Kurt Ritter: 35 years on

17th November 2011 (Last Updated November 17th, 2011 18:30)

He's celebrating three-and-a-half decades with the company, but Rezidor CEO Kurt Ritter shows few signs of slowing down. Phin Foster meets one of the industry’s longest-serving leaders to discuss achievements, failures and why, despite all the success, it’s important not to take oneself too seriously.

Kurt Ritter: 35 years on

The year is 1976. Concorde embarks on its maiden commercial flight. Apple Computers is born. Jimmy Carter edges out Gerald Ford in the race for the US presidency. Meanwhile, in Luleå, Sweden, a young Swiss national arrives at the city’s SAS hotel to take up the reins as general manager.

Fast-forward 35 years and Concorde is retired from service. Now in his late-80s, Carter is an outspoken Nobel Peace Prize-winning activist and Apple is the largest company on Earth. Our general manager’s fortunes have also changed somewhat. He’s still with the same organisation – give or take a few name changes – but has risen to become CEO of one of the world’s fastest-growing hotel groups.

Kurt Ritter’s 35th anniversary with Rezidor is remarkable for a number of reasons. In an industry where transience is a given, this long service with one organisation is extraordinary. CEO since 1989, he is the last of a dying breed: the hotelier executive. Drawn from hotel stock, Ritter studied at Lausanne Hotel School, and has never dreamt of doing anything else. Furthermore, the story of Rezidor’s rise is inseparable from his own; under Ritter’s leadership the group has developed from a small Scandinavian player to a global powerhouse employing more than 35,000 across three distinct brands, with over 400 hotels and 90,000 rooms either in operation or under development.

Unstoppable, the 64-year-old quickly returned to his desk after his anniversary party. Having only recently signed a contract extension that will keep him at the helm until at least 2015, this is a man with his sights still firmly set on the future. "I’m not particularly nostalgic," he claims, "Looking at what I’ve achieved certainly makes me proud – I haven’t got everything right in my career, although just being here means I can’t have got everything wrong either – but it’s a little frightening when you realise 35 years have passed already. I prefer to look forwards."

We are talking during one of Ritter’s frequent visits to a Rezidor property, where he is meeting with members of his executive team and once again ensuring that standards on the front line are being maintained. Amid the flotations, acquisitions and strategic agreements that define so much of a CEO’s tenure, Ritter has never strayed too far from his hotelier roots.

"I talk to people on the ground and always have done," he says. "That may not be the approach they teach at business schools and universities – perhaps the CEO should spend a little less time mixing with chefs and concierges – but it is in my blood. I don’t have the formal education of some other executives, but not many of them can walk into a hotel and know almost instantly how the property is running. Monthly profits, losses, balance sheets and cashflows: these things alone will not tell you everything you need to know. I see, hear, smell and live it – this is what I’ve been doing my entire life."

Hereditary hospitality

In an industry where transience is a given, this long service with one organisation is extraordinary.

This is no exaggeration. Ritter was literally born into the industry: at his parents’ Interlaken hotel Beausite in 1947. Some of his earliest memories are of waiting tables and lessons learnt during these formative years have stayed with him to this day. "I would serve soup in the restaurant and used to spill a lot," he recalls. "My mother told me I should sing a song while serving to amuse the guests and perhaps get a little tip. ‘Do it nicely’ were her exact words, ‘but don’t do it for free’. That advice is just as valid today as it was then; I’m still convinced that our business is all about service, being a good host and focusing on the guest. Get that right and people are happy to pay."

The other influential woman to have arrived relatively early in Ritter’s career is his wife, Lara. They met in the early 1980s, when he was managing the group’s first property outside Scandinavia, the SAS Kuwait Hotel, and the relationship might have cut his employment at SAS short had it not been for an understanding boss.

"I was in love and felt I had to leave because in Kuwait it is illegal to live together unmarried," he explains. "But the owner, Hussein, promised to protect me. He was influential enough to cut through the system and make sure people left me alone. It meant I could have the best of both worlds."

It takes an understanding spouse to put up with the demanding work and travel schedule of a hotel executive, but Ritter admits that it has often been Lara who has provided the impetus when he has been in need of an extra push. Furthermore, her counsel has been invaluable when it comes to making some difficult calls.

"As the saying goes, it can be lonely at the top," he acknowledges. "Not only does Lara travel widely with me and know every GM by name, she is also somebody who can provide uncensored, unencumbered advice. There are sometimes things I cannot discuss with anyone else, but with Lara there is no agenda other than to help me succeed. Having someone that you trust unreservedly is absolutely invaluable."

