Hotel Online  Special Report

The Strategic Approach to True


By Harry W. Rivkin & John W. Clevenger, April 2005

There has been a lot of talk in the hotel industry the last several years over something called Customer Relationship Management (CRM). In fact, if you asked a room full of hotel operators and technology vendors if they were developing CRM programs and methodologies, just about everyone would raise their hand.  This indicates there are many, if not misconceptions, than certainly different definitions regarding the application of CRM.  No doubt you have read about CRM, attended seminars and listened to presentations and maybe even invested precious time and resources in either planning or attempting to institute some form of CRM.   The good news is that hoteliers are increasingly realizing the need to be aware of not just Revenue Per Available Room (REVPAR), but Revenue Per Available Guest as well.  This realization and practice will result in significant increases in revenues. 

This, then, could be called the pursuit of true Guest Knowledge.

Let�s start with some definitions.  One of my favorite definitions of CRM comes from Brian Cryer's Glossary of IT Terms

�A sales slogan meaning in summary: it would be helpful to know a little about who buys your products and services.�
That�s a great sales slogan, and spot-on, but a more specific definition is this:  CRM is a Data-Driven, Customer-Centric program that enables a company to manage customer relationships in an efficient, organized and profitable manner.  It is a vehicle to gain trust from customers by understanding the buying behavior and meeting the needs of each customer in a more personalized way in order to increase sales and engender Loyalty though Guest Knowledge.

Hotel operators have attempted to meet and manage their guest management challenges by implementing CRM systems designed to address specific customer related activities such as direct marketing, loyalty programs and customer service.  From a technology perspective, the biggest challenge in implementing a true Guest Knowledge model is the fact that customer information is stored in multiple and non-related operational systems and is, well, messy.  The same customer may have created transaction records in many or all of the operational systems they encounter during their hotel experience (CRS, PMS, Event Booking, Internet Reservations, etc).   In the hotel environment, most often the basic transaction events are transferred over to a guest folio residing in the Front Office System (PMS), often with great detail.  Even so, because of the difficulty of correctly identifying the guest at each touch point this often results in fragmented customer information across multiple systems, generating several �truths� for each customer.  Unless great care is taken when these data are consolidated, multiple records can and will be created for each guest. Without a single view, or �truth�, for each customer, the hotel operator cannot realize the profitable promise and full economic value of their guests.

If you look at the business process and touch points for a typical hotel guest, you will see there is a vast amount of data collected about each guest and for each visit.

For instance, here are some examples of the data that can be captured in the reservation process alone, even before that first visit:

  • Booking Channel
  • Booking influencer
  • Booking window
  • Season
  • Week Part/length of stay
  • Market Segment/origin code
  • Rate
  • Room type requested
  • Special requests
During the guest stay and post departure you can add the following consumption data, including:
  • Total Revenue
  • Actual Length of stay
  • Additional Revenue and source (Restaurant, room service, spa, golf, etc)
  • Additional requests - amenities used
  • Problems & resolutions
Now that we have captured all of this raw data about our guest, how do we go about turning it into actionable marketing information and attaining true Guest Knowledge?

Here is a strategic approach; build a �cleansed� database that consolidates all of the available source data in one repository with regular updates to maintain the database.

Why this approach?

  • Without a consolidated view of all guests and guest transactions, there will be no single �truth� to support marketing, sales and CRM efforts.
  • Even with a single �truth� for each guest, cleaning data within each operating system can, at the current state of industry technology, only be done manually.  The necessary interfaces for automated cleansing often do not exist � especially where key operating systems are concerned, such as the PMS.  Manual maintenance of multiple databases is fraught with problems of inconsistency with respect to timeliness and cross-system maintenance and is in practice not cost efficient or sustainable. 
  • Based on all data sources and the data elements available in those data sources, design a database structure to accommodate the full range of available data on guests and related transactions.  This structure will accommodate �roll-ups� of data elements � such as products, market segments, usage characteristics and time periods � that respond to specific analytical requirements.
  • Build the initial database within the structure by administering the following procedures:
1.  Develop the appropriate scripts for scheduled automated extraction and transfer of data from the operational systems.  These automated processes run in background and are essentially one-way � i.e., they will bring data out of the operational systems (primarily the PMS) and will not interfere in any way with operations.  Extraction processes can be implemented on a monthly or daily basis.

