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CRM technology: Reaping the benefits in hospitality

24 June 2004
CRM technology: Reaping the benefits in hospitality

There is a story that in the 1950s there was an exorbitant bidding war between Hollywood's luxury hotels for the services of a particular doorman. The reason: he could match a name to the face of everyone who visited the hotel, so he would be able to welcome them by name the next time they stayed.

True or not, the story resonates in an industry where success or failure can depend on your customer knowledge. This lesson hasn't been lost on the large hotel chains. They seek competitive advantage by storing customer data and using it to improve their experience by providing them with more targeted services. And as Marriott International has found, investing in customer relationship management (CRM) software can lead to improvements in other areas, such as cross-selling and yield management (see case study, opposite).

Smaller scale
Mikko Hietanen, senior director of industry solutions with software firm Siebel, which supplied Marriott's system, stresses that the benefits of CRM are not limited to the major chains as the technology can be scaled down to suit smaller businesses.

Software giant Microsoft launched its first CRM product for smaller businesses late last year. And Siebel is taking the lessons it has learned from developing Marriott's CRM system to build software more suited to smaller businesses. A new version, which can be run by external IT partners, is expected to be released later this year.

Using CRM technology can allow a hotel or restaurant to run targeted marketing campaigns and measure how effective they are. It can also help businesses understand why customers complain.

However, Hietanen says the hospitality industry has a long way to go in reaping the full benefits. "CRM is not so advanced in travel and hospitality," he says, "but with increasing competition there is quite a lot more awareness of these issues and a surge in interest".

Although not every business needs CRM, he says, the most ambitious will see its benefits. "If you have no CRM, you can run a 10-room hotel on the village green very successfully, based on the customer intimacy, but that is exceptional," says Hietanen.

"Once you start to get bigger you lose that intimacy. The goal is to have a large, shining new hotel and still have the intimacy of a village green hotel and you cannot do that without CRM. That is the secret. It is scaling that is the problem."

To maximise the benefit from CRM systems, Hietanen says, users need to have executive sponsorship, a desire to change the company, and an understanding of their core business processes - the little jobs that everyone does to make the business tick.

Most importantly, users need to integrate their CRM systems with all the different ways they interact with their customers. Many hotels take bookings via their websites, for example, which presents a good opportunity for them to garner customer information.

The Eton Group, which has five-star hotels in London, Leeds and Edinburgh, launched a new-look website last June, and February's online bookings produced almost £58,000 in revenue.

But the company's exploitation of the internet is not confined to rooms sales. The Eton Group builds up a profile of each user from their registration details and then sends them e-mails promoting offers that are likely to interest them.

Relevant e-mails "I know that 61% like the theatre, 89% like last-minute deals, 86% like city breaks… and much more," says Kevin Nicholas, Eton Group's director of marketing. "We only send out information relevant to their interests and never send more than one e-mail a fortnight. Only a tiny number of users have asked to be unsubscribed, so they must consider the information useful."

Michala Alexander, CRM product manager for Microsoft Business Solutions, believes smaller hotel and restaurant chains can benefit from these technologies by introducing them slowly to the business.

"You do not need a huge implementation," she says. "Understand what your vision is but do not try to do everything at once, so people do not get scared by it. Identify a single issue you would like to resolve and then think how the technology can help solve it."

For a restaurant, the challenge may be to increase repeat business from particular firms that entertain business partners. "You can track what business customers buy and market directly to them, making sure you have their favourite wine in stock and offer discounts to them for group bookings," Alexander says.

In hotels, too, much can be gained from relatively straightforward use of customer relationship technology, which can help the operators target customers that bring them the most profit - not just the ones that stay most often. So, if a hotel is in a position to upgrade some guests, it can make sure it upgrades the most profitable ones, so they remain loyal.

"Recognise that loyalty is important," Alexander says. "I travel a lot with work and my hotel always has my details in full so I don't have to fill in any forms. They know what kind of room I like. People just like being remembered."

Benefits of CRM Marriott International gives more than 3,000 employees access to CRM technology, which reaches across all its brands. The company has found that it:n Improves customer satisfactionn Improves profitabilityn Strengthens brand loyaltyn Increases sales to corporate accountsn Increases cross-chain sales

Marriott: a two-way process Marriott International is one of the largest hospitality chains in the world, operating more than 370,000 rooms in 2,000 hotels in 58 countries. Its brands include: Marriott Hotels, Resorts and Suites; Renaissance Hotels; Courtyard by Marriott; and Residence Inn. Keeping track of customers across such diverse locations was a major challenge for the company, but it has reaped significant rewards by using customer relationship management (CRM).

Marriott wanted to create customer data that employees could access from anywhere and at any time to offer guests a personalised service. It turned to Siebel Systems to provide this data to about 3,000 employees around the world.

The CRM system has allowed Marriott to seek bookings from regular business customers for conferences instead of waiting for them to call. According to Michael Dalton, senior vice-president, lodging systems, Marriott International, the company's sales agents can collect and consolidate information on all corporate accounts; manage contacts; and record leads and opportunities.

Using Siebel customer systems, Marriott has improved its ability to sell additional products and services. For example, seven Marriott leisure hotels provide a personal planning service creating vacation itineraries for guests well in advance of their arrival.

"The guest experience starts when we're planning the itinerary, not when the guest arrives on the property," Dalton says. "If a guest has pleasant dealings with a hotel for three weeks before the vacation starts, it's a more lasting memory."

When a customer calls and makes a reservation, Marriott builds an itinerary based on the customer's requests and stored preferences. When the customer arrives at the hotel, tee times have already been scheduled, dinner reservations arranged and shopping itineraries created. Marriott has found that guests who participate in the system show noticeably higher guest satisfaction scores and tend to spend more money at hotel golf courses and restaurants.

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