Hotel Online Special Report 
Global Hospitality Industry Needs to Place Greater Emphasis on Customer Ownership and E-commerce Strategy More Investment Should Be Made in Branding and Customer Loyalty Systems to Increase Marketshare Los Angeles – February 8, 2000 – Key megatrends influencing the global hospitality industry in the new economy of the 21st century indicate that customer ownership will be the key to securing and maintaining competitive advantage, according to Arthur Andersen.
These megatrends, including consolidation, convergence, the cyclical nature of the industry, the efficient use of real estate, distribution systems, knowledge, outsourcing of non-core competencies, technology, and branding will have a profound influence on the day-to-day operations and long-term strategic direction in the hospitality and leisure industry in the coming decades.
Remarks Alex Kyriakidis, Worldwide Partner in Charge, Hospitality and Leisure Services, Arthur Andersen, “Globalization is rapidly eliminating boundaries and borders; the rapid proliferation of technology is redefining the meaning of time and space as we know it. The result is the customer is empowered like never before. If the industry does not stay ahead of the curve and remain close to its customers, it faces the prospect of disintermediation as their service becomes increasingly commoditized through the proliferation of electronic commerce.”
Relationship management is the key to securing a stable customer base, but this is only possible through a deep understanding of customer needs and preferences. Hospitality and leisure companies should invest in three key strategy areas. Customer Relationship Management – The business realities emerging with the New Economy drive the need for greater awareness in several aspects of customer ownership. To be successful and dynamic, leading edge hospitality companies will not give away markdowns unnecessarily, identify the most valuable customers, optimize promotions/advertising effectiveness via stealth one-to-one communication, ensure retention of valuable customers through targeted campaigns, and gain share-of-wallet by better understanding their customers.
Knowledge Management – Consistent with the drive to secure a greater share of the customer, the industry must actively seek ways to harness relevant knowledge from its guests, suppliers, employees and competitors. For the majority of hotels, ERP platforms currently in place are out of date and not integrated into customer data and guest satisfaction databases. There is also a need for the industry to begin to benchmark its performance in order to advance and evolve a universally recognized best practices operating standard.
Outsourcing Non-core Competencies – Increasingly, this is a key trend that extends beyond laundry and valet parking. A more significant area of operations is draining revenue from the bottom line – the finance and accounting function. Arthur Andersen research reveals that finance and accounting processes at the average hotel are running at more than two percent of revenue. This is more than double the best practice standards in a number of other industries. Less emphasis on non-critical functions will give hoteliers more time to focus on brand-building activities and satisfying their customers.
Concludes Kyriakidis, “The successful hospitality organization of the 21st century is one that embraces the New Economy today and looks toward leveraging relationships, alliances and solutions – even with competitors – to maximize shareholder value. Technology is the enabler to achieve this objective, and aggressive investments with sound strategic planning are critical.”
Arthur Andersen, helps clients find new ways to create, manage and measure value in the rapidly changing global economy.
Contact: Gina Marie Gralnik Tel +1 619 699 6940 [email protected] Antony Yee Tel +1 415 281 8156 [email protected] http://www.arthurandersen.com Also See: Digging up the right data can be as valuable as finding a diamond in the rough / Cindy Estis Green / Sept 1997 Applications of Database Marketing in the Tourism Industry / Economics Research Associates / 1999