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Abstract
Purpose – The purpose of this study is to investigate how hotels are implementing customer
relationship management (CRM) practices at the property level.
Design/methodology/approach – Semi-structured in-depth interviews were conducted with 45
hotel managers from 17 hotels. The interviews were recorded, transcribed, and analyzed using content
analysis.
Findings – All participating hotels have practices in place to manage customer relationships. The
most commonly cited goal for CRM is guest retention. Evaluation and control are perceived as very
important activities not only to create value for the customers, but also to track the performance of the
guest contact departments and the customers’ evaluations of the hotel/restaurant experiences.
Research limitations/implications – The sample is probably biased towards hotels that are most
interested in CRM and are heavily weighted towards higher tariff properties.
Practical implications – The study modified Buttle’s CRM value chain to analyze hotels’ CRM
practices. Results of the study provide a source for industry practitioners to compare and benchmark
their practices and to obtain useful CRM ideas.
Originality/value – CRM-related research in the hotel industry has looked at a variety of specific
practices and its role in achieving overall objectives at the corporate strategic level. Yet, no research
has been done to investigate CRM practices at the property level for hotels using the CRM value chain.
Keywords Customer relations, Customer service management, Value chain, Hotels, Hong Kong,
Marketing strategy
Paper type Research paper
Introduction
The concept of customer relationship management (CRM) was first developed in the
International Journal of
mid-1990s in information technology (IT) industries (Boulding et al., 2005; Payne and Contemporary Hospitality
Frow, 2005). Innovation in information processing, more sophisticated and demanding Management
Vol. 22 No. 2, 2010
pp. 139-159
q Emerald Group Publishing Limited
This research was funded by the School of Hotel and Tourism Management, The Hong Kong 0959-6119
Polytechnic University and supported by the Hong Kong Hotels Association. DOI 10.1108/09596111011018151
IJCHM consumers, and an increasingly competitive environment contributed to the
development (Bell et al., 2002; Chen and Popovich, 2003; Parvatiyar and Sheth,
22,2 2002). CRM was initially considered as a technology-only tool or simple database
marketing (Chen and Popovich, 2003; Parvatiyar and Sheth, 2002). However, it has
evolved into a management philosophy in which an organization concentrates its
activities around the customer. Over time, it has emerged as a strategy to use IT to
140 integrate the cross functions of employees to understand and retain long-term
profitable relationships with customers. The goal is to create greater value for both
customers and shareholders (Payne and Frow, 2005).
Many studies have been conducted on CRM in various industries in the past 20 years.
However, there is still significant disagreement on its definition and meaning (Buttle,
2004). In addition, there is not a commonly agreed framework for the implementation and
evaluation of the effectiveness of CRM practices (Sigala, 2005). Payne and Frow (2005)
proposed a cross-functional, process-based conceptual framework covering five generic
processes including strategy development, value creation, multichannel integration, and
information management and performance assessment. Based on the work of Payne and
Frow (2005), Iriana and Buttle (2006) created a 13-item survey instrument to assess an
organization’s CRM orientation in terms of strategic, operation, and analytical
perspectives. Buttle (2004) proposed a CRM value chain for the development and
implementation strategies. The value chain has two main parts that include five primary
stages and the supporting conditions. Both are essential components for creating value
for customers and profitability for the company (Buttle, 2004).
Sigala (2005) suggested an integrated managerial approach to hotel CRM including
the three areas of information communication technology (ICT), internal and external
relationship management, and knowledge management. CRM-related research in the
hotels has looked at various specific practices in isolation. They include loyalty
programs, brand loyalty, customer satisfaction, knowledge management, information
and communication technologies, and internal and external marketing (Bouncken,
2002; Choi and Chu, 2001; Engstrom et al., 2003; Kandampully and Suhartanto, 2000;
Lee et al., 2005; Minghetti, 2003; Palmer et al., 2000; Piccoli et al., 2003; Sigala, 2005;
Sigala et al., 2001; Tepeci, 1999).
