HENRY E. SCHIELEIN : Diamonds (5) in the Smooth : Ritz-Carlton Fills a Very Nice Niche in Resort Business

Mention luxury in a resort and one of the first names sure to come to mind is the Ritz-Carlton.

The five-year-old luxury resort on a bluff overlooking the ocean in Dana Point is Orange County’s only winner of two of the travel industry’s highest honors: the Mobil Travel Guide Five-Star Award and the Five Diamond Award from the American Automobile Assn.

The 393-room property keeps its awards--and its reputation--through such creme de la creme services as having 70 cooks and front-desk workers who are taught how to correctly loop a tie knot and properly tuck a handkerchief into a coat pocket.

Presiding over the opulence is Henry E. Schielein, general manager since February, 1986. Born in Bavaria, Schielein is a 40-year veteran of the hotel business.

Schielein trained at the finer European hotels, then came to the United States while working on a cruise ship. He joined the Ritz-Carlton Co. in 1983 as general manager of its Boston property.

Married for 23 years and the father of an 11-year-old son. Schielein, 50, relaxes at gourmet banquets or by going on overnight cattle drives.

In a recent interview with Times staff writer Mary Ann Galante, he discussed the Ritz-Carlton, the resorts market and tourism in Orange County.

Q. The Ritz-Carlton has won both the Five-Star and Five-Diamond awards for the past three years. How are the ratings determined?

A. Those organizations (that award the ratings) are very thorough in looking at you. They come in here unbeknownst to anybody and check in as regular guests. And then they make their observations and they play a few tricks.

They put little things down in corners, for example. They want to see how you vacuum. They drop little threads, just to check you. And they judge you on the level of service and the quality and appearance of your staff. They judge you on everything.

Q. What does it take to keep a Five-Star rating?

A. It takes a strong commitment by everyone concerned--not only management but the owners and the staff.

That’s because a lot of the ratings have to do with the quality level of your people. You can have the most beautiful facility, but if you do not have the service and the service-oriented mentality of your staff, you’re going to lose it.

On the average, we interview six candidates for every person we hire. We have more employees than we have guests. I would say we have 2.5 employees to each guest room, which averages out to one employee for each guest. That’s an estimate. But I can truthfully say that we always have more employees than we have guests.

Q. How important is a Five-Star rating to occupancy rates?

A. It is very important because it gives you a stamp of approval.

The rating effects occupancy rates, particularly with business meetings. There are certain organizations which have a great emphasis on quality. So if they take a group of high-level executives to a Five-Star, a Five-Diamond hotel, automatically those people know that they are going to one of the finest resorts or hotels in the country.

Q. The average hotel occupancy rate in Orange County last year was 69%. What is the occupancy rate at the Ritz-Carlton?

A. We are running in the mid to high 70s, and we’re looking to go beyond it this year.

Q. What was the hotel’s revenue last year?

A. We are between $40 million and $50 million in revenue. It definitely has been increasing every year.

Q. You’ve talked a lot about the importance of quality service at the Ritz-Carlton. How do you keep your employees motivated?

A. That’s probably the most challenging aspect of it. To keep employees motivated, you have to instill consistent pride in what they’re doing, as well as pride of affiliation with a quality operation. We have a motto: that we are ladies and gentlemen serving ladies and gentlemen. And we treat our employees as ladies and gentlemen.

Q. So insofar as personnel, what sort of unusual things will you do?

A. We do a lot of recreational activity. We have a lot of parties for our employees. We have awards banquets. We have sports teams. We provide our people with outfits that are tailored by fashion designers because we don’t want to put them in just an old waiter’s jacket or an old waitress’s dress. The dresses in our cafe and our lounge are worth $200 apiece--they are not just something you buy off the rack. Our staff in the front office wears suits that are designer suits made for the individual.

Q. Is the pay better at the Ritz-Carlton?

A. We pride ourselves (as being) either on the same level as anybody in Southern California or better. To maintain this, we take regular surveys of pay scales in the hotel industry and resort industry in this area.

Q. Are most of your weekend guests from California?

A. A great percentage. California and Los Angeles is our strongest market for weekend guests. You come down on a weekend and you’ll find Beverly Hills here.

Q. Why is that?

A. It’s convenience. You don’t have to get on an airplane. You hop in your car and depending what time you leave, between an hour and two hours later, you are in a little bit of a paradise, away from the hustle and bustle.

Q. For longer stays, are your patrons mostly from the United States or from abroad?

A. Naturally the United States is by far our biggest market. But compared with other hotels, we have a great number of international visitors. Of course, the bulk (are) from the Pacific Rim, but we see more and more Europeans.

