Historic overview Free Essays

The story of the Ritz-Carlton begins with Swiss hotelier Cesar Ritz who was well known in the hotel industry as the â€Å"king of hoteliers and hotelier to kings. † Mr. Ritz redefined luxury accommodation in Europe with his management of The Ritz in Paris and The Carlton in London. We will write a custom essay sample on Historic overview or any similar topic only for you Order Now Although he died in 1918, his wife Marie continued the tradition of opening hotels in his name. The Ritz-Carlton Investing Company was established by Albert Keller, who bought and franchised the name in the United States. The original Ritz-Carlton hotel was built in Boston, Massachusetts, and opened on May 19, 1927 with a room rate of $15 per night. It became known as the hotel to kings, queens, movie stars, and tycoons: Prince Charles, Irving Berlin, Bette Davis, and Howard Hughes were just a few of its notable guests. Additional locations soon opened in New York, Philadelphia, Pittsburgh, Atlantic City and Boca Raton, but all these locations did not survive the Great Depression and by 1940 only The Ritz-Carlton Boston remained. The Wyner Years: 1927-1964 On October 1926, 29-year-old Edward N. Wyner bought a third-acre parcel at the corner of Arlington and Newbury streets and formed a partnership called The Ritz-Arlington Trust with his father, George, and business associate, John S. Slater. The trust sold $2. 1 million of bonds to finance the construction of a hotel to be called the Mayflower. The 18-story, 201-foot brick building, designed by Strickland, Blodget Law Architects, was far taller than anything else along Newbury Street at the time. Construction had started on the second floor when Wyner was persuaded by then-Mayor James Michael Curly to make the Mayflower a world-class, 300-room Ritz-Carlton Hotel, which opened May 19, 1927. Room rates were $5 to $15 per night; $40 per night for suites. After a hugely successful opening, the stock market crash of 1929 and ensuing Depression brought financial difficulties. The Wyner family funded the hotel’s operating losses during the early 1930s, although the interest on the bonds went unpaid. Still in 1933, when only 30 guests were registered in the hotel, Wyner turned on the lights in every guest room to give the appearance the hotel was full. Wyner died of a heart attack on Dec. 5, 1961. His six sons tried to continue operation of the hotel, but it was too difficult, and a decision was made to sell. The Blakeley Years: 1964-1983 The unpaid interest on the bonds dissuaded many from trying to buy the hotel. But Cabot, Cabot Forbes principal Gerald F. Blakeley Jr. was interested. After more than a year of legal work, Hale and Dorr succeeded at clearing the bond obligations, and in October 1964 Blakeley and associates Paul Hellmuth and Charles Spaulding acquired the Ritz-Carlton Boston for $3. 8 million. â€Å"Out of the 20 years I owned it, it made money three years. The other years it broke even, but from a public relations standpoint for CCF, it was a tremendous asset,† said Blakeley, who completed a 19-story Ritz-Carlton luxury condominium complex on land adjacent to the hotel in 1981. In the late 1960s Blakeley obtained the rights to the Ritz-Carlton name in North America (with the exception of Montreal and New York). In June 1978, Blakeley was awarded the rights and privileges of the Ritz-Carlton trademark in the United States and was given a US Service Mark Registration. In August 1983, Johnson Properties bought the Ritz Boston and US trademark for $75. 5 million and established the Ritz-Carlton Hotel Co. In 1988, Johnson subsequently obtained the exclusive rights to the Ritz name throughout the world (except for the 210-room Hotel-Ritz Paris and the Ritz-Carlton in Montreal). The Corporate Years: 1983-1999 Johnson grew the company from the One Ritz-Carlton Boston to 30 hotels worldwide in just 10 years. He obtained financing to do so from Manufacturers Hanover Trust of New York in 1983 in the amount of $85 million secured by the Ritz-Carlton Boston. This loan was refinanced in 1989 by Manhattan Tops USA of New York for $136. 5 million and again in 1994 by Sumitomo Bank of Japan. By 1996, this mortgage was in default and the interest and penalties brought the total debt to $214. 