The purpose of the research presented here was to investigate how hotels in
Hong Kong are managing customer relationships. The study adopts Buttle’s
(2004) CRM value chain framework. This was chosen for the study because other
studies have either focused on the strategic view or on the role of ICT in CRM
practices. Although a more recent survey instrument has been developed by Iriana
and Buttle (2006), which focuses on the evaluation of companies’ customer
relationship orientation in the strategic, operational, and analytical domains. Buttle’s
(2004) CRM value chain provides a framework to understand how CRM practices are
implemented at the operational level and how the different activities work together to
create value. It focuses not only on the process, but also identifies the supporting
conditions for successful CRM implementation at the property level. Furthermore,
hotels of different size and price/quality level have CRM systems of varied levels of
sophistication (Imrie and Fyall, 2000; Moriarty et al., 2008). This suggests that
differences in CRM practices may exist among hotels of different price/quality levels in
Hong Kong.
The specific research objectives for this study are to:
.
identify the goals of CRM strategies;
.
identify and analyze CRM strategies and systems used by hotels in Hong Kong; CRM for hotels in
and
Hong Kong
.
identify how CRM practices differ amongst price/quality segments.
Methodology
The study adopted an inductive approach as suggested by Creswell (2003) by
following the five steps:
(1) Gathering of information.
(2) Asking open-ended questions of participants and recording field notes.
IJCHM
22,2
142
Figure 1.
CRM value chain for
hotels
Primary stages
Customer portfolio To identify customers whom the Does your hotel have a system or All hotels collected information about
analysis company would like to serve by practice in place to manage/maintain their customers at various points of
accessing the potential economic customer relationships? If yes, please contact. None used the data to perform
contribution of existing and potential describe what it is? cost and profitability analysis for the
customers purpose of segmentation and
identification of potential customers
Customer intimacy To better understand customers by Who is responsible for the All hotels proactively gathered
knowing their identity, profile, history, implementation of the CRM practices? information about customers’
requirements, expectations, and Is your CRM program a chain-wide preferences, special requests, and
preferences in order to facilitate more program? What kind of customer complaints. Higher tariff hotels were
intelligent CRM decisions. information does your hotel collect? more active in encouraging the
How is the information being used? employees to gather this information.
Communication with customers
(e-marketing) was an important
component of enhancing customer
intimacy
Value proposition To identify sources of value for Hotels used different ways to
development customers and create a proposition and differentiate themselves from their
experience that meet their requirements, competitors. In addition to offering
expectations, and preferences superior quality services, higher tariff
hotels provided more opportunities for
employees to interact with customers
(e.g. lobby greeters and managers
present in the lobby). One hotel has a
separate reservation hotline to handle
restaurant reservations
Most hotels have well-designed
procedures to handle complaints
Employees were empowered and have
ownership to handle complaints
(continued)
interviews
CRM value chain
Hong Kong
Table I.
CRM for hotels in
22,2
144
Table I.
IJCHM
Managing customer To design process and organizational Guest relations staff to act as internal
lifecycle structure to facilitate the acquisition, sales managers focusing on building
retention, and development of new and relationships, identifying guests’ needs,
existing customers and servicing of in-house guests
Frequent guest or VIP programs were
used to recognize and reward repeat
guests
Most hotels appeared to concentrate
primarily on returning guests
Evaluation and control To evaluate the performance and the Hotels tracked the performance of their
outcomes of the CRM practices and to guest contact departments and
propose measures for continuous customers’ evaluations
improvements Some hotels used this information to
monitor their performances and improve
their services
Some hotels were required to share this
information with sister hotels
Supporting conditions
Leadership and culture Availability of strong leadership Please describe your company’s mission/ Most hotels have strong customer-
commitment and customer-centric values oriented cultures
organizational culture Who (which departments) is/are Missions and values were communicated
responsible and involved in the CRM to all employees at orientation programs
process? and on other training occasions
Some have identified certain managers
or departments to be responsible in
executing and managing the CRM
process
Hotels with senior executives with prior
experiences in managing luxury hotels
tended to bring in new CRM ideas
(continued)
Description of the dimensions Sample questions asked in interviews Key findings
Information technology Availability of high quality customer Does your company adopt information The higher the category of the hotels, the
data through the use of appropriate technology to collect and manage more resources they committed to
information technology customer data? adopting technology as part of the CRM
process
All hotels have separate CRM systems/
databases for rooms and F&B customers
People Availability of qualified and committed What is your employee turnover rate? All hotels emphasized that their CRM
employees in all stages of the CRM value What does your hotel do to ensure that practices were sustainable only with
chain qualified employees are hired and capable and passionate employees
retained? All hotels invested considerable
resources in recruiting, training, and
retaining their employees
Low employee turnover and low-service
employees contributed to the success of
CRM
Process Availability of processes which What do you want to achieve through Most of the hotels adopted a proactive
contribute to the creation of value for your hotel’s CRM practices? approach in serving the customers
customers How does the company communicate its Most of the hotels did not appear to be
mission and/or value to the employees? effective in systematically
Are you sharing your customer amalgamating the information of guest
information within the hotel? requests and complaints into a single
Are the customers’ information being database for analysis purpose
shared among sister properties? Most of the hotels were not sharing their
What are the factors which facilitate and complete customer database with sister
hinder the implementation of CRM at properties
your property?
