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Great Leaders

Although marketing is relatively new to the hospitality industry, a common characteristic among many of the great hospitality industry leaders is their successful application of basic marketing principles. These principles include focusing on guests to satisfy their wants (external marketing) and satisfying employees who serve the guests (internal marketing). Here are sketches of four outstanding hospitality industry marketers. These early industry leaders of the past are all white males. But today's hospitality leaders are a diverse group, with representatives from different racial groups, ethnic backgrounds, and both genders. We can learn from these past leaders, but the future is yours.

Ellsworth Statler (1863-1928)

Ellsworth Statler was an innovator whose ideas still play a vital role in today's lodging industry. Statler constantly sought innovations that would make the guest's experience more comfortable and pleasant. In 1908, he opened the Buffalo Statler, the most innovative hotel of its time. It was the first middle-class hotel to have a bath in every room rather than the large public baths common at that time. His architect tried to dissuade him, arguing that it would be impossible to recapture the investment required to provide this convenience at the rates that Statler planned to charge. Statler then explained that the baths would be constructed back to back, with common plumbing shafts. These plumbing shafts would also carry electrical conduit and hot water for the heating system.
Statler added other conveniences. The Buffalo Statler was one of the first hotels to have a phone in every room. Statler felt this innovation would be paid for by increased room-service sales, and with many hotel guests eating in their rooms, the hotel restaurant could be made more attractive to local diners.
Internal marketing, or marketing to the employees, was also a part of Statler's marketing efforts. Statler understood that by taking good care of his employees and fostering a sense of pride in where they worked, his employees would be more sensitive to customer needs. As part of his internal marketing program, he developed an employee publication called the Statler Salesman. He also developed a profit-sharing plan for all employees, a radical policy at the time.
Statler's attitude toward his guests is summarized in the Statler Service Code.

Statler Service Code

Ralph Hitz (1891-1940)

Ralph Hitz headed the largest hotel organization in the United States during the 1930s, called the National Hotel Company. His company was paid to manage hotels owned by real estate investors. Hitz had great personal involvement in each of his hotels until his death in 1940.
Hitz came to the United States from Vienna in 1906. Three days after his family arrived in New York, he ran away from home. During the next nine years he supported himself by taking assorted jobs in the hospitality industry. In 1915 he married, putting an end to his transient lifestyle. After holding a number of secondary management positions, he became manager of the Gibson Hotel in Cincinnati in 1927. Here he more than tripled the hotel's profits over the next two years. In 1929, Hitz became manager of the 2500-room New Yorker, a position that moved him into national prominence.
Hitz was a marketing genius, creating innovations that today are industry standards. He was first to develop a customer database. This guest history file was used to order hometown newspapers for guests. Imagine the feeling of guests when their hometown newspapers were delivered to their rooms.
Hitz also developed a history file of 3000 active conventions. From these data, weekly bulletins on convention prospects were sent to each of his hotels. Hitz staffed three national sales offices and had two national salespeople. In the cities in which he had hotels, he networked with the local chapters of the major trade associations and helped them lobby to have regional or national conventions in their hometown, also the location of Hitz's hotel.
Hitz was a master at merchandising hotel services. He used an in-house radio system in much the same way today's hotels use in-house television channels to advertise their products. He scheduled radio promotions in the mornings, afternoons, and evenings describing the hotel's breakfast, lunch, and evening entertainment offerings. He created the position of "Tony" in the dining rooms. The Tony's job was created to merchandise café diablo and crepes suzettes. By standardizing the production process and dedicating one person to the task, he was able to sell these two items for 50 cents, making them affordable to the average guest. Guests perceived these treats as a real value, while Hitz made a handsome profit through volume sales. This exemplified his philosophy: Give the customer value and you will get volume sales in return.
Like Statler, Hitz recognized the critical importance of having satisfied employees. He paid more than competitive wages. He sent gifts to all employees on the birth of their children and developed extensive training programs for his staff. Hitz developed a special club for employees with five or more years of service. Members of the five-year club had an automatic appeal to the general manager before they could be fired.

