private information being in records at a hotel. Ritz-Carlton notes all possible information to serve the customers better, but it must know if the customers are comfortable with having personal information in their records.

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Another aspect of the dark side of CRM is that tastes and preferences of the customers change over time. It is not necessary that a customers wants will remain uniform throughout. Ritz-Carlton customers said that the hotel puts in serious effort to know what the current or updated preferences of the customers are so that they can serve them better and meet their expectations. One customer said, Everytime I check in to a Ritz-Carlton hotel, they inquire if Id like something I had requested for at a previous visit and they update my preferences accordingly.

The dark side is small in case of Ritz-Carlton, but the dark side in the hotel industry at large is not that small. The case of Ritz-Carlton is one which should educate the other players to follow their footsteps to help achieve better customer satisfaction. The following section is the inference for the industry. 7.2.2 General Inference for the Hotel Industry

There is surely more to the dark side than what is explained with the help of gap model. The other issues are discussed above with the application to the case of Ritz-Carlton. Privacy issues cannot be neglected by hoteliers. Most customers are worried about their information being misused or swapped. The hotel industry must ensure that the privacy concerns are dealt with. Changing tastes and preferences of customers must be updated perpetually. The unwillingness of customers to build a relationship with the hotels must be attempted to convert into willingness. One focus group member commented, The relationship must be a genuine one meeting our level of expectations.

7.3

How can the dark side of CRM be reduced?

There is evidence collected that there is a dark side to CRM in the hotel industry. The reduction of the dark side to CRM is essential for the profitable future of the hotel industry. Hotels earn profits through their customers and if the customers do not feel that their experienced service quality was up-to-the mark, then it can be a serious threat to the hotels well being in the future. The following portion shall provide an analysis on how

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the dark side in case of Ritz-Carlton can be reduced followed by an analysis on dark side reduction for the hotel industry in general.

In the case of Ritz-Carlton, the dark side prevailing is not large proven by research. However, the dark side that exists needs to be reduced to enhance Ritz-Carltons reputation of high class service quality. The gaps in service quality have been identified and discussed earlier. The Ritz-Carlton must take appropriate steps to fill the gaps in service quality. This can be done by simple measures like the management being clearly aware of what the customers needs and expectations are, training the staff effectively to tactfully deal with crisis situations like service failure or dispute, providing the service that customers want, meeting the expectation level of its customers, maintaining the uniformity of service worldwide for which it already is reputed and improving its overall service delivery to further strengthen its status and position in the global hotel industry. The employees must serve the customers willingly as this will increase their level of service and please the customer.

Employee interviews confirmed the literature available that The Ritz-Carlton empowers all its employees to settle a customer dispute by spending up to $2,000 per day without consulting any senior. Vice President Diana Oreck says hotel standards are so high and service-recovery training is so rigorous that no employee has ever had to provide a $2,000 credit (USA Today.com, 2006). The service recovery is given importance by the Ritz-Carlton to reduce service gaps that may occur from time-to-time. One customer said that she was staying at Ritz-Carlton in Dubai and her room had some ants. She complained about it and the matter was resolved immediately. The member of staff she complained to, without any delay shifted her to a superior room at no extra cost and apologized for the inconvenience caused to her. She was impressed by the quick complaint handling and was delighted. Complaint handling is essential to reduce the dark side and the Ritz-Carlton already follows the concept. It needs to ensure that the complaint handling is efficient and helps in seeking positive response from the customer and leaves him/her satisfied. The hotel industry can benefit from following the RitzCarlton way of pleasing customers.

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The hotel industry can reduce the dark side of CRM by simple measures. Some of the possible ways to reduce the dark side are as follows. 1. Accurate knowledge of what the customers want, need and expect 2. Once the management knows what the customers expect, relevant instruction should be passed down to the members of staff to cater to the customers expectations accordingly 3. The members of staff must carry out their tasks to fulfill the customers expectations whole-heartedly. This helps in adding the extra personal touch. 4. The members of staff must maintain a cordial and warm relationship with the customers, keeping in mind their individual preferences and fulfilling the same. 5. In case of service failure or dispute, the employees must act immediately to resolve the situation and leave the customer pleased. The hotel industry must empower the staff to take immediate action and give them monetary allowance to resolve the situation quickly without wasting time to consult senior management like they do at Ritz-Carlton. 6. The hotel industry can deliver the service the customers want to avoid discrepancies in service. However, if there is any service failure and the customers choose to complain, the hotels should consider this as a golden opportunity to restore service quality. Literature available (mentioned earlier) suggests that only a small percentage of the customers choose to complain. Efficient complaint handling shall prove beneficial and advantageous to the hotel industry for its profitable future. 7. Customers must be treated with highest regards, respect and dignity even if they are rude. This shall prevent the situation from getting worse and service recovery might be possible. 8. The service gaps must be closed by efficient management and supervision. The staff should be carefully recruited and trained. Literature available confirmed by employee interviews show that employees at Ritz-Carlton undergo rigorous and detailed training to tackle situations and deliver top class service quality. The

