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The Ritz Carlton Philadelphia: Situational Analysis

Kathryne Von Helms

The Ritz Carlton Philadelphia

Situational Analysis

Executive Summary

The purpose of this report is to provide a situational analysis of the Ritz Carlton Philadelphia, and determine areas of strengths, weaknesses, opportunities, and threats. The first and second part of this report will cover the background of the Ritz Carlton LLC Company and the Ritz Carlton Philadelphia specifically. With a credible standard of service and a path to success under its mission, vision, and strategic goals, the Ritz Carlton is an upscale brand that provides luxurious amenities to its guests. The third part of the report will focus mainly on the Ritz Carlton Philadelphia’s target market. With many different segments, like upper/middle class, business travelers and meetings/events, the third section will focus on the upper/middle class as being the most prominent group of people to choose the Ritz Carlton. Afterward, the report will discuss the psychographics of this group and determine why these individuals choose to invest in luxurious brands like the Ritz Carlton.

The fourth section of this report will go in-depth to identify the competitors in the Philadelphia area and determine how the Ritz Carlton sizes up to them. Using this information we can determine if the Ritz Carlton Philadelphia’s would meet the expectations of their primary target market. Additionally, we will cover the strengths and weaknesses as compared to their competitors and identify what the Ritz Carlton Philadelphia does well and its drawbacks. The fifth section will cover a macro/PESTE analysis, where I identify opportunities and threats within the many political, economic, social, technological, and environmental influences affecting the Ritz Carlton Philadelphia. Afterwards the report will touch upon a micro analysis, where suppliers, publics, and marketing intermediaries are discussed.

To conclude this report, a SWOT table will be shown at the end to summarize the Ritz Carlton Philadelphia’s strengths, weaknesses, opportunities, and threats, as well as briefly summarize the report afterwards.

Tables of Contents

  1. Ritz Carlton Background………………………………………………………………….

1.1 Ritz Carlton Philadelphia……………………………………………………………….

2. Mission, Vision, and Goal Strategic Analysis……………………………………………..

2.1 Gold Standard…………………………………………………………………………..

2.2 Mission Statement……………………………………………………………………….

2.3 Vision……………………………………………………………………………………

2.4 Strategic Goals………………………………………………………………………….

3. Target Market……………………………………………………………………………….

3.1 Overall Market Segmentations …………………………………………………………

  1. Upper Class & Middle Class………………………………………………………..
  2. Business Travelers………………………………………………………………….
  3. Meetings & Events………………………………………………………………….

3.2 Psychographics………………………………………………………………………….

  1. Lifestyle…………………………………………………………………………….
  2. Social Status…………………………………………………………………………
  3. Exotic Experiences………………………………………………………………….

4. Internal Analysis…………………………………………………………………………….

4.1 Identify Competitors…………………………………………………………………….

  1. The Rittenhouse & AKA Rittenhouse………………………………………………
  2. Kimpton Palomar & Kimpton Monaco……………………………………………..
  3. The Logan…………………………………………………………………………..
  4. Sofitel Hotel…………………………………………………………………………
  5. The Bellevue………………………………………………………………………..

4.2 Side by Side Comparison……………………………………………………………….

  1. Strengths & Weaknesses………………………………………………………………..
  1. Strengths……………………………………………………………………………
  2. Weaknesses…………………………………………………………………………

5. External Analysis……………………………………………………………………………

4.4 Macro Analysis…………………………………………………………………………

  1. Political……………………………………………………………………………..
  2. Economic……………………………………………………………………………
  3. Social……………………………………………………………………………….
  4. Technological……………………………………………………………………….
  5. Environmental………………………………………………………………………

4.5 Micro Analysis………………………………………………………………………….

  1. Supplier……………………………………………………………………………..
  2. Publics……………………………………………………………………………….
  3. Marketing Intermediaries……………………………………………………………

6. Summary & SWOT…………………………………………………………………………

  1. SWOT Table……………………………………………………………………………
  2. Summary………………………………………………………………………………..

1. Ritz Carlton Background

 

1.1 Ritz Carlton Company

With over 100 years of history and a luxurious brand that cannot be mistaken, the Ritz Carlton embodies the finest hotel services within the hospitality industry. Established by Albert Keller, who bought and franchised the name in the early 1900’s, Ritz Carlton franchises were established in cities such as Boston, Philadelphia, Boca Raton, and Atlantic City in the 1940’s (Luxury Hotels & Resorts). As the first Ritz Carlton to revolutionize the hotel industry, the Boston location set the bar for all Ritz Carlton establishments in future years to come. With amenities like gourmet cuisines, private baths in each guest rooms, and personalized guest experiences, the Ritz Carlton Boston paved the way for luxurious hospitality for other hotels chains and future Ritz Carlton’s alike (Luxury Hotels & Resorts). In 2018, there are currently 40,000 employees working for the Ritz Carlton brand, continuing its success through extensive training and providing the unprecedented service it is known for (Luxury Hotels & Resorts).

