The “TRICK” to Navigating the Turbulent Seas of Transition: Traditional Lodging Makes Waves on the High Seas, Part II

• AETHOS Managing Director Thomas Mielke spearheads a profound look at the human resources staffing and skill set issues and challenges that are faced in the cruise sector. This is the second in a series of four articles focusing on human capital advisory in the cruise space.

Approximately a month ago, following Ritz Carlton's previous announcement about moving into the cruise line sector, I contemplated the issues that must have been discussed in the board room prior to committing to such an endeavor. It stirred my thinking about a company's transition into a new business area that requires new skill sets and a firm's transformation from a company culture perspective to accommodate and welcome a new talent pool into its realms.

Employers are acutely aware of the challenges they face nowadays, so they are preemptively having strategic discussions and preparing detailed action plans to cope with these kinds of business and organizational changes – whether it is a Ritz Carlton moving into the cruise line sector, for example, or Accor moving into a new hybrid segment with Jo&Joe, a brand described as "a vibrant living space, a home that is open to the external world […] which provides a made-to-measure solution for the Millennial-minded Townsters and Tripsters."

Sticking to the topic of traditional lodging leaving the shores, I wanted to hear and learn firsthand from an executive who has witnessed similar change. I sat down with Marco Ciraulo for a brainstorming session. Marco is a former Cunard and SAGA Cruises employee who subsequently gained experience within the hotel industry, including with Four Seasons Hotels & Resorts, before returning to the cruise line sector. He is founder and owner of Culina Consulting as well as a senior teaching fellow at the University of Surrey where he lectures on organizational change management, business strategy and hospitality operations, and where he holds senior executive education seminars.

The "TRICK" to Success in Brand Repositioning

Capitalizing on the knowledge obtained in the luxury hotel industry, Marco is currently involved in advising an established European cruise operator to move into a more high-end market segment. He is helping this operator develop a new hotel room product and Food & Beverage (F&B) concepts, as well as getting involved in defining the client's service and product proposition for its new fleet of luxury cruise liners. Both the soft- and hardware will be quite different from what the client's organization already has. The key question Marco and I were discussing was, how do you ensure that an established, well-accepted and functioning corporate culture and DNA can be carried over successfully into a new business venture and/or adjusted to accommodate the changing needs of the business?

Marco's current assignment is very much a question of maintaining a more disciplined, i.e., process-driven, company culture within one part of the organization whilst aiming to foster and develop a more intuition-based and emotive culture elsewhere. The client company's goal is to encourage internal company transfers but it will also need to attract a new talent pool. Ideally, the two value systems will need to be compatible. It seemingly is a similar challenge as that faced by the Ritz-Carlton team: With already well-oiled and much appreciated corporate cultures and belief systems in place, the firms will have to make sure to attract a new type of employee profile without alienating "the base" to set up the new business ventures for success. To manage this, Marco and I suggest the following TRICK:

Train and mentor – to ensure existing staff feel valued and understand that there are opportunities to grow and develop across the organization whilst new staff learn to value the legacy of the firm.

Raise awareness – for what is different and the reason why it has to be different, making staff understand the new direction that is being pursued.

Identify commonalities – to help bridge the gap between the "old guard" and the "newcomers," ensuring greater collaboration between one division and the next.

Communicate, communicate, communicate – not only to ensure that the message comes across but also to anticipate and proactively manage potential resistance to change.

Kick-start and foster innovation – to keep the firm agile and strengthen staff's openness towards new ways of going about things.

Following the TRICK philosophy, and removing all potential 'speed bumps', is key to success. Marco elaborates on this, highlighting that "to get rid of those speed bumps, it is important to avoid any and all unnecessary politics that prevent a team from exceling due to, at times, lengthy decision-making processes at the head office level and/or senior management's occasional, unnecessary involvement and micromanagement of processes that really should be left to the team hired to do the job in the first place." Not wanting to dismiss the importance of trust and control, Marco and I agreed on the helpfulness of guidance and empowerment as conduits to success. Providing a platform and infrastructure to have the team work as entrepreneurs is key.

Launching a Landside Brand Offshore

Given Marco's hotelier's background, we were also comparing the hotel industry to the cruise line sector. Would a traditional lodging operator face particular challenges when moving offshore?

In his view, so-called key differentiating factors in the hospitality industry are, in fact, often easily copied. "Having bigger rooms? Providing the better selection of F&B outlets or in-room amenities? It may be costly to replicate, but it can be done without a lot of innovation or time of effort needed, whether this is on- or offshore," he says. Success thus depends much more on the intangibles, the subtleties. In hospitality, it is often the people who make the difference as well as the brand affiliation and the customers' emotional attachment to it that make it hard for competitors to keep up. Ritz-Carlton, therefore, is in a good position – there is no question that it does 'the people side of things' extremely well.

One of the main challenges a traditional hotel operator faces, though, when moving its operations to the seas is the increasing complexity of its staffing. Cruise ships employ an extremely diverse crew across the different trades. More often than not, a lot of them do not have a lodging or hotel background and may lack prior experience within the high-end hospitality industry. Adding to this is the fact that there is already tough competition out there for new recruits, with the cruise line industry being the fastest growing hospitality sector. Further complexity is added by the challenging work environment of long working days, limited pay scales and time spent away from home – all this reduces the pool of handpicked, highly skilled employees. When wanting to charge premium rates, this becomes a unique challenge. Moreover, time itself often becomes a challenge since one has to process a very large number of applicants, going through behavioral-based interviews before then organizing and carrying out behavior training and skill-based development programs. Nowadays, one hears it everywhere, but hiring for attitude and training for skill really is crucial in the cruise line sector.

Re-concepting the Aesthetic and Service Experience

Although people make the difference, traditional hotel operators should not forget that in the cruise sector the product is so much more than just the look, feel and location of the physical asset. Marco and I were discussing that cruise customers are obviously a captive audience. There are limited opportunities for them to 'pop out' and experience the destination on their own, and they willingly 'succumb' to the predefined agenda of the cruise operator. This means, though, that customers are also setting extremely high expectations.

So, besides nailing the service levels and the customer engagement, cruise operators need to think of all the different components of their product – ranging from the physical look and feel of the ship and its venues and outlets to the social interaction on board, the destinations and ports of call that form part of the itinerary, the tour operators that carry out the excursions in the different destinations, the transportation companies that bring customers from A to B…. Getting the mix right and knowing what counts where is an art form. On land, customers typically do that for you, so when they opt for a cruise, they put a lot of trust in operators to get it just right and to their personal likings. To do this right for 300 or 5,500 passengers, that's what we call a challenge!

But, in a way, this level of challenge can serve as an object lesson for all brands. After all, most luxury, boutique or lifestyle brands (be they hotel or F&B, etc.) all strive to become destinations in themselves – to build a sustainable community or, what offshore operators would call, captive audiences. So, perhaps the lessons to be learned go both ways… and the next tide of landside innovations in product or service standards will come like a message in a bottle from the seas.

Leora Lanz (for AETHOS)
LHL Communications
AETHOS Consulting Group