Q&A: Ritz-Carlton founder Horst Schulze on tech's role in luxury hotels

Horst Schulze began in the hospitality industry more than 65 years ago as a server’s assistant in a German resort town.

Schulze went on to work for Hilton and Hyatt before becoming one of the founding members of the Ritz-Carlton Company in 1983 and serving as president and chief operating officer of the company’s worldwide operations.

After leaving the Ritz-Carlton Hotel Company, Schulze founded another luxury brand, the Capella Hotel Group.

We spoke to him about changes in the luxury category, the impact of technology, hospitality brands moving into alternative accommodations and how his views on crowd-sourced reviews have changed.

What are some of the main ways the luxury hospitality market is different today than it was when you were launching the Ritz‐Carlton brand in 1983?

When I started in the industry, luxury was more about the hotel surroundings, chandeliers, marble finishing, etc. It was also about the facilities such as the swimming pool and gym. Luxury back then was all about seeing and feeling it.

Today, though, it is much more individualized, and guests view luxury as personalized service and an experience that is tailored to them. This could mean knowing the guest name as he or she walks into the lobby, knowing (before they do) what they want, their favorite cocktail, type of pillow or type of coffee they prefer in the morning.

Time and again we hear that millennials and younger generations value experiences over things. What implications does that have for hotels?

It means hotels have to go back to the basics when it comes to service. As I alluded to earlier, nowadays having new, shiny facilities and amenities are no longer enough. In order to stand out hotels have to provide unforgettable experiences for their guests and this is done primarily through superior, personalized service.

Service can mean designing a curated, personalized day out for a newlywed couple, or it can mean understanding what the guest wants and addressing their request in a timely and competent manner.

To date I think hotels think that by providing iPhone charging points, free Wi-Fi and "Instagrammable" hotel decor is enough to attract the millennial traveler, but it is not. Millennials demand the same level of service excellence as their forebears and as you alluded to in your question, prioritize experiences over "things."

It is true that millennials have grown up using technology and so do expect the minimum when it comes to Wi-Fi, charging points, etc.

Hotels do need to reflect this as well as continue to innovate in this space, such as allowing guests to access their rooms through their mobile phones, introduce facial recognition to replace check-in, ordering food and extra towels through mobile and other innovations. Anything that will remove unnecessary pain points should be considered by hotels.

However, hotels will need to focus on service excellence and providing a meaningful experience. There are few better and more meaningful experiences for guests than connecting with a hotel employee who is kind, friendly, helpful and motivated.

This is what really stays with the guest, as you can see on the millions of TripAdvisor reviews that millennials (and other generations) post.

What advice do you have for luxury brands trying to balance high touch with high tech?

High tech and high touch are not necessarily mutually exclusive, a perfect example is mobile training. I recently joined the mobile training firm Boost as a director and board member precisely because I see the power of mobile and how it can enhance guest service.

For example, you cannot separate language from service, and it is vital that employees are able to communicate effectively with their guests, understand their requirements and deliver on them.

Mobile training allows employees to learn English and/or Mandarin at a time and place of their choosing (unlike traditional classroom‐based methods) and is much more effective at teaching languages.

Importantly, the modern "mobile-first" hotel employee is more used to reading from a screen than from a book and so responds better to mobile training. Mobile training does not replace the employee, rather it empowers the hotel employee to perform better and provide better service.

So, my advice for hotels would be identify the technologies that empower employees and truly make the life of the guest easier and more pleasant.

Too often I see hotels (and companies in other industries) purchase technologies almost, it seems, for the sake of it - iPads on the reception desk that no one uses, lighting systems in hotel rooms that are too complex for more guests to fully understand, I could go on.

General managers need to ask themselves whether the technology they are about to invest in improves the lives of the guest, or empowers service staff to improve the life of the guest. If the answer is yes, then go ahead.

Will chatbots and other AI‐driven communication systems ever become good enough to replace the need for human service in hotels?