8 million. By splitting this mortgage note into three parts, Sumitomo Bank was able to unbundle the Ritz Boston from the trademark rights to the Ritz brand worldwide. Blackstone Real Estate Acquisitions of New York bought the Ritz-Carlton Boston at auction for $75 million in February 1998. A month later, Host Marriott Corp. of Bethesda, Maryland, acquired the hotel from Blackstone for $100 million. Marriott International Inc. , which franchises and manages Marriott’s 325,000 rooms, bought the Ritz-Carlton Hotel Co. and rights to the Ritz-Carlton name worldwide from W. B. Johnson for $290 million in a two-part transaction completed in 1998. Millenium Purchase In 1998, Christopher Jeffries, founding partner of Millennium Partners, obtained Ritz franchises from Marriott for four hotel properties under construction: two in Washington, one in New York City, and one in Atlanta, Georgia. In addition, Jeffries was searching for a brand affiliation for the new 155-room hotel and 270-luxury condominiums he was constructing as part of Boston’s 1. 8 million-square-foot Millennium Place, a mixed-use complex on lower Washington Street. Because of noncompetition clauses, the only way he could obtain a second Ritz flag in Boston was to own the existing Ritz. Millennium Partners acquired the original Ritz-Carlton Boston for $122 million (though it had sold for just $75 million less than two years prior) and spent $50 million for renovations. Marriott agreed to allow the Ritz affiliation for the condominium complex, which will be known as The Residences at the Ritz-Carlton, and share all of the services of the hotel. In 1999, when Millennium Partners of New York, the new owners of the original Ritz-Carlton Boston, announced that the company was building a second Ritz-Carlton in Boston (the now-completed 193-room Ritz-Carlton, Boston Commons), there was much local disapproval. A member of the old guard summed up: â€Å"The movement of a name from one place to another doesn’t do it. There would never be that special atmosphere; a grace, decency, and ambiance that once existed. † Millennium Partners admitted they had no intentions of trying to duplicate the Ritz. Taj Purchase In October 2002, The Ritz-Carlton Boston celebrated its 75th Anniversary with a major restoration to bring the facility 21st century amenities while maintaining its 20th century decor. The Ritz-Carlton Boston has been in continuous operation since it opened in 1927. The property is a Boston landmark and anchors fashionable Newbury Street and the picturesque Boston Public Garden located in the heart of the Back Bay. In November 2006, The Taj Hotels Resorts and Palaces, subsidiary of the India-based Tata Group, entered into a definitive agreement to purchase The Ritz-Carlton Boston from its current owners, Millennium Partners. The $170 million transaction is scheduled to close on January 11, 2007. Taj Hotels Resorts and Palaces operates 75 hotels across the world. The Ritz-Carlton Boston will be renamed the Taj Boston upon closing the purchase. The existing Ritz-Carlton Boston Common is expected to be renamed Ritz-Carlton Boston. 2000 and beyond From 2001 to 2007 Boston was home to two Ritz-Carlton hotels that faced each other on Boston Common. The Ritz-Carlton Boston Common Hotel opened in 2001. In November 2006 The Taj Hotels Resorts and Palaces, India luxury hotel group entered into an agreement to purchase the original 1927 Ritz-Carlton Boston from its current owners, Millennium Partners, for $170 Million. The Ritz-Carlton name was not sold to Taj Hotels. The Ritz-Carlton Boston was renamed Taj Boston on Jan. 11, 2007. The Ritz-Carlton Hotel Company, LLC has announced its first hotel in India. The property is slated to open in Bangalore in 2007. The Ritz-Carlton Hotel Company In 1983, the original hotel and the brand were sold to The Ritz-Carlton Hotel Company, L. L. C. , based in Atlanta, Georgia which began expansion of the brand to other locations. The company grew to become the hospitality leader in the US under the leadership of Horst Schulze. His strong conviction of customer loyalty and emphasis on a value/mission driven philosophy for the â€Å"Ladies and Gentleman serving Ladies and Gentleman† became a benchmark in the industry that other companies aspired yet never reached. In 1995, Marriott 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 company is now headquartered in Chevy Chase, Maryland, located in the Washington, D. C. MSA. The Ritz-Carlton Hotel Company partnered with Bulgari in 2001 to operate a chain of hotels owned by and operated under the Bulgari brand. Simon Cooper joined Ritz-Carlton in 2001 as President and Chief Operating Officer taking the helm from Horst Schulze. Cooper’s mandate was to grow the chain through hotel expansion and product diversification. Under Cooper’s watch the company has aggressively expanded its hotels and has added The Residences at The Ritz-Carlton (private residential units) as well as The Ritz-Carlton Club (fractional ownership residences) to the company’s new development program. How to cite Historic overview, Papers