Merging company culture: Marriott and Ritz-Carlton

When companies with different leading attributes merge, their corporate cultures can pose challenges. I experienced one of those mergers when Marriott International purchased the Ritz-Carlton Hotel Company. I landed the Vice President of Food and Beverage position shortly after Marriott took complete control over Ritz-Carlton Hotels. Today, most consider the merger to be successful, but in the beginning it did not run smoothly for some stakeholders.

The Ritz-Carlton Hotel Company's roots reach back to César Ritz, a great hotelier legend. In 1896, he opened the first hotel to carry his name in Paris. The Ritz brand experienced various ups and downs until the founding of the Ritz-Carlton Hotel Company in 1983. With the pride of luxury hospitality tradition, Ritz-Carlton had grown to 40 hotels when Marriott International acquired the brand in 1998, including its management contracts and real estate holdings. At that time, Marriott International operated 900 hotels, ranging from Fairfield Inn in the budget segment to Marriott Hotels in the more upscale market. The merger with Ritz-Carlton's 40 hotels facilitated the entry into the luxury tier. However, the two companies' corporate cultures called for a complex merger strategy. Here are some of the cultures components.

Ritz-Carlton indoctrinated its employees by insisting that they learn and live the company's credo. The Ritz-Carlton is a place where the genuine care and comfort of our guests is our highest mission. The credo continues with two more sentences focusing on guests. We pledge to provide the finest personal service, and facilities for our guests who will always enjoy a warm, relaxed, yet refined ambience. The Ritz-Carlton experience enlightens the senses, instills well being, and fulfills even the unexpressed wishes and needs of our guests. The hotel company's president, Horst Schulze, insisted that every employee knew and lived the credo. On the other hand, Bill Marriott was known for saying, take care of your employees and they will take care of the guests, and the guests will come back. The different corporate structures resulted in varying approaches to financial forecasting. For example, Ritz-Carlton, a private company focused on accelerating its growth to attract investors, managers created overly optimistic operating budgets. On the other hand, the publicly held Marriott International insisted on shareholders confidence by accurately predicting financial outcomes. According to Daniel Goleman's seminal article on leadership styles, his start-up company calls for a command and control leadership style. More mature organizations perform effectively under democratic leadership. While the bosses at Ritz-Carlton told their subordinates what to do, how to do it, when to do it, the Marriott leaders favorite phrase fostered by Bill Marriott personally was, "What do you think?" Ritz-Carlton needed to build its brand often at the expense of individual hotel owners interests while Marriott relied on growing the company by satisfying its investors. One of the most recognizable components of corporate culture is an organization's nomenclature. For example, at Ritz-Carlton, employees were called ladies and gentlemen, and at Marriott, they were associates. Ritz-Carlton "ladies and gentlemen" shuddered when Marriott managers called them associates during the early days of the merger.