Hong Kong
145
Table I.
CRM for hotels in
IJCHM all but six cases, there were two interviewers present and each took individual notes.
With participants’ permission, the interviews were audio-taped and transcribed.
22,2 Interviewees were ensured anonymity of responses by disguising their names and
companies. The transcripts and notes were read through to obtain a general sense of
information and overall meaning. Two of the authors coded the transcripts
independently by segmenting the sentences and phrases into categories, which were
146 then labeled. Based on the results of the coding process, descriptions of the themes
were generated. Then, the main themes generated by the two authors were compared
to generate common themes.
High Tariff A
(all) 9 53 542 2,221 84 6 585 1.08
Super A 5 29 435 3,024 78 7 658 1.51
High Tariff A 4 24 677 1,218 90 5 493 0.73
High Tariff B 6 35 540 938 89 4 340 0.63
Medium Tariff 2 12 352 630 89 4 163 0.46
Total 17 100 519 1,581 86 5 449 0.87
Note: a 1 Hong Kong Dollar ¼ 0:128 US Dollar
participating hotels
Hong Kong
Characteristics of
147
Table II.
CRM for hotels in
22,2
148
IJCHM
Table III.
Goals of CRM
Exceed
Make Make guests guests’ Enhance Generate repeat Target Increase Identify areas
No. of guests feel feel “coming expectat- Communicate guests’ business from right market for
Category hotels special home” ions with guests satisfaction customers customers share improvement
Super A 5 2 0 1 2 0 4 1 0 3
High
Tariff A 4 1 2 1 2 0 4 1 0 1
High
Tariff B 6 1 0 0 1 1 5 0 0 2
Medium
Tariff 2 0 0 1 0 1 2 1 1 0
Total 17 4 2 3 5 2 15 3 1 3
Customer portfolio analysis. The CRM value chain places great importance on CRM for hotels in
assessing the potential economic contribution of each customer by estimating the
revenue generated. Without customer data, the companies will not be able to segment
Hong Kong
the market and project the potential sales from each group. All the hotels participating
in the study collected information about their customers at reservation, check-in,
check-out, and during their stay. As Minghetti (2003) suggested, they collected three
types of information, which included front-line data (guest profile information), 149
spontaneous data (information provided by the guest) and behavioral data (guest
transaction data or preference information input by staff into the computer system).
The types of information collected were very standardized but the quantity and quality
depended on the sophistication of the systems used.
No major differences were found among the hotels of different categories. They
gathered guests’ profile and transaction information via the property maintenance
systems and restaurant management systems. The information is stored in guest
databases. For room guests the information is used for segmentation and sales
forecasting. None of the hotels stated that they analyzed the cost and profitability for
each of the segments and customers were segmented mainly based on their geographic
market and purpose of business. The use of restaurant guests’ profile and transaction
information was limited to sales forecasting. Buttle (2004) believed that customers
generating different profitability levels should be served differently. Customers can be
segmented based on their “profitability” as this allows the company to maximize the
profits by offering differentiated products and services to different segments.