Managing turbulent times

It must have been of particular value when tough decisions had to be made at the height of the downturn. Ritter and his team acted relatively early, implementing the group-wide ‘hedging for turbulence’ programme in late 2008 – it went on to generate €36 million in savings the following year – while pressing ahead with an expansionist agenda. Between 2008 and 2010 Rezidor posted three consecutive record years of room openings.

Events also demanded a shift in Ritter’s leadership style. He is quick to admit that a downturn requires a change of approach and believes the experience of developing in two quite different corporate cultures has been invaluable.

I’m still convinced that our business is all about service, being a good host and focusing on the guest.

"I’ve long considered it one of my competitive advantages," he begins. "I grew up in the rather autocratic environment of German Switzerland, where one person gives orders and the rest follow them, learning from my mother that you have to be tough. Then I went to Scandinavia where the philosophy is quite different. [Former chief executive of the SAS Group] Jan Carlzon was my ultimate boss and through him I learnt a lot about managing during an upturn: you needn’t always be looking over others’ shoulders; not every decision must run through you; not every negotiation runs into defeat.

"In many organisations I see leaders that are fantastic sunny boys. They perform when the weather is good and the economy growing, but fail terribly when conditions reverse. Perhaps they are not as confident making those tough calls and stepping out to lead. One has to be more authoritarian during a downturn because everybody has to be pulling in the right direction."

That direction currently points Rezidor and its majority stakeholder, US hospitality and travel giant Carlson, along a shared path. The relationship dates back to 1994, when Ritter concluded a marketing agreement with Carlson that saw SAS become the sole franchisor for the Radisson brand in EMEA. In 2002, a further strategic agreement was signed, with Rezidor (the name changed from SAS in 2001) becoming a partner for the Park Inn, Country Inn and Regent brands. This was followed three years later by a strategic agreement that resulted in a further enhancement of the partnership into a shareholder agreement. Carlson’s share in Rezidor has since risen exponentially, and is currently 51.3%.

Despite this shared history, potential synergies have not always been fully realised, but things are changing. In an effort to increase revenues, both parties have instigated a culture of cooperation in areas such as online delivery, revenue generation tools, sales centres and loyalty programmes.

"The time seems right to take this relationship to the next level," Ritter says. "For a long period we were running quite different business models: Rezidor was far more about management while Carlson focused on franchising – now they have a new team in place that sees the world differently and wants to adopt elements of our business model."

The Ritter management model

No profile of Kurt Ritter would be complete without mention of that business model. Despite his reticence to engage in too much navel gazing, I put it to the chief executive that a movement away from ownership to management contracts might just be his great legacy. Rezidor’s decision to pursue an asset-light strategy, taken back in 1997, now looks prophetic and has been adopted by pretty much every large operator. Can he take some credit for transforming the way in which the entire hotel industry operates?

Ritter is quick to admit that a downturn requires a change of approach.

"I wouldn’t want to call myself the initiator," he chuckles. "What I will say is that I was there at the beginning of a trend that became prevalent globally. A time may come along where it’s a good idea to invest in real estate, but I stand by my original opinion that owning and managing properties are two very different businesses and one is inclined to be far too nice to oneself when doing both. When you exclusively manage, you are answerable to owners who have no time for excuses and one is pushed far harder to succeed."

This strategy also enables accelerated growth, with the Russian CIS and Africa the main regions where the group now hopes to drive it. Focus has moved to secondary and tertiary cities with populations of 500,000 or more. "As an international traveller staying in Ulaanbaatar, would you rather book a room at the hotel ‘Nikolai’ or a Park Inn by Radisson?" Ritter asks. Rezidor already has the largest development pipeline of any international operator in Sub-Sahara Africa.

It’s all highly exciting and Ritter, as ever, is at the very heart of things, making deals, pressing flesh and cajoling staff members at all levels. "There’s a lot of Rezidor blood running through my veins," he says. "It’s now my 22nd year as CEO and the danger is thinking I’ve seen it all. It’s something I’ve witnessed in others; they stop listening. If my people see me becoming that person, they know I want them to tell me. I have to ensure I’m not taking myself too seriously."

This is yet another differentiator, as the rest of the industry has been taking Ritter extremely seriously for some time now. One gets the impression that they will continue to do so for quite a while to come.