In 1983, the Ritz Carlton Hotel Company was formed and led by Colgate Holmes. Under Holmes, the Ritz Carlton spread across the United States and by 1992, there were 23 Ritz Carlton’s established and operating across the country (Luxury Hotels & Resorts). In 1998, the exceptional hospitality that the Ritz Carlton had provided was capturing worldwide attention, which lead to Marriott International’s decision to purchase the hotel franchise. Since the purchase, Ritz Carlton has continued to grow and expand across the hospitality industry, and several branches have been opened thus far. In 2000, the Ritz Carlton Residences opened its first location in Washington, DC, and their first Destination Club location in Aspen, Colorado in 2001 (Luxury Hotels & Resorts). As the years have progressed, the Ritz Carlton has grown exponentially and is now serving guests worldwide with 91 hotels across 30 different countries. This luxury brand has received every single major award the hospitality industry can receive. For example, the Ritz Carlton has received the J.D. Power  North American Hotel Guest Satisfaction Index Survey 2017, the AAA Four and Five Diamond Award January 2015, Best Hotel Brand for Customer Service, and many more (Luxury Hotels & Resorts).

1.2 Ritz Carlton Philadelphia

Originally built for the Girard Trust Company between 1904 and 1908, the former bank building features grand architecture and pillars that reflect a classical era style (The Ritz Carlton Philadelphia). In 2000, when the building was transformed into what is now the Ritz Carlton, this grandiose classical style is now blended with modern touches, located in the heart of Center City, Philadelphia (The Ritz Carlton Philadelphia). The Ritz Carlton Philadelphia offers spacious suites, like Presidential Suites and Governor Suites, to more modern one-bedroom suites, while still maintaining a luxurious feel in all rooms. All rooms have a fantastic view of the city or city hall, and feature amazing amenities that budget hotels or economy-level hotels would never have (The Ritz Carlton Philadelphia).

Aside from rooms and suites, the Ritz Carlton Philadelphia offers delicious Latin cuisines in its fine-dining area. This ambiance is perfect for couples and those looking for a romantic dinner, which the Ritz Carlton never fails to deliver by following its Gold Standard. After dining, guests can head over to the Richel D’Ambra Spa & Salon where massage therapies and salon services are offered to unwind, relax, and enjoy their time at the Ritz Carlton Philadelphia (The Ritz Carlton Philadelphia).

With over 26,000 square feet of event space, the Ritz Carlton Philadelphia is capable of hosting weddings, team building retreats, training seminars, meetings, and other medium-to-large scale events (The Ritz Carlton Philadelphia). The Grand Ballroom can fit 600 guests and provides a pre-function area for receptions, a large screens for projections, and customizable catering menus for all types of wants and needs (The Ritz Carlton Philadelphia). With the city of Philadelphia at its doorstep, the opportunities are endless for guests staying at the Ritz Carlton.

2. Mission, Vision, and Goal Strategic Analysis

While this report is focused on the Ritz Carlton Philadelphia, all Ritz Carlton’s within the hospitality industry follow the same Gold Standard, mission statement, vision statement, and strategic goals to keep their properties in sync. For section 2 of this report, the Ritz Carlton LLC Company will be discussed in broad terms but can be directly related back to its Philadelphia location. In the diagram below, you will see the Ritz Carlton’s famous Three Steps of Service, motto, employee promise, and credo.

2.1Gold Standard

The Ritz Carlton credits themselves with providing the “Gold Standard”. These standards are the foundation of the Ritz Carlton Hotel Company, and exemplify the values by which the Ritz Carlton operates and makes decisions by (The Gold Standard). The standards hold true for their mission, vision, goals, motto, and steps to service, and helps provide a basis for employees, managers, and executives to follow. By implementing policies and holding everyone accountable to such high standards, the Ritz Carlton is able to flourish and provide the exceptional service it is known for (The Gold Standard).

2.2 Mission (What Business Are We In?)

“The Ritz-Carlton is a place where the genuine care and comfort of our guests is our highest mission. We pledge to provide the finest personal service and facilities for our guests who will always enjoy a warm, relaxed, yet refined ambience.”  (Luxury Hotels & Resorts). This mission statement, promptly displayed on the Ritz Carlton’s website, shows their attitude towards providing the best experience possible.  The Ritz Carlton claims to go above and beyond in their mission, and uses bold words like “finest” and “refined ambiance” that really sets the bar for the type of service they are providing their guests. Because the have established this mission statement, they cannot possibly strive for anything lower than the absolute best, hence why the Ritz Carlton is recognized as a luxury brand within the hospitality industry. These luxury services define the business that the Ritz Carlton is in and the people that they serve, who are wealthier in social class and spend more on grandeur services.

