Customer Relationship Management in the Hotel Industry - Assignment Example

CUSTOMER RELATIONSHIP MANAGEMENT (CRM) IN THE HOTEL INDUSTRY Introduction Many researches that focus on customers’ relationships management have shown a similar trend of recognizing the long-term value of both prospective and existing customers. The ongoing profitability, revenues and investor values are all factors that rely on the activities that a business engages to ensure that they create, manage and improve effective relationships between themselves and their customers. These activities are largely depended on having the ability to comprehend the fundamental basis of the value that a business draws from customers. This paper looks at customer relationship management in the hotel industry and will largely draw from the experience of the recent past in the 1990s and the present. Part A: Consider how the hotel industry has changed or evolved since the 1990s until now in terms of a) consumers and b) marketplace Customers The Hotel industry experienced over expansion in the 1990s, and the mid and late years of the 1990s, ended up being another boom periods for hotels after the 1980s boom. The 1990s hotels basically served a clientele comprising of businessmen and they offered service that included fax, voicemail and the internet. The 1990s particularly saw the introduction of various developments regarding the use of technology integration in hotel customer service that was driven by sturdy sets of connections in technological capabilities that were based on customer server technology and was a very useful tool when it comes to sales and marketing. The systems particularly had features that enabled customers to access information about hotels, services related to bookings, rates and all the services that the hotels offered (Ansari & Carl 2003). This technology led to the liberalization of information in the hotels industry and offered benefits such as distribution of information related to customer service and user friendliness which entirely transformed customer service in the hotel industry and served to attract a lot of customers. Technology in the 1990s was therefore one of the greatest improvements when it comes to customer service. The happenings of September 11 hurt travel across many European Countries and the US generally and this somewhat brought the hotels industry to a state of loss, but by mid 2000s, the hotel industry was back on its feet once again. The 2000s ushered a new era in the hotels industry as hotels grew in numbers and sought to improve customer service. By 2010, about 7 million rooms were rented in hotels in more than 50, 000 different hotels. By 2009, the hotel industry made about $127 billion in revenues worldwide. This serves to show that the industry has been increasingly developing in the last one decade. Every hotel in the industry including the Summer Palace Hotels is a five-star hotel group is a representation of both reputation and standards and each hotel represents a specific quality and market niche with regard to the type of service that it offers as well as the facilities that it is able to offer t its customers as well as cost expectations (Blattberg et al 2001). Chain hotels therefore represent different degrees of quality and cost. Markets The internet has become a very critical tool in marketing when it comes to the search for a suitable hotel or motel where a customer can stay and/or eat. Research shows that in the year 2005 alone, about a quarter of all hotel and motel bookings were done via the internet and that about another quarter of all customers got access to information regarding the hotels where they intended to book reservations before doing so. The numbers mentioned here have continued to go up in the current world leading to a requirement that hotels and motels expand their search engines. The demand for hotel rooms grew by 6.6 percent between the year 2009 and 2010, which was the biggest growth rate in 20 years. In the era that we are currently in hotel customer service is one that demands technological improvements for effective marketing. Considering the opportunity that technology offers hotels to be able to improve and reengineer their business processes, Hotels are required more than ever to be technologically savvy (Ambler et al 2002). The older technologies of the 1990s such as fax are becoming outdated very fast and hotels now need to acquire new technological means such as well- integrated systems to be able to support their database marketing and customer service if they are to compete effectively in the coming years (Akerlund 2005). Database marketing or the use of technology to create better channels of targeting the customers of a hotel has also become very popular. Though many hotels have manual ones, they aren’t of much use because they are limited as they are very cumbersome to handle and they don’t have features that can enable operators to monitor their customers efficiently and in a faster way. Part B: Based on your answers in part A), how do you think these changes would have impacted Summer Palace's CRM strategy and practices? The hotel industry is waking to the above changes with the traditional way of relating with customer, which mainly focussed on the physical item for consumption, being phased out gradually. A new era has been ushered in where the customer is demanding more consistent delivery of what the brand image promises to offer. Experience is now becoming a defining factor of the success of a brand such as that of the Summer Palace Hotels group. Being able to offer value is also central to building good customer relationships. Technological