Q. How strong is resort development across the country?

A. It is very strong. You see resorts coming on rapidly. It’s the big trend.

Q. Why is that?

A. People have more time and more money. Where better to enjoy it than in a beautiful resort?

Q. Who is your strongest competition in Southern California?

A. To tell you the truth, our strongest competition (in California) probably is in the Palm Springs area. If we have cold and foggy weather, those very same clients that come here on a sunny day go into the desert because they like to see the sun and to be warm.

But our main competition is not in California. It is in Hawaii. We lock heads many times when we negotiate for certain business.

Q. How saturated is the coastal resort market in south Orange County?

A. Fortunately, there aren’t that many coastal resorts. When you have a beachfront resort, you’re very happy that there aren’t too many others.

Q. The Dana Point Resort overlooking Dana Point Harbor is a new addition to the area. Admittedly, it is more modest than the Ritz-Carlton, but it is still an upscale hotel. Has it impacted your business at all?

A. No. You cannot compare the properties. The investment that was made in this hotel is so enormous. When you come into the Ritz-Carlton, with the collection of art, the rugs, the antiques--everything that was put into this hotel is very unique. There was a big investment made.

The Dana Point Resort is a very fine resort, but they do not have those assets that we offer our guests.

Q. So what is the difference in your clientele?

A. Well, I don’t want to sound pretentious, but we cater to a very limited market. The clientele of the Ritz-Carlton is your professional people, your entertainment people, your corporate executives.

And it’s the same with our groups. They are top-level groups--investment houses, medical groups, pharmaceutical groups. Every hotel has to have a market. It’s like automobiles, you know. There are your Rolls and your Bentleys and your Ferraris. And then you have your Mercedes. And then you have Chevrolet and the Honda. They all take you where you want to go. They’re all good. But there’s a luxury differential.

We have a high cost of operation. My payroll alone is over $16 million each year. These are all very expensive modes of operation, and they have to be paid for. You cannot spend more than your client believes is worth paying for. Consequently, our clients are people who enjoy the finer things in life and realize that those things cost money.

Q. There are 5,000 additional rooms that are expected to be built in the area from Huntington Beach to Dana Point within the next four years. Is there a demand for all those rooms?

A. I would think there’s a demand. I would imagine that the bulk of it will go for the commercial traveler. You have to understand the hotel business is like a pyramid, and every hotel company has a market share. We naturally consider ourselves catering to the tip of that pyramid because of what we offer.

Q. The hotels that are coming in include the Monarch Beach Resort, a $300-million property just north of your resort, that will be a joint venture of Stein-Brief Inc. and the Hemmeter Corp. Is that property the closest in style to the Ritz-Carlton?

A. No. Any time you go close to 1,000 rooms, it becomes a totally different environment. There’s no way that you can provide the same attention to detail. It becomes a mass activity.

We try very much to personalize our service. We like to know as many of our guests personally. Many of our guests know many of our people here by a first-name basis because they come back. There is a difference between a 1,000-room hotel and a 400-room hotel. There’s just no comparison.

Q. In that sense then, will they complement your hotel?

A. Yes, no question. Just by their presence, they will definitely create activity in this neighborhood. Whether that is good or bad, I don’t want to judge because sometimes people like to be away from the hustle and bustle.

Q. So is the development a concern to you at all?

A. I’m concerned that it might disturb the beauty of the present setup. Let’s face it. Any time you overbuild, you destroy a lot of the beauty that originally created the attraction. You know as well as I what happened to places like Waikiki Beach. You can go forever in Miami Beach and hardly see the ocean because you see nothing but one concrete block next to the other.

Q. Is that a danger here?

A. I don’t know. I hope that it will never happen. I don’t think it will happen because there is too much involvement by the citizens of this community.

Q. There are several new seaside resorts being built along the Palos Verdes coastline, including another Ritz-Carlton. And a number of rooms are being constructed in north San Diego. Do you see these areas as being competition for the Ritz-Carlton?

A. They may be competition but they also might add a lot to the attraction of it. As long as they’re done in good taste, and as long as they do things in a quality fashion, they will only attract more people.

Q. But is there the demand for those rooms?

A. That has to be seen. Obviously the people who build feel there’s a demand.

Q. What do you see the resort industry doing to attract more guests?

A Well, the industry is consistently looking to make it more exciting, to add more attractions.

If you go to Hawaii, the Hyatt Regency Waikoloa on the Kona Coast has monorails that take you to your room. You have swimming with dolphins. It’s almost a little version of Disneyland.

You have to decide which way you want to go. Do you want to become a fantasyland type of resort or do you want to operate more conservatively, like we do.

Q. Do you see the Ritz-Carlton doing any of those glitzy things?

A. No. We are very conservative. We offer our guests all the comforts, and we believe that service is the most important aspect, along with the quality of the facility and the restaurants that we offer. It’s not everybody’s cup of tea to swim with a dolphin.