2.3 Vision (What Do We Hope to Accomplish?)

“The Ritz Carlton inspires life’s most meaningful journeys”. (Luxury Hotels & Resorts) This short but simple vision statement goes along with the Gold Standard credo that the Ritz Carlton Company operates under. A vision statement is a proclamation of commitments and objectives that the organization aims to follow throughout its decision making process. The Ritz Carlton exemplifies this vision statement through numerous actions and policies, but one thing they follow in-line with their vision statement is their Steps of Service (The Gold Standard). The first step is to greet each guest with a warm and sincere greeting, the second step is to use the guest’s name while fulfilling each guest’s needs, and the third step is to provide a fond farewell while also using the guests name. These steps fall closely with their vision statement because they are providing a meaningful and heartfelt experience to hopefully inspire each guest through their journey as they enter and as they leave (The Gold Standard).

Their Employee Promise also falls in line with their Vision Statement. Stating, “At The Ritz-Carlton, our Ladies and Gentlemen are the most important resource in our service commitment to our guests. By applying the principles of trust, honesty, respect, integrity and commitment, we nurture and maximize 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.” (The Gold Standard). By valuing their employees, employees are then able to value and inspire the guests entering into the Ritz Carlton through all walks of life. By doing this, the Ritz Carlton hopes to inspires its employees who then continue to inspire its guests throughout all of life’s journeys.

2.4 Strategic Goals (Developing The Company’s Best Assets)

In order for their strategic plans and goals to stay relevant, the Ritz Carlton believes all employees should take part in creating and implementing their strategic goals in order for them to be readily achievable. While the senior management may create the plan, it is up to the mid-level employees to carry it out in everyday functions (Is Your Strategic Plan D.O.A.?, 2018). Defined as the “Roadmap”, this plan is comprised of three important pillars: a definition of each element of the strategic plan, rationale on why a change was or was not made, and a description on how to implement each goal. This system lays out what needs to be done and make each employee responsible for the success of the company (Is Your Strategic Plan D.O.A.?, 2018). By doing so, they are developing the company’s best capabilities by making every employee carry their fair share of work and making everyone accountable for the company’s success.

3. Target Market Profiling

This target market analysis will highlight the direct audience that the Ritz Carlton Philadelphia plans on marketing and selling to. With many factors such as age, gender, race, ethnicity, and income levels, these traits can be examined to further marketing techniques and to make sure the Ritz Carlton is providing exactly what its target demographic needs. We will also be taking a look at the psychographics within their target market. While a target market describes who is buying your product, psychographics describe why your target market is buying your product.

3.1 Overall Market Segmentations

  1. Upper & Middle Class: The Ritz Carlton is considered a luxury hotel, and with that comes an expensive price tag. This expensive price tag can typically only be afforded by wealthier individuals, who are not price conscious. Because the Ritz Carlton offers a unique and unforgettable experience, and wants its customers to enjoy the finer things in life, they are able to offer their rooms at a premium rate. Serving high-profile people from celebrities to wealthier individuals, the Ritz Carlton’s rates range from about $300-$400 per night, and go upwards of $1,000. That means that if a couple were to stay at the Ritz Carlton in the month of October from Friday to Sunday, it would cost them roughly $700 total. At the Philadelphia location, 72% of people who have stayed at the Ritz Carlton say that it is best for couples, while the other 28% say it is best for families (Luxury Hotels & Resorts). With that being said, their typical customers will most likely be wealthier couples looking for a weekend getaway.
  2. Business Travelers: Business travelers are a tremendous sector that the Ritz Carlton provides for. Because their companies are paying for their travel expenses, business travelers are not conscious of costs. Business travelers are much more likely to choose an upscale or luxury hotel, simply because they are not the ones paying for it (Business travel spending U.S. 2011-2017, 2018). Providing exceptional amenities, meeting space, and a business center, the Ritz Carlton allows its business travelers to make use of these extra functions for all their business-related needs (Luxury Hotels & Resorts). Additionally, the Ritz Carlton is located in the heart of center city, making it almost effortless to access public transportation, taxi services, or uber.
  3. Meetings & Events: Similar to individual business travelers, the Ritz Carlton Philadelphia also sells a large portion of its rooms and venue space to corporate functions and business meetings. Traveling in large groups, these businesses typically need an upscale hotel that provides meeting and venue space for its many programs. For example, the Ritz Carlton Philadelphia has a Plaza Ballroom that is 1950 square feet in size, with dimensions of 56 x 35 feet (The Ritz Carlton Philadelphia). This venue space offers reception seating for 150 individuals, conference seating for 44 individuals, and theater-type seating for 100 individuals (The Ritz Carlton Philadelphia). For the Ritz Carlton Philadelphia, is it important to please this market as they will likely use the venue space again if they are happy. Many organizations have partnerships with hotels and meeting spaces, so creating these bonds is crucial for repeat business. To the left is a diagram of the Ritz Carlton Philadelphia’s “Plaza Ballroom”, that can be utilized for companies and organizations alike.