changes which as we have seen in part A above, is the main feature that has characterized service provision in the past two decade, continues to affect the hotel industry to large extent. Technology would therefore have given the Summer Palace Hotels group, an opportunity to face the new patterns of consumer behaviours also mentioned above. The Summer Palace Hotels group would also have been in a position to engage fully with customers and build a brand that is unlike any other in their markets across the world. In other words, technology would have enabled the hotel to differentiate itself from the rest of its competitors. Being able to deliver their brand experience in a consistent manner and at a price point that is transparent would have led to much needed success. Building customers relationships in the hotel industry today is about: Being able to meet the needs of the customer and improve the experience of the customer through faster check-ins, and check-outs and being able to respond to customer service requests faster Being in a position to offer customers more efficiency in terms of service, having fewer staff requirements, being able to cross-train staff, being able to lessen expenses related to overall administration and being in a position to explore new opportunities through which functions can be made more integrated and at the same time more widely distributed (Bolton et al 2000). Technology would have offered the hotel in the world of today a chance to enhance customer relationships through better, faster customer service, in a world where the desires of customers are increasingly rising by the day, as well as to offer better price control, and employ more effective marketing strategies and enlarged prospects for hotels to gain greater competitive advantage. Being a five star hotel, the Summer Palace Hotels group is at the upper end of the hospitality industry where building a brand is central to growth due to saturation that has occurred lately in that market. Technology would therefore have come in handy especially in consideration of the fact that the upper market segment is where posh technological changes would have come in handy considering that it is in this segment where customers expect service features such as: One stop guest services which engage the use of in-room televised remote-control that enables the customer to select from a variety of available programs and services, smart cards, which consist of integrated circuits that let customers have access to their room as well as other services in their rooms, video based check-in and fast check-out which makes the use of touch screens on free standing terminals that customers with advance reservations can use to check in and out of hotels without having to go through queues at a customer care desk, and database marketing technology tools that allow hotels to have a records of the clients which enables hotels to segment their customers and come up with a summary of their frequent customers’. The discussion about high-tech has become a thing of the past in the hotel industry, because new technologies have already been established in the industry and are already affecting how hotels operate and especially how they serve their customers and how they build a niche for themselves in the markets of today. The use of technologies has proved that technological know-how is able to bring improvement in the way hotels operate as well as bring about higher profits margins and improved customer service. The wave of change in the recent past has been so fast to extent that many hotels have been left with many uncertainties as to the types of technologies they should adopt as well as the most viable means of causing a flawless amalgamation of technological systems in their organizations (Ambler et al 2002). Additionally, the last five years have witnessed a lag in the amounts of investments that hotels operators and owners have been putting into IT due to the recent economic recession which affected not only the hotel industry but many more a great deal. Many hotels today are said to be using technology that is quite outdated and this is likely to cause a disadvantage to them when it comes to offering customers and remaining on top in the market place (Cao & Thomas 2005). It would have been to the advantage of the Summer Palace Hotels group if they could employ technology in order to improve customer service Part C: State your arguments whether you agree OR disagree that Summer Inn should have a loyalty program The market where the Summer Palace Hotels group is intending on establishing its new enterprise is considered to be in the “mid and budget” bracket when it comes to customer and market positioning. In this type of market, setting oneself apart from the competition becomes more difficult to achieve and for the Summer Palace Hotels group to build a brand in this market segment, they must be willing to focus more on putting consistency into operation through a straightforward but more persuasive brand promises. This should be joined with value and experience in order to attract customers (Akerlund 2005). This new class of accommodation that attempts to position itself between a typical backpackers' accommodation and a full-service hotel, is going to become an increasingly forceful brand in the market and is expected to prolong growth in the coming years. The new class is capable of attaining a steady “revenue per available room (rev PAR), which is based on a conversion expenditure that is quite low as compared to that in the high end market and this is an appealing factors for many operators and owners of hotels (Ansari & Carl 