J. Willard Marriott (1900-1985)

J. Willard Marriott also recognized the importance of his employees and treated them like family members. He visited them when they were sick, helped them when they were in trouble, and listened to them when they wanted to talk. Marriott spent much of his personal time letting his employees know that he cared about them. He often visited restaurants and shook hands with all the employees. He knew the importance of the employee-customer relationship and tried to make sure that his employees felt comfortable in their jobs. J. W. Marriott, Jr., current president of Marriott, recalls that at one time, his father employed a person whose sole responsibility was to make sure that the restaurant employees enjoyed their work and were fairly treated. It has been said that J. Willard Marriott treated line employees better than management.
Marriott valued good locations. He often located his restaurants adjacent to bridges, citing his belief that they might reroute highways but they would not remove bridges. Marriott was also expert at analyzing the environment and picking up trends. He recognized the importance of the automobile in the 1920s and geared his first restaurant toward automobile traffic. In the late 1930s, he had the foresight to see the airplane as the future commercial transportation mode and was one of the first to enter the airline catering business.
Marriott was an innovative marketer. His Hot Shoppes had the famous curb-cut, which allowed cars to come onto the lot. He used the first drive-in trays. He ran gala grand openings for his Hot Shoppes that included bands and entertainment and had his employees promote the restaurant by handing out coupons to cars stopped at traffic lights.
Today, the Marriott corporation has sales of more than $7.5 billion annually, operating a broad range of food and lodging facilities. Its lodging chains include Marriott Hotels and Resorts, Marriott Suites, Residence Inns, Courtyard Hotels, and Fairfield Inns. Its food service operations emphasize contract feeding, such as dining rooms in office buildings, employee cafeterias, and college and school feeding.

Ray Kroc (1902-1984)

Ray Kroc is considered the father of the fast-food industry. He started franchising McDonald's in 1955 to create a demand for the multimixer. Kroc was the exclusive distributor of this machine, which could mix up to five milkshakes at once. His largest single user was a hamburger restaurant in California called McDonald's. Kroc made a deal with the McDonald brothers to expand this restaurant concept, which would create a larger demand for his mixers. The success of the restaurants soon changed his focus from mixers to hamburgers.
Kroc had great marketing skills. He managed to develop a restaurant concept that appealed to younger families: quick service, clean surroundings, and inexpensive food. He offered value by keeping the menu simple and developing an excellent service delivery system. His formula, QSC&V (quality, service, cleanliness, and value), was the key to his restaurant's success. He maintained consistency throughout the chain by insisting that all the franchisees adhere to strict product specifications, keep the stores clean, and provide good value through his pricing structure. To maintain a family atmosphere and discourage teenagers from hanging out, he would not allow telephones or jukeboxes in the restaurants.
Kroc was one of the first restauranteurs to understand the value of public relations and include it in McDonald's strategic plans. He hired the public relations firm of Cooper, Burns, and Golin in 1957, knowing that a favorable article in the paper was much more valuable than an advertisement. McDonald's quickly gained national publicity through media such as Time and Associated Press. Cooper, Burns, and Golin also developed kits for the franchisees to use in their local markets. These kits explained how to support the community through involvement in local charities and events and how to get media coverage from such activities. Some chains are just now starting to emulate the form of local store marketing that McDonald's began using more than 30 years ago.
Ronald McDonald House is one of McDonald's national charities. A study found that customers had a preference for McDonald's because of their perceived community involvement through Ronald McDonald House. Kroc realized that image is not only important for a company's customers, but that it has an impact on stockholders, franchisees, prospective employees, and communities in which the company locates its stores.
Through Kroc's leadership McDonald's became the largest restaurant company in the world, as measured by gross sales. Today, it is an international organization with more than 14,000 stores. More than 2000 people apply for a McDonald's franchise every year.

None of these hospitality industry leaders took a formal marketing course before entering business, as marketing was not taught in most colleges until the 1960s. Yet the concepts that have been formalized into the discipline of marketing were the keys to the success of these past leaders.

References

  1. Floyd Miller, Statler: America's Extraordinary Hotelman (New York: The Statler Foundation, 1968).
  2. Ibid., p. 140.
  3. "Hitz Hotels," Fortune, 15, no. 5 (May 1937), pp. 139-154.
  4. Willard J. Marriott, jr., Interview at Marriott Headquarters with Karl Conrad and Bill Heaton of the Conrad N. Hilton College, on April 8, 1986.
  5. Charles Moritz, Current Biography Yearbook (New York: H.W. Wilson Company, 1972).
  6. John F. Love, McDonald's, Behind The Golden Arches (New York: Bantam Books, 1986).
  7. John T. Bowen, "Advertising to Children: Restaurants Should Proceed with Caution," Consultant, 18, no. 1 (1985), pp. 45-46.
  8. Lisa Bertagnoli, "McDonald's Company of the Quarter Century," Restaurants and Institutions, 98, no. 18 (1989), pp. 32-441.





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