Given the above information, the Ritz Carlton Philadelphia’s primary customers are upper class and middle class couples. Mainly traveling for leisure purposes, the majority of the people choosing to stay at the Ritz Carlton are those who have money and are typically making this money to spend it on name brand and luxury products and services.

3.2 Psychographics of Upper & Middle Class Couples

  1. Lifestyle: The Ritz Carlton Philadelphia’s wealthier target market customers choose to purchase its rooms and suites because of their lifestyle. By either growing up in a wealthy family or obtaining a job that pays very well, people with more money tend to enjoy luxurious amenities (Bisht, 2016). These people pay more for luxury brands because of the standards that are associated with it. Like fine-dining experiences or paying more for a designer handbag, people living with a high-class lifestyle typically choose the finer things that the tourism and hospitality industry has to offer because they live this lifestyle on a daily basis (Bisht, 2016).
  2. Social Class: Being from the upper middle class or upper class segment, people with a higher social class will have more money to spend on experiences and exceptional services. With premium pricing, the Ritz Carlton Philadelphia provides this experience with a hefty price tag, one that is affordable by their target market (Maguire, 2017). They are choosing to stay here not only for the exceptional service, but simply because they can afford it. To maintain a high social status, sometimes these people will invest their time and money into luxury brands to outwardly express their status (Maguire, 2017). With designer items and luxurious hotels like the Ritz Carlton, putting their money towards these items and experiences shows the rest of society their
  3. Exotic Experiences: By 2022, it is expected that luxury travel will have produced in $1.15 billion in revenue worldwide (Bisht, 2016). Luxury travel is the fastest growing market in the travel industry, and it is mainly due to people’s desire to experience something unique. The Ritz Carlton’s upper/middle class target market are people willing to pay for an experience that is different than the norm. Within this market, Baby Boomers are dominating the luxury travel market because of their higher disposable income and less health constraints than older generations (Bisht, 2016). They typically do not have the responsibilities of caring for children because they have all grown up and moved out, and tend to be in senior management level jobs that pay well as opposed to Millennials going into entry level jobs and Generation X’ers who are still working their way up (Bisht, 2016). With a high desire to experience exotic services and the right amount of disposable income, Baby Boomers are a prime target for the Ritz Carlton Philadelphia.

4. Internal Analysis

For the internal analysis, this section will be focusing on the other leading luxury hotels in the Philadelphia region. Each luxury hotel offers unique amenities that some people find more valuable than the Ritz Carlton Philadelphia. Based on our demographics and psychographics, the typical consumer of the Ritz Carlton Philadelphia expects certain upscale amenities, some of which are offered at many of the other competing hotels in Philadelphia. After identifying our competitors, we will look at the strengths and weaknesses the Ritz Carlton possesses that could potentially impact our target market.