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hotels must select and recruit staff carefully and train them to deliver remarkable service quality 9. The top priority of a luxury hotel is to provide luxury to please the customers. The members of staff and management must have a clear understanding of what is required to be done in order to achieve customers appreciation. 10. The hotels can have an advanced information system that records all customer details and preferences and is accessible by any property of the chain worldwide, similar to how it is done at Ritz-Carlton. 11. The hotel industry must secure and safeguard the customers private information and prevent any misusage. The customers must be given importance, cared and looked after sincerely. 12. The privacy of the customers must not be intruded into under any circumstances. 13. The hotels must strongly meet or over-meet the customers expectations in order to sustain their future because for hotels, customers are the only source of income and they cannot afford to put their profits at stake.

To summarize, the hotel industry must learn from Ritz-Carlton which received various quality awards and the only company to receive the Malcolm Baldrige National Quality Award twice till date. One customer said, The hotels must deliver what we want them to deliver and how we want them to deliver. This shall prevent any form of service gaps and shall reduce the dark side completely. Another customer said that all that luxury hotels need to do is provide luxury the way customers demand it. One focus group member pointed out that, I want the luxury hotel to provide me with service and not just amenities/ facilities without a personal touch. I would not be impressed by expensive chandeliers but would be impressed by desired behaviour. In the end, all that matters is customer satisfaction and the service delivery must be customer-oriented to reduce the dark side to CRM

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Chapter 8: Conclusion and Further research

This is the concluding chapter of the paper and shall shed light upon the limitations of this research conducted along with possible implications this paper shall have for the luxury segment hotels worldwide. The hotel industry is a customer-oriented industry and its success wholly depends on the customers. The research objectives of explaining the dark side of CRM in the hotel industry with the help of the gap model was successfully accomplished. The gap model does not fully explain the dark side of CRM in luxury hotels and there is more to the dark side than only service gaps. Privacy issues are a major concern among customers today. Luxury hotels must ensure that customer privacy is safeguarded. The changing tastes and preferences of customers must be tracked and recorded to improve service quality. Relationships once established must be maintained living up to the expectations of the customers. One focus group member commented, The relationship must be a genuine one meeting our level of expectations.

The research has shown that basically customers have their own perceptions of service quality. The customers want service as per their expectations. Service gaps are not normally tolerated by many customers, especially when they are paying for a luxurious stay. The customers pay importance to what they receive and how they receive. The customers may forgive small errors in service but not repeated service failures and misbehaviour of any sort from the hotel management or staff. The customers desire service as per their individual definitions and fulfillment of desires leads to satisfaction. The hotels must treat customers as human beings and not just objects or avenues to earn profits. The attitude of the hotel should be customer-oriented and the customers receiving desired service quality must be prime concern for the hotel.

In the case of Ritz-Carlton, the service gaps occur minutely as shown by research. Other hotels can learn from the case of Ritz-Carlton and keep an updated knowledge about the customer expectations and preferences to allow superior service quality which in turn 83

could lead to customer satisfaction which means business to the hotels. Complaints must be handled efficiently and immediately to recover service failures and customer disputes. The reduction of the dark side can be possible with improved service quality and fast service recovery in case of disputes or service failures. The luxury hotels must strive to enhance their service quality which shall prove to be a key success factor for the organization. There should be zero defects in service quality to eliminate the dark side of CRM in the hotel industry.

This paper shall be useful for the hotel industry to analyze the dark side of CRM. The hotels can have in-depth information about customer expectations in terms of service quality. This paper could prove helpful in providing a guideline to the luxury hotels to bring about improvement in service quality to gain and retain customers. Last but not the least, the luxury hotels could follow the Indian concept of Atithi Devo Bhavah, which is Guest is God.

Further Research: There is also further research scope in this area of CRM in the hotel industry. There is ample literature available on the brighter side of CRM in the hotel industry. There are innumerous articles suggesting the high class service provided by Ritz-Carlton and also other luxury hotel chains but there is not much literature available on the dark side of CRM. Scholars can carry out research on the dark side and conduct detailed study on the customers perception of perfect service quality. Time is required to conduct a detailed study on the dark side of CRM and such studies shall provide valuable data for the luxury hotels to comprehend extensively customers expectations and ensure that they are met at least if not over-met.