I think technology will get very close, and possibly even take on many roles traditionally done by a human in hospitality.

Hotels think that by providing iPhone charging points, free Wi-Fi and "Instagrammable" hotel decor is enough to attract the millennial traveler, but it is not.

Horst Schulze

Share this quote

Today, there are "robots" such as Amazon’s Alexa and Apple’s Siri who can call up restaurants and make bookings, often with the person at the other end of the line not knowing that they’re speaking with a robot!

So, I do think that as artificial intelligence becomes more sophisticated and capable, we will see it take on more tasks, especially repetitive, rules‐based work that employees currently do.

However, hospitality is a very personalized industry. At the end of the day guests (especially repeat guests) book with a certain hotel not only due to its facilities and location (although these are important), but because of the service they receive.

People like to speak with other people because, unlike machines, we have empathy and sincerity.

While budget hotels may rely on technology more to take on most (or possibly all) service functions, for most hotel segments I do not believe technologies such as AI and chatbots will replace human service.

Ritz‐Carlton’s parent company, Marriott, has made some considerable moves into the private accommodation arena. Give us your thoughts on the rise of that sector and the role of hotel brands to serve consumers’ demand for it.

Airbnb has really driven and developed the market for home rentals and in general I think this is great, giving the consumer more choice and options. It is also not surprising that larger hotel brands are entering this space which I also think is positive especially if they raise standards and provide innovation.

Personally, I still have some concerns about renting someone else’s apartment. This is due to security reasons – hotels have sprinkler systems and other safety features – but also the fact that when I am on business or on vacation, I would prefer not to make my own bed and clean up!

However, if Marriott and others find a way to overcome these then I may be tempted to try them out.

I read an interview you did several years ago where you said that initially you didn’t think travelers would really rely on crowd‐sourced reviews from sites such as TripAdvisor to inform their travel decisions. What are your thoughts on these sites now and the impact they have on the hospitality industry?

I think online review sites have clearly made an impact on guest opinion and decision‐making. This is also reflected in the attention that many general managers pay to such sites. I would say that the impact is less pronounced on the ultra‐luxury segment which relies on travel agents and other experts.

And what about the online intermediaries ‐ did you imagine they would become so powerful in distribution of hotels and their huge role in customer acquisition?

Thirty years ago, I would not have imagined this, no. In general, though, I think such intermediaries have been positive especially for smaller, independent hotels.

General managers want business and online intermediaries are able to provide this, smaller hotels with less powerful brand names are now able to reach a much wider audience so this has certainly benefited them.

Looking back on your long career in hospitality, what have been some of the your proudest or most memorable moments?

My proudest moments have been when I have see my own employees move on to leadership positions within the industry.

When I was recently in Bali, Indonesia, I ran into a general manager of a hotel there who told me that he was a line employee (a banquet server) when he first started in the industry. His first hotel was a Ritz‐Carlton property in Bali, which I opened.

I would open all Ritz‐Carlton properties and part of my role was to teach and guide the leaders. So, at that particular property I was teaching the hotel management – this man was just in the background listening in – using flipcharts. When we all left the room took the flipcharts and used those teachings throughout his career.

He is now a general manager of a hotel in Bali. This is the kind of story that really inspires me.

If you could go back to your time at Ritz‐Carlton, is there anything you would do differently?

There are a few things, but I prefer to keep them to myself!

What advice do you have for young people entering the hospitality industry today?

There are a few pieces of advice I would like to give. Firstly, you must have a vision that drives you, a purpose. This is important because employees want to be connected to a purpose and the role of any employer is to lead them to that purpose.

Secondly, work hard. This seems obvious but you will not achieve your vision or reach your destination unless you put in hard work. Additionally, it makes success that much more satisfying.

Thirdly, work to create something excellent and understand that whatever it is you do ultimately defines you. Lastly, have fun! Again, this seems very obvious and of course, you will not have fun all day every day. However, try to find a role that you enjoy and can look back on with satisfaction.