2.  Data extracted for guests residing in the United States and Canada should be address standardized per postal standards when extracted from the operational systems.  Address-standardization and correction for residents of other countries can be done should the hotel require it.

3.  On a monthly basis, address standardized data for guests residing in the United States will be processed against the National Change of Address (�NCOA�) file to bring all guest records current as to present address and to ascertain the delivery point validity of the address.

4.  All folio records should be matched and a unique guest number affixed to records that track to the same guest.  A variety of match keys can be utilized in the matching process including Property-assigned Guest History Number, traditional name/address keys and, where available, telephone number, credit card number and email address.

5.  Create a full range of guest-level and stay-level data elements using the data fields available from the PMS including total stays, room nights, room revenue and non-room revenue by detailed bucket; use of Property amenities; stay patterns by market segment, week-part, season and booking window; lifetime value (ADR, average length of stay, average spend); booking channel and source of business; geographical feeder markets (country, state, metro area, county, city, ZIP Code); distance traveled to Property; length of relationship with guest; recency of staying at the Property.

6.  With each update, all guest records can be matched against a compiled demographic database and demographic data will be appended to each guest record matched to a record in the compiled database including age of household head; annual household income; homeownership and home value; marital status of household head; presence of children in household; tenure (years) at present residence; and mail responsiveness.

7.  Produce a set of comprehensive reports � designed to meet Property specifications � and post those reports in a web-based E-Library that is easily accessible to authorized end users on a 24/7 basis.  Reports posted in the E-Library will include data quality tracking reports on the accuracy and completeness of data entered into the operational systems (primarily the PMS); guest profiles; stay profiles; lists of top guests, markets, channels, rate codes and source of business.  Reports will also include lists of suspected duplicate guest masters that need to be reviewed and, where appropriate, consolidated.

8.  Provide the capability to design and execute ad-hoc queries per Property specifications.  Ad-hoc queries may include counts; statistical reports; and targeted lists.

9.  The database should be maintained on-line at a remote location in a secured environment and should be backed-up nightly off-site. 

The development of guest knowledge can improve the guest experience, increase revenues and provide you with a competitive advantage.  We have happily arrived at the confluence of two great forces that will allow the hotelier to implement and reap the rewards of a Guest Knowledge system.  Those great forces are Awareness and Technology.

CRM, or true Guest Knowledge, is first and foremost a philosophical awareness. This awareness allows us to make the commitment to better know and understand the guest company-wide and to develop strategies to make the best use of guest knowledge.  The technology provides the opportunity to support this commitment to cost effectively collect, consolidate, �cleanse�, manage, mine and act on guest data from diverse sources and systems.  This, in turn, allows the operator to anticipate guest needs and preferences and to exceed expectations and delight the guest with the delivery of personalized services.

Now we are on or way to developing true Guest Knowledge!

About the authors
Harry Rivkin, President, IDT, has more than forty years of marketing database experience across a variety of industries. He co-founded IDT, taught the marketing curriculum in the Saint Joseph�s University MBA program and database marketing courses in Cornell University�s School of Hotel Administration Professional Development Program.

John Clevenger, Vice President of Sales, IDT. He has over 15 years of direct sales experience in database services, software applications and advanced technologies in the hospitality industry. 


John W. Clevenger
Vice President, Director of Sales
The IDT Group 
9 Cinnamon Teal Lane
Novato, CA 94949-6694
[email protected]

Also See: The ABCs of CRM / Mark Haley & Bill Watson / Hospitality Upgrade Magazine / March 2003
Understanding the Power of Customer Relationship Management / Neil Holm / Hospitality Upgrade Magazine / November 2003

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