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Appendices
Appendix 1 Consent Form
Title of Study: The Dark Side of Customer Relationship Management in the luxury segment of the Hotel Industry. Principal Investigator: Mr. Akshay Jaipuria
Before agreeing to participate in this research study, it is important that you read the following:

Purpose of the study and how long it will last: The purpose of this interview is to understand the dark side of CRM in the hotel industry. It will take approximately 45 minutes to complete the interview. Description of the study including the procedures to be used: You will be asked about the service delivery of Ritz-Carlton and hotel industry at large and the gaps that might occur is service delivery. Description of procedures/elements that may result in discomfort or inconvenience: There are no foreseeable physical or psychological risks when you participate in the interview. Confidentiality of research records: A notebook will be used to record your answers. Your answers to the interview will be kept confidential. Only the researcher will have access to the data. No attempt will be made to identify you individually. There is a possibility that data from this survey could be used for further research beyond the initial study. Withdrawal from Study You are free to withdraw your consent and discontinue participation in the study at any time without consequences.

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Payment for participation in the research: Participants in this study shall receive a drink and some snacks for participating in the interview (Customers ONLY) RESEARCH SUBJECTS RIGHTS: I have read or have had read to me all of the above. Signature ___________________________________

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Appendix 2

CRM and Atithi Devo Bhava

India is renowned for its strong culture, warmth and friendly attitude. Respect has always been an integral part of the Indian soul. From time immemorial we have always respected our teachers, our elders, our parents and our guests. Perhaps that is why a great Indian Emperor once observed that, In Hindustan our manner is very respectful and our hearts are always open. In many ways, at that time India was the ultimate destination for the enlightened travelers and Indian hospitality set the standards for the world. Indians believe in Atithi Devo Bhava, which means that a guest is a form of God. The Ministry of Tourism, Government of India, has introduced the Atithi Devo Bhavah Program which is a seven point program of hospitality and training (Incredible India, 2006). The seven points are explained below. 1. Samvedan Sheelta or Sesitisation-

This means to sensitize the various sections of the tourism industry about how each of them could contribute for the growth of the tourism industry and how they will benefit from it. 2. Prashikshan or Training and Induction

This involves explaining the needs and expectation of the tourist to employees, how they should respond and behave in order to satisfy the needs and meet the expectations of the guests.

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3. Prerna or Motivation -

This means motivation to participate in this program through various measures like awards for the best worker in the segment because when you are enthusiastic you can do wonders.

4. Pramani Karan or Certification -

Certification to ensure standards shall be done at an appropriate stage in the training program. 5. Pratipushti or Feedback -

Feedback shall be obtained from tourists about the service reception and their overall experience to improve the training program on a continuous basis.

6. Samanya Bodh or General Awareness -

The marketing communication campaign will be undertaken to create general awareness among the public about the necessity and the benefits of the Atithi Devo Bhavah programme.

7. Swamitwa or Ownership-

The Atithi Devo Bhavah programme is a movement that shall urge all segments of the Indian society and worldwide to adopt, and look upon as their own. The concept of Atithi Devo Bhavah can be a helpful guide to CRM in the hotel industry.

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Appendix 3
The Ritz-Carlton Hotel Company currently has 59 hotels under its flagship. A list of the current locations is alphabetically given below: 1. Amelia Island, Fla. 2. Atlanta (Downtown), Ga . 3. Bali, Indonesia 4. Bachelor Gulch, Colo. 5. Bahrain 6. Hotel Arts Barcelona, Spain 7. Berlin 8. Boston, Mass. 9. Boston Common, Boston, Mass. 10. Buckhead (uptown Atlanta, Ga.) 11. Cancun, Mexico 12. Cleveland, Ohio 13. Coconut Grove (Miami), Fla. 14. Dearborn, Mich. 15. Doha, Qatar 16. Dubai, United Arab Emirates 17. Georgetown, Washington D.C. 18. Grand Cayman, Cayman Islands 19. Half Moon Bay, Calif. 20. Hong Kong 21. Huntington (Pasadena), Calif. 22. Istanbul, Turkey 23. Jakarta, Indonesia 24. Rose Hall, Jamaica 25. Kapalua (Maui), Hawaii