4.1 Identifying Competitors

  1. The Rittenhouse & AKA Rittenhouse: The Rittenhouse Hotel is located at 210 W Rittenhouse Square between Walnut and Locust Street and was originally a mansion for the Cassatt family. Eventually, this property was converted into the grandeur hotel it is today (Middleton, 2018). Opening in 1989, this hotel offered 118 luxury rooms at a premium price. With an upscale bar and eatery, The Rittenhouse hotel rivals with the Ritz Carlton Philadelphia in terms of customer service, food, and differentiation (Middleton, 2018). AKA Rittenhouse, located at 135 South 18th Street between Moravian and Walnut Street, is another luxury hotel in the Rittenhouse area that is slightly cheaper but offers similar luxurious experiences. 12 stories high, the AKA Rittenhouse has a modern twist while offering a gym and on-site kitchen to its guests (Middleton, 2018). From studio rooms to two bedroom suites, the AKA Rittenhouse rivals with the Ritz Carlton Philadelphia in terms of price and differentiation as well.
  2. Kimpton Hotel Palomar & Kimpton Hotel Monaco: The Kimpton Hotel Palomar is a boutique hotel located in Rittenhouse Square that offers luxury suites and views of center city from its grandiose windows. With in-room spa treatments available, guests are able to choose up to 80 minutes of massages right in the comfort of their room (Middleton, 2018). Highlighting its comfort and spa services, the Kimpton Hotel Palomar competes with the Ritz Carlton Philadelphia in terms of convenience and guest comfort (Middleton, 2018). The Kimpton Hotel Monaco is another Kimpton property located in Old City that mixes a modern style with historical touches. Opening in 2012 and offering 268 rooms, this Kimpton location offers in-room spa services as well, yoga, and free wine tastings for its guests (Middleton, 2018). With a rooftop bar and a beautiful view of the city, the Kimpton Hotel Monaco offers unique amenities that rival the Ritz Carlton Philadelphia.
  3. The Logan Hotel: Where the old Four Seasons used to be located, the Logan Hotel took over this property and features 391 rooms with unlimited beautiful views (The Logan Philadelphia). The Logan offers an on-site eatery and steakhouse that specializes in farm-to-table dining. Additionally, The Logan offers a rooftop lounge, called Assembly, and spa services that highlight deep tissue massages and stress relief relaxation procedures (The Logan Philadelphia). Right near Benjamin Franklin Parkway, The Logan is a prime location for any type of luxury traveler looking to explore Philadelphia.
  4. Sofitel Philadelphia: While slightly more affordable than some luxury hotels in Center City Philadelphia, Sofitel has 306 hotel rooms with a stylish flare (THE HOTEL). Eating at Liberte Lounge, guests can enjoy French cuisines and unique cocktails at the Sofitel’s bar (THE HOTEL). This pet-friendly hotel has 24 hour room services, a business center, a fitness center, and valet parking (Middleton, 2018). Rivaling with the Ritz Carlton Philadelphia in terms of price and uniqueness, Sofitel has many services to offer at a decent rate.
  5. The Bellevue: Operated by Hyatt, this hotel is located near the Avenue of the Arts, and boasts plush beds, marble bathrooms, and modern style. The lower level of The Bellevue features on-site shops like Tiffany & Co., Ralph Lauren, and many other select brands for its guests to enjoy (Middleton, 2018). On the 19th floor, The Bellevue offers a fine-dining eatery with an American flare and balcony seating and amazing views of Center City for its guests (Middleton, 2018).

4.2 Side by Side Comparison

  The Ritz The Ritten- 

house

Sofitel AKA Ritten- 

house

The Bellevue The Logan Kimpton Monaco 

Hotel

Kimpton Palomar 

Hotel

# of Rooms 301 118 306 78 172 391 268
Average Rating (TripAdvisor) 4.0 4.5 4.5 4.5 4.0 4.5 4.5 4.5
Price Range Per Night $330- $1,300 $350-$880 $240- 

$340

$257-$525 $194-$350 $240-$330 $250 $200-300
Spa (In-room or on-site) Y Y N Y Y Y N Y
Room Service Y Y Y N N Y Y Y
Business Center Y Y Y N Y Y N Y
Fitness Center Y Y Y Y Y Y Y Y
Valet Y Y Y N Y Y Y Y
On-Site Dining Y Y Y Y Y Y Y Y
Meeting/Event Space

(27,000 sq ft)

(8,470 sq ft)

(16,000 sq ft)

N

(30,000 sq feet)

(23,100 sq ft)

Y (13,000 sq ft) Y (6,000 sq ft)
Established motto & promise of service (Gold Standard) Y N N N N N N N