Customer intimacy. Better understanding of customers will enable more intelligent
CRM decisions (Buttle, 2004). The company must be proficient in acquiring, enhancing,
storing, distributing, and using high-quality customer data. All hotels believed that it
is important to understand the needs of customers. They all used the guest
information, such as preferences, special requests, and incidents, to service the guests
when they are in-house or making future reservations. Some hotels have invested in
computer- based restaurant reservation systems which allow them to store customers’
information, special requests, and transaction details. Others use the traditional
reservation book and note cards to record customers’ information.
All hotels proactively gather information about their customers’ preferences by
encouraging their guest-contact staff to observe and record guest preference
information. Some of the “Super A” hotels provide small note pads for their staff to
record guest information. The information is sent to the guest relations or front office
department to update the guest database. Only one hotel set a target for the number of
guest preferences each employee was expected to collect. This concurred with the
findings of Gamble et al. (2001) that staff incentives for advancing customer knowledge
are uncommon.
Customer data were made available to those involved in service, operations, sales,
and marketing. Most of the hotels limit employee access to the guests’ information to
ensure customer privacy. The majority offered the guests the opportunity to “opt” out
of the system by asking the guest to indicate at check-in whether they would like the
hotel to use his/her information for marketing purposes. This is mainly because the
Personal Data (Privacy) Ordinance of Hong Kong of December 1996 states that unless
the individual gives consent personal data may only be used for the purposes for which
they were collected or a directly related purpose. The parties collecting personal data
should ensure appropriate security measures are used to protect the data and control
IJCHM the access of the data (Office of the Privacy Commissioner for Personal Data (PCPD),
2008).
22,2 All the participating hotels viewed communication with customers as an important
component of enhancing the intimacy with customers. An important goal for several
properties is improving the efficacy of their target marketing to existing customers.
Communications were targeting specific groups based on demographic characteristics,
150 preferences, and transaction histories. They considered e-marketing the most
cost-effective promotional tool. Several hotels stated that they limit the number of
promotional emails sent to guests to avoid communication overload. A few
participants suggested that this overload could lead to guests ignoring the
communications, or worse, it could create negative feelings towards the hotel.
A few hotels have found ways of using their systems to increase revenue from
in-house guests. For example, in one hotel the guest relations department works closely
with the restaurants to steer guests to hotel restaurants in need of additional business...
However, manpower is an issue. Without sufficient staff to be able to interact with
customers and play the role of “internal sales manager”, the system will not work.
Value proposition development. This stage involves identifying sources of value for
customers and creating an experience that meets and exceeds their expectations and
requirements. Long term profitable relationships with key customers can be
maintained by satisfying individual guest needs, improving the guest experience,
and avoiding or minimizing the effect of service failures (Choi and Chu, 2001; Engstrom
et al., 2003; Minghetti, 2003; Tepeci, 1999). In addition to the traditional marketing mix,
management of customer experience is especially important in a service industry like
hotels in the value creation process. Customization of service and communications,
service guarantees, and service recovery programs are value-added CRM practices.
Hotels participating in the study used different ways to differentiate themselves
from their competitors. The medium tariff hotels identified themselves as offering
“value for money” to their guests. The High Tariff B hotels focused more on the quality
of the products (e.g. guest rooms, restaurants, and location of the hotel). The High
Tariff A and “Super A” hotels differentiated by offering superior products and
personalized services. They sought to provide more opportunities for managers and
employees to interact with customers informally. A number of the “Super A” hotels
deployed guest relations officers, lobby greeters, and duty managers to approach
guests in the hotel lobby and to make courtesy phone calls. Some hotels scheduled their
management staff to be manager-on-duty on a rotational basis and some were required
to be in the lobby for a certain number of hours a day to greet and bid farewell to
guests. One of the hotel executives comment that:
It is important for us to be there for the guests, whenever they need us. Having staff in the
lobby is just like having someone to welcome guests back home. Also, they are there to talk to
guests, find out how they are enjoying their stay, and provide relevant information and
suggestions to guests when needed.
This was not only practiced by higher tariff hotels. One of the “Medium Tariff” hotels
required the two sales managers to take turns greeting the guests in the lobby, thus
allowing the sales managers to maintain closer relationships with the guests. This
supports Beck and Knutson’s (2006) suggestion that the functions of sales managers in
hotels are changing. However, it also puts pressure on the sales managers and requires
them to have strong time management skills.