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26. Key Biscayne (Miami), Fla. 27. Kuala Lumpur, Malaysia 28. Laguna Niguel, Calif. 29. Lake Las Vegas, Nev. 30. Marina del Rey, Calif. 31. Milan, Italy, BVLGARI Hotels and Resorts 32. Montreal, Quebec, Canada 33. Naples, Fla. 34. Naples Golf Resort, Fla. 35. New Orleans, La. 36. New York, Battery Park 37. New York, Central Park 38. Orlando Grande Lakes, Fla. 39. Osaka, Japan 40. Palm Beach, Fla. 41. Pentagon City, Va. 42. Penha Longa, Portugal 43. Philadelphia, Pa. 44. Phoenix, Ariz. 45. Reynolds Plantation, Ga. 46. South Beach (Miami), Fla. 47. St. Louis, Missouri 48. St. Thomas, US Virgin Islands 49. San Francisco, Calif. 50. San Juan, Puerto Rico 51. Santiago, Chile 52. Sarasota, Fla. 53. Seoul, Korea 54. Shanghai, China 55. Sharm El Sheikh, Egypt 56. Singapore

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57. Tysons Corner, Va. 58. Washington, D.C. 59. Wolfsburg, Germany

There are also a few upcoming properties in various locations which are listed below along with estimated year of opening.

UPCOMING LOCATIONS: BVLGARI Bali, Indonesia - 2006 Beijing Financial Center, China - 2006 Moscow, Russia - 2006 Powerscourt, County Wicklow, Ireland - 2007 Beijing, China (Central Place) - 2007 Dallas, Texas - 2007 Guangzhou, China - 2007 Tokyo, Japan - 2007 Molasses Reef, Turks & Caicos - 2007 Shenzhen, China - 2007 Charlotte, NC - 2008 Dubai Financial Centre, United Arab Emirates - 2008 Hong Kong, China - 2009 Toronto, Canada - 2009

(Ritz-Carlton, 2006)

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Appendix 4
The following is a list of awards won by the Ritz-Carlton recently in 2005 and 2006:

Mobil Five-Star Award 2006

Lodgings The Ritz-Carlton New York, Central Park The Ritz-Carlton, San Francisco The Ritz-Carlton, Naples The Ritz-Carlton, Palm Beach

Restaurants

The Dining Room at The Ritz-Carlton, Buckhead The Dining Room at The Ritz-Carlton, San Francisco

Mobil Four-Star Award 2006

Lodgings

The Ritz-Carlton, Atlanta The Ritz-Carlton, Bachelor Gulch The Ritz-Carlton, Boston The Ritz-Carlton, Boston Common The Ritz-Carlton, Cleveland The Ritz-Carlton, Coconut Grove The Ritz-Carlton, Georgetown The Ritz-Carlton, Half Moon Bay The Ritz-Carlton, Huntington Hotel & Spa The Ritz-Carlton, Kapalua

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The Ritz-Carlton, Key Biscayne The Ritz-Carlton, Laguna Niguel The Ritz-Carlton, Lake Las Vegas The Ritz-Carlton, Golf Resort, Naples The Ritz-Carlton, New York, Battery Park The Ritz-Carlton Orlando, Grand Lakes The Ritz-Carlton, Pentagon City The Ritz-Carlton, Phoenix The Ritz-Carlton, Reynolds Plantation The Ritz-Carlton, Sarasota The Ritz-Carlton, South Beach The Ritz-Carlton, St. Louis The Ritz-Carlton, Tysons Corner The Ritz-Carlton, Washington D.C.

Restaurants The Dining Room at The Ritz-Carlton New York, Central Park The Dining Room at The Ritz-Carlton, Tysons Corner

AAA Five Diamond Award 2006

Lodgings

The Ritz-Carlton, Amelia Island The Ritz-Carlton, Atlanta The Ritz-Carlton, Bachelor Gulch The Ritz-Carlton, Buckhead The Ritz-Carlton, Cancun The Ritz-Carlton, Coconut Grove The Ritz-Carlton, Georgetown The Ritz-Carlton Golf & Spa Resort, Rose Hall, Jamaica

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The Ritz-Carlton, Half Moon Bay The Ritz-Carlton, Huntington Hotel & Spa The Ritz-Carlton, Kapalua The Ritz-Carlton, Key Biscayne The Ritz-Carlton, Laguna Niguel The Ritz-Carlton, Lake Las Vegas The Ritz-Carlton, Marina del Rey The Ritz-Carlton, Naples The Ritz-Carlton Golf Resort, Naples The Ritz-Carlton New York, Battery Park The Ritz-Carlton New York, Central Park The Ritz-Carlton, Palm Beach The Ritz-Carlton, Philadelphia The Ritz-Carlton, San Francisco The Ritz-Carlton, Sarasota The Ritz-Carlton, Washington D.C.