4.3 Strengths & Weaknesses

  1. Strengths: Based on the information above, it is clear that there is an industry standard amongst upscale hotels. Most luxury hotels offer amenities like 24 hour room service, valet parking, on-site dining, and a spa. It is important that the Ritz Carlton Philadelphia works to differentiate itself, especially when its competing hotels are offering similar services. The Ritz Carlton biggest strengths is its brand. While some of its competition in Philadelphia may offer different amenities, the Ritz Carlton has strong brand awareness (Bhasin, 2018). More people are likely to recognize the Ritz Carlton as a luxury hotel than the Sofitel or The Rittenhouse, meaning they are more likely to choose the Ritz Carlton Philadelphia prior to researching different luxury hotels. This is the main strength that drives the upper and middle class demographic to stay at the Ritz Carlton Philadelphia instead of competing hotels. Another strength of the Ritz Carlton is its obvious upscale services. It does not fail in any of the categories for upscale amenities, while some of the luxury hotels in Philadelphia that I compared in the table above do not have a spa or adequate meeting space for example. Lastly, as you can see by the last comparison on the chart, the Ritz Carlton is the only luxury hotel that follows a credible line of service like the “Gold Standard”. Because the Ritz Carlton has its established way of doing service, consumers know that employees are trained properly and their customer service is of utmost importance to them (The Gold Standard).
  2. Weaknesses: The Ritz Carlton Philadelphia’s biggest weakness is its 4.0 rating on TripAdvisor and multiple websites across the board. 8 out of 10 of the hotels compared in the above table have a rating of 4.5 stars, while only the Ritz Carlton Philadelphia and The Bellevue have 4.0 star ratings. This could severely harm the Ritz Carlton Philadelphia’s  business because once people do their research on luxury hotels in Philadelphia, they will quickly see that the Ritz Carlton is rated significantly lower than its competitors. Forbes says that 88% of customers trust online reviews almost as much as they trust family and friend recommendations, while only 12% do not care about online reviews from the general public (DeMers, 2015). Having higher reviews online also means that your hotel property will show up more often than those ranked lower, and enables your property to show up organically when searched (DeMers, 2015). For the Ritz Carlton’s target market, this will definitely defer people because these individuals, couples, and families are paying large sums of money for the best service possible. It is impossible to ignore the significance of positive reviews and online ratings in the hotel industry, and this is a major weakness for the Ritz Carlton Philadelphia when being compared to its luxury competitors. Another weakness is its price difference. Hotels like Sofitel are able to offer luxury rooms at a rate of $240-$340 a night while the Ritz Carlton has rooms well over $1,000 (Middleton, 2018). While the Ritz Carlton Philadelphia’s primary target market is upper and middle class people who are not super price conscious, there comes a point where everyone must consider price. When offered a luxury room at $1,000 per night versus and room at $450 per night, many people may pick the cheaper one if the amenities are similar. This proves to be a major weakness for the Ritz Carlton Philadelphia, because similar amenities are offered at a cheaper price when compared to other luxury hotels.

5. External Analysis

An external analysis will be conducted on the Ritz Carlton Philadelphia, determining what factors influence it as well as opportunities and threats it may encounter in the near future. Using the PESTE analysis, these influences can either be taken advantage of and utilized for further growth or need to be monitored to ensure that the Ritz Carlton Philadelphia is not being harmed in any way. With the upper and middle class being their primary customer target market, the Ritz Carlton can utilize certain opportunities but must carefully monitor others. Lastly, a micro analysis will be conducted to determine the Ritz Carlton Philadelphia’s suppliers, publics, and marketing intermediaries.