One of the “Super A” hotels with a number of F&B outlets has a separate
reservations department to answer telephone calls for reservations for the different
restaurants within the hotel. The hotel has a computerized restaurant reservation CRM for hotels in
system and a designated reservation number for all the restaurants, which operates
from 10 a.m. to 10 p.m. daily. The manager believed that if the hostess in the restaurant
Hong Kong
is too busy greeting the guests and not answering the phone, the hotel is either losing
potential revenue or not providing the appropriate service to the customers. This is
another example of how hotels are adding value to the customer experience.
Complaints provide an opportunity to gather information that can be disseminated 151
and used throughout the organization for product modification, service enhancements,
and preventative measures (McAlister and Erffmeyer, 2003). All the hotels agreed that
service recovery is one of the most important CRM tasks. They all have well designed
procedures for handling guest complaints. Most included systems for logging and
disseminating details of the complaints and follow-up to ensure satisfactory
resolutions. Most of the hotels require that feedback must be provided to guests
within 24 hours. Hotels also believed that staff being given the opportunity and
autonomy to handle guest complaints is of utmost importance. All “Super A” hotels
require any employee who received the complaint to “own” it until solved.
Whoever receives the complaint has ownership of it. You will own the problem and follow
through until you have done everything you can [. . .]
said one of the executives of a “Super A” hotel. Another executive also expressed
similar thoughts:
We also emphasize to our staff that we should try to solve the guest’s problems before they
depart as there is a high possibility that they will become a very satisfied customer.
The majority of the hotels required their staff to involve the duty manager when the
complaint involved potential compensation or hotel liability.
Managing customer lifecycle. Customer acquisition, retention, and development are
important processes in managing customer lifecycle. With good customer databases
and data mining techniques, customer data can be used to prospect new customers and
for cross-selling and promotion of new products and services. It is important to ensure
new guests are identified, and existing guests are retained and encouraged to return.
One of the “Super A” managers purposely took the guest relations department out of
the Rooms Division and made it a separate unit answering to the General Manager.
This allowed the guest relations team to focus exclusively on building relationships,
identifying needs of the customers, and servicing them. The executive further
explained:
My sales managers are my external sales and my guest relations team is my internal sales.
By sharing the sales responsibilities among other guest contact staff, the sales
managers can focus on revenue-generating sales activities and tasks outside the hotel
while the front-line staff focuses on servicing and selling to in-house guests (Beck and
Knutson, 2006).
Frequent guest programs are very commonly used marketing tools to attract and
retain customers. All the hotels have some form of program to recognize and reward
their frequent customers. They recognize their patronage by offering special welcome
amenities. Major chains have corporate frequent guest or loyalty programs to
encourage patronage. These programs are often incentive programs in which guests
can accumulate points and redeem rewards. There appears to be a difference between
the frequent guest programs of “Super A” and other hotels. “Super A” frequent guest
IJCHM programs are usually not a point-based program. They recognize the loyal guests by
offering different amenities other non-monetary benefits. These amenities are often
22,2 tailored to the guest’s individual preference. The hotels believe that their well-heeled
guests are looking for more than materialistic rewards. Therefore, building an
emotional tie with the customers is likely to be more successful. The objectives of these
loyalty programs must be to develop high levels of emotional loyalty rather than just
152 repeat visits (Hallberg, 2004). These programs are effective in increasing customer
loyalty to the hotel brand or chain, but at the same time are very costly to operate
(McClearly and Weaver, 1991). Chain hotels are in a better position to share the costs
among the different properties.
Several of the hotels, particularly the “Super As”, appeared to concentrate primarily
on returning guests. Repeat guests tend to get most of the attention and service from
the hotel staff, and many resources were spent to recognize and reward them. It can be
speculated that first-time guests are not receiving the full “wow” experience while
paying the premium rates. This may inhibit their becoming regular guests. Johnson
and Selnes (2005) suggested that a healthy customer portfolio requires significant
efforts to bring new members into its portfolio of loyal and most profitable customers.