Restaurants

The Dining Room at The Ritz-Carlton, San Francisco The Grill Room at The Ritz-Carlton, Amelia Island Artisans in The Dining Room at The Ritz-Carlton, Naples The Dining Room at The Ritz-Carlton, Buckhead Atelier at The Ritz-Carlton New York, Central Park Maestro at The Ritz-Carlton, Tysons Corner The Club Grill at The Ritz-Carlton, Cancun Fantino at The Ritz-Carlton, Cancun

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Cond Nast Traveler: 2005 Gold List

United States

The Ritz-Carlton, Amelia Island The Ritz-Carlton, Atlanta The Ritz-Carlton, Bachelor Gulch The Ritz-Carlton, Boston The Ritz-Carlton, Boston Common The Ritz-Carlton, Buckhead The Ritz-Carlton, Cleveland The Ritz-Carlton, Coconut Grove The Ritz-Carlton, Georgetown The Ritz-Carlton, Half Moon Bay The Ritz-Carlton, Huntington Hotel & Spa The Ritz-Carlton, Kapalua The Ritz-Carlton, Key Biscayne The Ritz-Carlton, Laguna Niguel The Ritz-Carlton, Marina del Rey The Ritz-Carlton, Naples The Ritz-Carlton Golf Resort, Naples The Ritz-Carlton New York, Battery Park The Ritz-Carlton New York, Central Park The Ritz-Carlton, New Orleans The Ritz-Carlton, Palm Beach The Ritz-Carlton, Philadelphia The Ritz-Carlton Lodge, Reynolds Plantation The Ritz-Carlton, San Francisco The Ritz-Carlton, Sarasota The Ritz-Carlton, Washington D.C.

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Europe

Hotel Arts Barcelona The Ritz-Carlton, Istanbul

Asia/Australia/Pacific Nations

The Ritz-Carlton, Bali Resort & Spa The Ritz-Carlton, Hong Kong The Ritz-Carlton, Osaka The Ritz-Carlton, Millenia Singapore The Portman Ritz-Carlton, Shanghai

The Americas

The Ritz-Carlton, Cancun The Ritz-Carlton, Montreal The Ritz-Carlton Hotel, Spa & Casino, San Juan The Ritz-Carlton, Santiago The Ritz-Carlton Golf & Spa Resort, Rose Hall, Jamaica

The Best by Design

No. 1 in the Americas: The Ritz-Carlton, Santiago

The Best by Activities

No. 1 in Asia, Australia and Pacific Nations: The Ritz-Carlton, Bali Resort & Spa

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Travel + Leisure: 500 Greatest Hotels in the World 2006

United States

The Ritz-Carlton, Laguna Niguel The Ritz-Carlton, Huntington The Ritz-Carlton, Half Moon Bay The Ritz-Carlton, San Francisco The Ritz-Carlton, Bachelor Gulch The Ritz-Carlton, Georgetown The Ritz-Carlton, Amelia Island The Ritz-Carlton, Naples The Ritz-Carlton, Naples Golf Resort The Ritz-Carlton Grande Lakes, Orlando The Ritz-Carlton, Palm Beach The Ritz-Carlton, Sarasota The Ritz-Carlton, Buckhead The Ritz-Carlton, Kapalua The Ritz-Carlton, New Orleans Maison Orleans The Ritz-Carlton, Boston The Ritz-Carlton, Boston Common The Ritz-Carlton, Lake Las Vegas The Ritz-Carlton New York, Battery Park The Ritz-Carlton New York, Central Park The Ritz-Carlton, Cleveland

Europe

The Ritz-Carlton, Berlin Hotel Arts

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Asia

The Ritz-Carlton, Hong Kong The Portman Ritz-Carlton, Shanghai The Ritz-Carlton, Bali Resort & Spa The Ritz-Carlton, Osaka The Ritz-Carlton Millennia, Singapore

Mexico

The Ritz-Carlton, Cancun

South America

The Ritz-Carlton, Santiago

Caribbean

The Ritz-Carlton Golf & Spa Resort, Rose Hall, Jamaica The Ritz-Carlton, St Thomas

Consumer Reports

Consumer Reports Hotels issue ranked The Ritz Carlton Hotel Company the No. 1 luxury hotel company in all areas including value, service, upkeep and problem resolution.

Luxury Institute

Most Prestigious Luxury Brand

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Travel Weekly

2006 Readers Choice Awards, Best Luxury Hotel Company 2006 Readers Choice Awards, Best Upscale Hotel Company

Forbes: Sure to Impress Travel Destinations

Forbes named The Ritz-Carlton Hotel Company the best Business Hotel Chain

(Ritz-Carlton, 2006)

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Appendix 5

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