5.1 Macro Analysis (PESTE)

  1. Political:A major political threat that the Ritz Carlton Philadelphia faces is the rise of terrorism in the past decade. While Philadelphia itself has only had scares and small-scale attacks, it is impossible to predict where a terror attack will happen next. Using Las Vegas as an example, it becomes clear how greatly terror attacks can effect a destination. After the horrific Las Vegas shooting that took place in October of 2017, total visitation to the city had already dropped by 3.3% in January 2018, while casino revenue dropped down to 8.89% (Tourism slump Continues in Las Vegas Months After Mass Shooting, 2018). Las Vegas had already been in a recession beforehand, and the terror attack did not help in the slightest. The city of Philadelphia needs to be conscious of these attacks, because sadly, they are not uncommon anymore. If this were to happen to Philadelphia, tourist numbers would then decrease for the following months and many hotels like the Ritz Carlton would lose out business. One data site shows that in 2011, there were roughly 5,000 terror attacks worldwide, and in 2016, there was a shocking increase to 13,500 attacks reported worldwide (Terrorism, 2018) This dramatic increase shows that no matter where you are in the world, it may happen to you at any time. With that being said, as a major city along the East coast, Philadelphia must be wary of the sudden increases of terror and be conscious of what that can do for the tourism and hospitality industry.
  2. Economic: The growth in the business market is another potential opportunity for the Ritz Carlton Philadelphia. The typical business traveler tends to spend much more than the leisure traveler, as money is not a pressing issue since their company is paying for it. Business travelers tend to choose nicer hotels with the best services and amenities (Business Travel Spending U.S. 2011-2017, 2018). They want things readily available as they are always on the go, and need exceptional customer service to get through their day. This is a huge opportunity for the Ritz Carlton Philadelphia because if money is not an issue, a business traveler would very well spend their company’s money on a luxury hotel room within the Ritz Carlton rather than a budget hotel room. In 2015, there were 459 million domestic business trips in the United States alone, and in 2020 that number is expected to increase to 483 million trips (Business Travel Spending U.S. 2011-2017, 2018). With this overall growth nationwide, Philadelphia will thus see an increase in business travelers considering Philadelphia is a major city in the United States and the third largest city on the East.
  3. Social: Additionally, another major opportunity for the Ritz Carlton Philadelphia is the city’s diversity. DMO’s like Visit Philly, who are in charge of marketing and managing the city’s domestic tourism, show that their prime audience is aged 25-54 years old (Visit Philadelphia Annual Report, 2017). Visit Philly markets to multicultural sight-goers with an emphasis on African Americans, Latinos, and the LGBT community (Visit Philadelphia Annual Report, 2017). With cultural sights and places like the Gayborhood and African-American targeted museums, Philadelphia is able to attract an array of people from different races, ethnicities, and sexual orientations. This is an opportunity for the Ritz Carlton Philadelphia because there is not a “one size fits all” mold of people visiting the area. A wide variety of people visiting means more growth and spending, something the Ritz Carlton can harness and take advantage of. By marketing some of their services to these diverse communities, individuals will understand that the Ritz Carlton Philadelphia is an open atmosphere that accepts those from all walks of life, thus increasing their revenue.
  4. Technological: Technology is growing exponentially and this is an opportunity for the Ritz Carlton to grow as well. With many organizations appearing to have a greater online presence, the opportunity to market their luxury services are limitless. As of this year, over 40.8 billion people have some type of online presence, adding up to 53% of the world’s total population. With this information, 3.2 billion of them have a social media presence, which equates to 42% of the total population (Shaw, 2018). A survey conducted in 2017 of 5,700 marketers concluded that 69% of the 5,700 surveyed believe they are currently building loyal customers through their online platforms. In an additional survey of more than 600 senior marketers, 39% said their organic social media posts appeared to have medium return on investment, while 20% said they received the highest return on investment from this same online marketing forum (Shaw, 2018). Amongst this, 36% reported that social media ads brought in medium return on investment and 17% said this technique brought in high return on investment (Shaw, 2018). Whether it’s through building brand awareness or getting social media viewers to increase sales, this is a major opportunity for the Ritz Carlton as more generations become well adapted to social media. Generation X, well known for their adaptiveness to technology, are individuals in management positions who are making the most money to afford grandeur services like the Ritz Carlton (Peraita, 2015). While millennials are known for being tech savvy, generation X is very adaptive to new forms of technology and additionally have the money to spend on services like the Ritz Carlton Philadelphia (Peraita, 2015). The pros of creating a strong online presence is an opportunity for the Ritz Carlton as current generations up to 40 years old are adaptive and interacting with online content.
  5. Environmental: A major opportunity that the Ritz Carlton Philadelphia has is its prime location. The city of Philadelphia is becoming a popular travel destination and not just a pass through city. In 2017, Visit Philly reported that 43.3 million people visited the city, more than ever before (Visit Philadelphia Annual Report, 2017). 500,000 of those people were from Canada, which is Philadelphia largest visitor market, while 88% of the 43.3 million visitors choosing to visit Philadelphia reported being in the city for leisure purposes. Philadelphia is also considered a “year round destination”, meaning that throughout the year the city saw high numbers of visitors during all months of the year (Visit Philadelphia Annual Report, 2017). This is the 8th year in a row that Philadelphia has seen major increases in tourism, showing the immense opportunities the Ritz Carlton Philadelphia has. Likewise, with the Eagles Super Bowl win, the papal visit in 2015, and large-scale conferences like the DNC, the city of Philadelphia is making national headlines and drawing attention. With that being said, the Ritz Carlton Philadelphia can attract more guests as people are more likely to visit, stay, and spend time in the city.