Evaluation and control. Potentially one of the important findings from this study is
that evaluation and control are perceived as very important activity. This is not only
for the purpose of creating value for the customers, but also for tracking the
performance of the guest contact departments and the customers’ evaluations of the
hotel/restaurant experiences. Virtually all of the hotels provide comments cards in the
guest rooms and restaurants. Some of the hotel chains monitor guest satisfaction by
having the properties randomly survey in-house guests using a standardized
group-wide questionnaire. Some offer incentives such as F&B coupons to encourage
guest participation. To increase the credibility of the results of the survey, four hotel
chains commission a research company to conduct surveys of guests after they have
checked out.
Most of the higher tariff hotels tend to have a more sophisticated process and
system to analyze the information for performance monitoring. They also use the
information and results more extensively to improve their services and products. With
more resources, “Super A” hotels can afford to have a designated manager responsible
for collecting, tracking, and analyzing all the relevant information including complaint
correspondence, emails, log books, comment cards, etc., for the improvement and
enhancement of service quality. In some cases reports are generated by the corporate
office, and hotels could access the reports of all properties. Managers commented that
every hotel within the group would feel the “pressure” to make improvements since
every hotel is “watching”.
Supporting conditions
Leadership and culture. Leadership is needed to provide direction for the organization.
To successfully implement CRM, the leader must be strongly committed to lead the
change (Buttle, 2004). Leaders also should have ownership of any CRM programs or
individual initiatives. The background of the senior executives also provides directions
for the hotel on whether to adopt a more operational or analytical CRM approach. One
of the medium tariff hotels shared that their general manager and their senior
executives had experience in managing luxury hotels. Therefore, they brought in a
number of positive changes to the hotel by implementing CRM initiatives. Initiating
change in a company with a number of long-service employees was not an easy job, but CRM for hotels in
the management finally gained the support of the employees.
The level of market-orientation varies across the properties. Narver and Slater
Hong Kong
(1990) define market-orientation as the organizational culture that most effectively and
efficiently creates the necessary behaviors for the creation of superior value for
customers and superior business performance. All the hotels have mechanisms to
understand the customers’ preferences. Some of them are obsessed in obtaining 153
customers’ information. However, some hotels, even those in a chain, do not share
customers’ information with their sister hotels. The “Super A” and “High Tariff A”
hotels deploy more resources to deliver services and products that meet the needs of
individual customers. The other hotels adopt a more standardized approach. Hotels in
the higher quality categories were seen to have a more customer-oriented culture in
which their employees have a strong sense of “ownership” satisfying the needs of the
customers. This is in line with Brown et al. (2002) who defined customer-orientation as
the employee’s predisposition to meet the customers’ needs and confirming that
customer-orientation had positive impact on employees’ performance and satisfaction.
Employees are empowered to make the guests happy but the managers are active in
the process. Empowerment involves the transfer of power from higher levels of
employees to front-line staff (Cunningham et al. 1996). It was observed that the higher
the category, the more empowerment is given to the employees for handling guests’
issues. Not only should the complaint be handled in a timely manner, but the content
and process of consumer complaint management are important in influencing
customers’ perception of the service failure experience and satisfaction (Hocutt and
Stone, 1998; Spreng et al., 1995) and their repurchase intention and negative
word-of-mouth communication (McAlister and Erffmeyer, 2003). When employees are
given the opportunity to enjoy autonomy in decision-making, it contributes to higher
employee satisfaction (Hocutt and Stone, 1998). Extensive orientation sessions,
customer service trainings, and management-employee meetings are common
practices to equip employees with the necessary skills and knowledge for their jobs.
In all of the best examples, the employees are given extensive orientation and training
before being empowered. They have to “earn” the responsibility, but at the same time it
is important to motivate and gain employees’ commitment through these internal
marketing processes (Grönroos, 1994).
People. A recurring theme among the participants was the importance of the people.
