Web's wonder
"I think the Internet will dramatically change our business and, ultimately, change it for the better." That's the opinion of John Paul Nichols, executive vice-president, sales and marketing, for Cendant hotels. What makes his comment interesting is not that it's particularly radical but more that, even in 2001, he is speaking in a future tense. The real impact has yet to come.
The Internet and its uses within the hospitality industry have been discussed at all six Eurhotec hospitality technology conferences. This year's, however, held last week in Paris, differed in that it was noticeably light on Internet hype. Many of the seminars and discussions revolved around the same basic question: "OK, now we've all got it, what do we do with it?"
The economics of using the Internet, rather than the technical specifications, was a common thread. There is still a common agreement that while all the initial promises of vast cost savings and increased revenue may not have materialised, the Internet is still the biggest revolution to hit hospitality since the telephone.
"For a company with 20 hotels we see it as a great tool for worldwide exposure," says Willi Tinner, vice-president IT for Swissôtel. "We also see big, big potential in the Internet, enabling us to optimise our internal processes; information must be available to the guests but also our staff. We see the Internet as an enabler for us to global communication."
Nick Price, director of techology for Mandarin Oriental, agrees: "We are in a high-service industry and we view the Internet as an enormous opportunity to get up close and personal with our guests. The Internet can be whatever you want it to be. The question is, do you really understand it?"
That's all very well, but how has the day-to-day running of hotel groups like Cendant, Swissôtel and Mandarin Oriental changed now that the Internet has been around for a while?
Nichols at Cendant has seen a significant decline in the number of rooms booked over the telephone and a large increase in those booked over the Web. However, the drop in phone calls is bigger than the rise in online reservations. "That's mostly because there isn't a working customer service model on the Internet today," he explains. "You may get great content on a Web site but lousy bookability. "We're focusing a lot of time and effort on customer service as a way of increasing business. If we do that the Internet is a cheaper, more effective solution for the consumer. If we're not successful it will be a much more expensive channel and so long term it will be bad for hoteliers."
In other words, as great as the Internet is, old-fashioned and well-tested principles of customer service have to be applied to it.
Swissôtel has also seen a large rise in Internet bookings but, says Tinner, it is still a small contribution - just 3% of all bookings are done online.
"Not a big amount, but there is an awful lot of potential," he explains. "We also find that the average achieved room rate is slightly above the rates we get via normal channels, so we just see the Internet as an opportunity to catch another group of untapped potential customers."
Huge potential
Use of the Internet to sell rooms to customers has historically been the prime function, but in the past couple of years the notion of the Web being used to buy supplies, especially in bulk, has been an increasingly popular concept. So-called e-procurement companies such as hotelsupplies.com and zoho.com have sprung up trying to get a foothold in a business that has the potential to be huge.
But the time isn't right for it yet, according to Price at Mandarin Oriental. "Where you have one hotel in one country there's very little opportunity to aggregate demand across country borders," he says. "There'd be a better opportunity working with competitors and that in itself is a significant hurdle to jump."
This idea of joining forces with rivals to strike better deals with suppliers over the Internet started with a venture last year by Marriott and Hyatt. Nichols also remains slightly sceptical, though.
"There are definitely conceptual opportunities [with e-procurement] but I don't think anyone's proven the business model yet," he says. "So do I think there's going to be some sort of e-procurement model that eventually will reduce costs? Yes I do. As to whether there's a viable model today, the jury is still out."
While hoteliers at Eurhotec debated the pros and cons of the Internet's effect on distribution and procurement, there was an almost universal agreement that marketing is where the Internet's true potential lies at the moment: gathering information on previous and potential customers and using it to know exactly who they are, what they like and what they don't like. This goes under the catchy heading of customer relationship management, or CRM.
Targeted marketing
CRM is essentially the gathering of data on hotel guests and the use and manipulation of it, from name and address to whether they like still or sparkling water.
Swissôtel, for instance, is in the process of installing a CRM system in its hotels, relying on increased levels of customer satisfaction to drive repeat business and targeted marketing to pull in new guests.
"The technology is only an enabler," says Tinner. "We see there also has to be an effort to make CRM part of our service culture throughout our organisation."
Nichols at Cendant agrees. "The real value of the Internet is the ease with which you can collect customer information and the ease with which you can communicate back to the customer what they want to hear. Initial tests have shown that we can clearly change the consumer's behaviour and that's what any marketing company wants."
Nick Price at Mandarin Oriental, however, believes that CRM shouldn't be a new concept associated with technology.
"We are in the business of serving our customers so CRM shouldn't be a surprise to us," he says. "The customer is the information asset of this business and we don't accurately manage that information today, which is why we find CRM attractive. You need to go back to some basics and ask why current systems don't support the concept more effectively. CRM as a concept is a core one. It's something that every system in our business should be equipped to handle."
The point underlying all these different applications of the Internet seems to be finally becoming visible through the hype and speculation. Whatever the technology and however the Internet is manipulated, the outcome must be an enhanced experience for the guest. And it's taken only six conferences to work that out.
Eurhotec 2001
The sixth annual pan-European hospitality IT exhibition and conference
Palais des Congrès, Paris, France
February 19-21, 2001
Cendant Corporation Hotel Division
www.cendant.com/cendant-is/hotel_brands.html
Swissôtel
Mandarin Oriental
Source: Caterer & Hotelkeeper magazine, 1-7 March 2001