5.2 Micro Analysis

  1. Suppliers: Operated by Marriott, the Ritz Carlton LLC Company and the Ritz Carlton Philadelphia use supplier diversity. Their program called “Exchanges” welcomes minority, women, LGBTQ+, disabled, and veteran operated suppliers to help fuel their business (Supplier Diveristy). Marriott believes that suppliers must accurately represent their customer base, who are unique individuals with different backgrounds (Supplier Diversity). Not only does it represent the community well, but it drives economic empowerment. In the past decade Marriott International has spent 5 billion on diverse suppliers, nationally and globally. Some of those diverse suppliers include WEConnect International, US Business Leadership Network, US Hispanic Chamber of Commerce, and many more (Supplier Diversity). While this applies for Marriott as an organization, the Ritz Carlton and the Ritz Carlton Philadelphia are kept within reach of the corporation. While many of their economy level hotels are franchised, the Ritz Carlton has high standards, some that only Marriott may be able to implement well (Luxury Hotels & Resorts). Additionally, Marriott’s luxury hotels are franchised the least out of all their brands. With that being said, a lot of Marriott’s suppliers carry over to the Ritz Carlton LLC Company, and act as some of their main suppliers.
  2. Publics: General publics and internal publics are the main two groups of people who have interest in the Ritz Carlton Philadelphia’s immediate success. General publics are classified as the general population’s attitude toward a brand and the services they offer (Marketing 101). The general public tends to believe that the Ritz Carlton brand is a luxurious service, regardless of if they have stayed there or not. These affect consumer buying habits because of how your organization and brand is perceived. If your brand is considered fancier than others, the price tag associated with this is typically higher and upper class people will be the ones to purchase it (Marketing 101). Your online presence can also show your customers general perceptions of your brand. Through reviews, comments, and demographics interacting with your content, you will be able to determine brand reputation and how people are reacting to your amenities and services (DeMers, 2015). Internal publics are another group that directly impact the success of the Ritz Carlton Philadelphia. Internal publics are defined as people within your business, like general employees, managers, etc. (Marketing 101) Going back to their Gold Standard implementation and strategic plan, the Ritz Carlton makes their employees responsible for directly contributing to the businesses brand and success. When your employees are trained properly and enjoy working for you, they will directly impact you by how they represent your brand and treat your customers.
  3. Marketing Intermediaries: The middlemen that act as intermediaries for the Ritz Carlton Philadelphia are sites like booking.com, travelmediagroup.com, Expedia, and many more booking websites. These websites let you compare deals, amenities, and choose the right option for you. Without claiming the business as their own, marketing intermediaries connect businesses with buyers midway and influence buying (Ashe-Edmunds, 2017). Using these sites as middlemen, the Ritz Carlton Philadelphia is able to reach more people, provide convenience, and help market its services. With a small price to pay, hotels must pay these intermediaries commission for broadcasting its rooms and services (Ashe-Edmunds, 2017). This is typically not an issue as Marriott is one of the largest hotel chains in the world, physically and financially, and using these marketing intermediaries also helps increase hotel revenue with more exposure (Ashe-Edmunds, 2017).

6. Summary & SWOT

6.1 SWOT Table

Strengths 

 

  • Strong brand
  • Upscale amenities
  • Credible “Gold Standard”
Weaknesses 

 

  • Average 4.0 rating online
  • Expensive in price
Opportunities 

 

  • Technological factors (online & brand awareness)
  • Environmental factors (location)
  • Social factors (diversity)
  • Economic factors (business growth)
Threats 

 

  • Political factors (terrorism)
  • Hotel competition

6.2 Summary

The Ritz Carlton LLC Company is owned by Marriott International and boasts fine-dining, luxury suites, spa services, and more. With over 100 years of history and a strong mission and vision, the Ritz Carlton LLC company holds all its employees accountable for carrying out their strategic plan, and operates under its “Gold Standard” of great service. The Ritz Carlton Philadelphia specifically follows these guidelines as well, and offers 301 luxury rooms right in the heart of Philadelphia for their primary target market, upper and middle class couples.

With the given information from this report, the Ritz Carlton’s target market consists of upper and middle class couples and individuals who can afford their luxury services. This group expects fine services because of their psychographics, and have come to expect certain amenities when paying for hefty price tags. From internally analyzing, we can see that there are many competitors in the Philadelphia area, some that offer similar or better services to that of the Ritz Carlton. Although the Ritz Carlton has this competition, one of its major strengths is its brand awareness. People know the Ritz Carlton brand across the globe, while many are unfamiliar with smaller brands such as Sofitel or The Rittenhouse. As compared to their competitors, the biggest drawback is the Ritz Carlton’s overall reviews and price. While its reviews are still good, they could be better. The majority of the luxury hotels in Philadelphia have a 4.5 star rating, while the Ritz Carlton only has a 4.0 star rating. This can severely impacts a customer’s choice because after researching luxury hotels in Philadelphia, they will see that the Ritz Carlton Philadelphia’s reviews are 0.5 starts lower than many other hotels. Compared to other luxury hotels, the Ritz Carlton Philadelphia offers the most expensive rooms across the board. Regardless of social standing, if a hotel is offering luxury services at a cheaper rate, many people will choose the latter. From an external analysis, there are many additional opportunities including technological, environmental, social, and economical influences that the Ritz Carlton Philadelphia can harness. Likewise, there are also a few threats to this location as well, some being political acts of terrorism and price that can influence the future of the Ritz Carlton Philadelphia.

References

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Bhasin, H. (2018, June 11). Marketing mix of Ritz Carlton – Ritz Carlton Marketing mix. Retrieved from https://www.marketing91.com/marketing-mix-of-ritz-carlton/

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Vacations, Adventure & Safari, Cruise, Yachting & Ship Expedition, Rail Journey, Small Group Journey, Celebration & Special Events, Culinary Travel & Shopping), Age Group (Millennial, Generation X, Baby boomers, Silver hair) – Global Opportunity Analysis and Industry Forecast, 2015 – 2022. Retrieved from https://www.google.com/amp/s/www.alliedmarketresearch.com/luxury-travel-market/amp

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Generation. Retrieved from https://www.centro.net/blog/generation-x-the-small-but-mighty-generation/

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