2003)and is the most likely factor as to why the Summer Palace Hotels group wants to go into it. The main factor when it comes to brand promise that is driving this new brand that is mainly based on appealing to the lifestyle of the consumer that it is targeted at, is the talent that is said to be behind its mode of delivery (Deloitte 2012). However at the moment, the staff turnover in this market is still said to be low, and considering that its staff costs account for about 45 percent of the costs of operation, with a strong correlation between staff retention and guest satisfaction, the owners Summer Palace Hotels group need to come up with a strategic plan on how best they are going to conscript, remunerate and preserve employees, as well as how they are going to ensure that they maintain consistency when it comes to consumer satisfaction. All the above mentioned factors revolve around profitability and survival in this market segment as being based on the ability to retain customers and therefore, loyalty programs will be very critical for the Summer Palace Hotels group if they are going to be in a position to be able to offer a differentiation factor for their customers. The need for loyalty programs will be particularly critical for the hotel because they will be dealing with a new set of customer and being able to understand theirs desires and cater for them is very critical (Deloitte 2012). Creativity through customer loyalty programs will therefore come in handy and will be a real game changer for the new summer inn, because they will enable the inn to respond to its new customers who have a new set of behaviours and tendencies creatively. The global market when it comes to hotels is such that budget hotel brands are likely to materialize because operators have been refocusing their strategies regarding them on the shortages that are visible in that segment. Those that are likely to emerge as winners in this new market segment are expected to move fast in order to be the first to benefit from this area where economic growth is expected to be faster and where supply is still below the expected levels. This market also has potential in terms of domestic travel and international brand recognition when it comes to outbound customers who are mostly upscale customers and their preference being basically based on recognition as opposed to reward. Customer loyalty will therefore give the new summer inn a leeway to be able to appeal directly to the emotions of these customers and their need to feel special which is the basis upon which loyalty is likely to be build faster and in a convenient manner. On the part of mid market and budget segments, the operators of the new summer inn will have to be keen on offering value and rewards as this will attract customer loyalty. Customer loyalty will also be critical when considering that service appeal in the modern world in inherently depended on generational desires and ideals. Customer loyalty programs will especially assist the new inn to attract the boomers whose is that of “forever young” and who love experiential life enhancing services and products. If customer loyalty is approached well, this new market segment is likely to deliver an enormous return on capital that the operators put into it. The challenge that the summer inn is likely to face though is that they have to maintain lifestyle products modern and germane. The other consideration that the new inn needs to see to is that of implementation of the power of the social media as a marketing tool through which they will be able to build massive following and engage their customers in constant discourse that creates awareness and builds a sense of community. The power of social media is such that a failure to recognize that it is capable of building a strong network and flow of traffic can be detrimental especially if competitors discover it before the in does. Conclusion This paper has established the trends of Customer relationships in the 1990s, and in the present age as a way of establishing building a source of continuous revenue and profits in the hotel industry. The paper has also sought to establish the role of market segments as well as customer loyalty in the context of new emergent markets as compared to past ones. It has also established the characteristics of different markets for different customers and how customer relationships affect those market segments. Above all, the paper has tried to show that customer relationship management is very critical to the success of both new and old hotels in a global world where the desires of customers are increasingly changing and changing fast by the day. List of References Akerlund, H, 2005, Fading Customer Relationships in Professional Services, Managing Service Quality Vol 15 Issue 2 , 156-171. Ambler, T, Battacharya, C, Julie E, et al, 2002, Relating Brand and Customer Perspectives on Marketing Management, Journal of Service Research Vol. 5 Issue 1 , 13–25. Ansari, A, & Carl, F, 2003, E-Customization, Journal of Marketing Research 40 Issue 2 , 131-145. Blattberg, R, Gary, G, & Jacquelyn, S, 2001, Customer Equity: Building and Managing Relationships as Valuable Assets, Boston: Harvard Business School Press. Bolton, R, Kannan, P, & Matthew, D, 2000, Implications of Loyalty Program Membership and Service Experiences for Customer Retention and Value, Journal of the Academy of Marketing Science Vol 28 Issue 1 , 95–108. Cao, Y, & Thomas, S, 2005, Reducing Adverse Selection through Customer Relationship Management, Jurnal of Marketing Vol 69 Issue 4 , 219-229. Deloitte, 2012, Hospitality 2015" Game Changers or Spectators", London: Deloitte. Read More