Even managers from the most technologically-oriented hotels emphasized that their
CRM practices were sustainable only with capable and passionate employees with
strong enthusiasm in their job. Many of the managers professed and demonstrated a
love for the job. These managers wanted to make their guests happy and handling
difficult guests represented a “game” not a burden. All the hotels have invested
considerable resources in recruiting, training, and retaining employees. Virtually all
the properties had full-time dedicated training staff and required extensive orientation
programs for all employees. All the “Super A” hotels stated that low employee turnover
and long-service employees contribute significantly to the success of their CRM
programs.
Information technology. IT includes front office applications that support service,
sales, and marketing; depositories of customers’ data; and back office applications
which integrate and analyze the data (Greenberg, 2001). Not surprisingly, as the
average daily rate increases, so do the resources committed to CRM. The “Super A”
hotels dedicate extensive technological resources to retain loyal customers. Even
IJCHM within categories there were differences in the level of IT utilized. At one extreme was a
hotel that used paper and pen logbooks that are transcribed and distributed by a
22,2 secretary each morning. At the other end a manager of a highly computerized “Super
A” property joked that the company had never seen a system they did not like.
Perhaps, coincidentally, the hotel also maintained a high occupancy and room rate with
fewer employees-per-room than any other hotel in their classification. Appropriate use
154 of technology certainly helps the hotels manage customer relationships more
effectively though virtually all the managers emphasized that it is a tool to help
employees and not a substitute.
All participating hotels except the two medium tariff hotels use or were in the
process of adopting computerized restaurant management systems. However, the level
of sophistication varies. Some only use them for managing reservations, but some also
have the capability of storing customers’ profile and transaction data. Some hotels
maintain a separate restaurant customers’ database solely for the purpose of
e-marketing and mailing of promotional materials.
Within the hotel, most seem to operate separate CRM systems for the rooms division
and food and beverage. A few managers indicated that they would prefer a single
system which consolidates all customers’ records. This would require investment in a
computer system that can integrate multiple databases. Several managers indicated
that their owners are reluctant to make such investments in non-physical assets.
Processes. The process is the way which things are done within an organization.
The processes need to be designed and implemented to facilitate the creation of value
to the customers and the achievement of CRM objectives. These processes can be
classified as front-of-the house, where interactions with customers take place, and
back-of-the house, where the different departments support the delivery of services to
the customers.
Most of the hotels have adopted a proactive approach in serving the customers by
obtaining guests’ information and preferences in advance and using them to service the
customers. The higher priced properties appear to be quite efficient at using the
prodigious quantities of data collected towards correcting individual problems,
personalizing the guest experience, and identifying target markets. Most of the
managers interviewed were satisfied with the type and quality of customer information
collected through the different channels. Three of the “Super A” hotels and one from
each of the rest of the categories, designate a staff or a particular department to
maintain the guest database to ensure that it is complete, valid, and up-to-date.
However, most of the hotels do not appear to be effective in systematically
amalgamating the requests and complaints into a single database that can be analyzed
longitudinally to look for opportunities for identifying and correcting defects. Only
three, all “Super A” properties, described such a proactive system.
Several of the participants perceived customer information as proprietary even
within the same company. All but one “Super A” hotel interviewed were sharing their
frequent guests program members’ information with their sister properties. The guest
history information is uploaded to a central database and dispatched to the different
properties every night. Three out of the four participating “High Tariff A” hotels did
not do so because they either did not have a central reservation system or their
property management system was not capable of storing and sharing complicated
guest information. Another stated that each hotel within the group operates
independently and there was no need to share guests’ information. One manager was
honest enough to admit that this was because they might be competing for a piece of
business with a sister property. Sharing of customer information among sister hotels CRM for hotels in
under the same group is uncommon for “High Tariff B” and “Medium Tariff” hotels.
The finding is consistent with Gamble et al. (2001) and Piccoli et al. (2003) that the
Hong Kong
practice of sharing customer information is problematic because of contractual
agreements, lack of trust, and technological restrictions. Although Gamble et al. (2001)
and Piccoli et al. (2003) suggested that legislation barriers is one of the possible reasons
for not sharing customer data, it appeared that this is not one of the reasons considered 155
by the hotels not sharing their databases with sister properties even though they were
required to comply to the Personal Data (Privacy) Ordinance of Hong Kong.
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Corresponding author
Ada S. Lo can be contacted at: hmada@polyu.edu.hk