The Implications of CRM Strategies on

Hotel Staff Skills and Competencies

in Relation to Guest Satisfaction

in the Case of the Ritz-Carlton

Abama, Tenerife

Iulia Buruiana

Higher Diploma in Hospitality and Tourism management

HTMi, Switzerland
Introduction

As hospitality industry is rapidly increasing, more and more companies strive to possess as

many strategic advantages, based on prolific customer relationships as possible, in order to

maximize their performances (Josiassen et al., 2014). Great companies, such as The Ritz-

Carlton, have discovered the secret of a flourishing business, based on returning customers,

which is why the focus has been mainly directed on designing, implementing and applying

strategies of engaging guests (Wang, 2012). The author has directed her attention upon

the primary research focus of this paper, The Ritz-Carlton Abama. Located in Guia de Isora,

Tenerife. Abama opened its doors for the public for the first time in 2005, being taken

under the management of The Ritz-Carlton Company, one year later, in 2006. Luxury

abounds within every service detail, harmony and peace are reflected not only in the

exquisite design and architecture, but also in the eyes and behaviour of the staff. With a

number of approximately five hundred employees, 10% trainees, the management team

strives to keep everyone satisfied and motivated (The Ritz-Carlton Abama, 2014). Steel et

al. (2013) states that CRM implementation promises to increase guest satisfaction, loyalty

and retention, merged with increased revenue. Think of it as a means to gather information

regarding various fields such as customer knowledge, marketing effectiveness, sales, etc.

(Finnegan, Currie, 2010). As a definition, “CRM is a business approach that seeks to create,

develop and enhance relationships with carefully targeted profitability and thereby

maximize shareholder value” (Payne, 2007).For decades, researches have deeply looked

into analysing or developing strategies in order to retain guests. CRM has

been looked at from a vast palette of angles, always being juxtaposed

to a wider or particular situation, department, company or country.

This was done in order to have a more accurate vision of its effects, which ultimately lead

to increasing the financial benefits (Wang, 2012). Even though CRM and its means of

implementation has aroused curiosity for researchers, being a fascinating and

contemporary subject of discussion (Wu et al., 2011), there are still some gaps that require

further attention, as they are crucial in understanding the process of how CRM works

(Sigala, 2005).

There have been numerous studies focusing on the implementation of CRM, but little is

known about the factors that have an impactful role in its implementation (Sigala, 2005).

Unfortunately, currently researches are thought to have some loops regarding the tight

bond between guest satisfaction and the staff’s abilities to reach it (Sigala, 2005).

KM, CLM, RQ, are few of the topics adjoined to CRM (Wu, 2011), and as in any research, the

existence of certain limitations (Sigala, 2005), lead to helping the author of this research

proposal to focus on finding and transforming them into a research topic. The writer

believes that the implications of CRM strategies on the personnel‘s abilities to influence

guest satisfaction is a matter of extremely high importance, which should be researched at

a qualitative and greater scale, in defiance of some other insufficient studies (Moreno, et al.,

2014).

In order to understand, anticipate and manage the guest’s needs, to increase the business’

efficiency and profitability (du Plessis, 2004), entrepreneurs need to have skilful staff,

adaptable to the CRM implementations. The actual research concentrates on evidencing the

CRM implications on staff in conjunction with guest satisfaction, moulded and applicable in

the primary research focus, The Ritz-Carlton Abama. The results are meant to improve the

hotel’s performance relationship between staff management and customer satisfaction.

Customer Relationship Management Concept

Qi et al. (2014) states that over the past decades, more and more hotels, have implemented

numerous strategies of CRM in order to develop the relationship between the customer and

the company. Sustaining their idea, Mendez and Moreno (2011) add that in conjunction

with KM, CRM has become a key tool in the majority of companies, especially the ones

predisposed to a competitive environment. “Customer Relationship Management is the

core business strategy that integrates internal process and functions, and external

networks, to create and deliver value to targeted customers at a profit ”, (Buttle, 2009).

Analyzing this statement, it displays a sequence of actions, as well as the tools used to

enhance the quality of services provided (Wu, 2011). Basically, the entire process of CRM

reduces to designing, implementing and applying different strategies which molds on each

enterprise’ target market (Mahajan, 2006). The ultimate goal of CRM is to increase revenue,

by creating long-lasting relationships with valuable customers using different models and

techniques that denote high quality and trust (Kumar, 2010).

The IDIC Model

There are various models expressing CRM strategy, although the writer focused on two of

them, the IDIC model and the CRM value chain, as these two constitute the base of CRM

around which the other three have been developed. This model has been conceived by

Peppers and Rogers (2001) and it focuses on one-to-one guest relationships, suggesting a

number of four actions in order to achieve the desired objective. The first step

into creating a relation is to identify the target market, in order to be able

to design the offerings based on their requests and needs (Sigala, 2004).
After identifying the market for which the products or services are being addressed, for

providing QGS and to enhance the customer’s experience, the market is divided into

segments, in order to better determine the needs of each segment. For example, in

hospitality, some hotels address to business people - this category determining the

targeted market, although these business people are in turn divided into segments, based

on a certain criteria, for instance, nationality or religion. Interacting with guests is what

makes the difference between the methods of approaching of each hotel. This is the perfect

occasion of QGS and enhancing the CLV. Lastly, the “wow factor” is generated by

customizing the services and offers. Making each and every guest feel unique is what they

are looking for and it generates the connection between customers and hotels, as it

produces the feeling of familiarity.

The CRM Value Chain

Figure 1. CRM Value Chain (Buttle, 2000)

Designed to enhance guest experience and to create customer value, Francis Buttle created

this model, which is an adaptation of Porter’s value chain analysis, as a response to the high

demand for CRM on the market. Creating awareness and guests actually feeling the CRM

effect is the result of a successful strategy which leads to reaching the business’ goals.
Following the primary stages, creates the vision of an organized and correct sequence of

actions leading on the guest satisfaction path, which fusions in a symbiosis with the

supporting conditions, meant, on the other hand, to increase the profitability. It is

important to have a clear view, that CRM is not about the supporting conditions, but about

the ultimate outcome, which is the merge between guest satisfaction and profitability

(Buttle, 2009). Peppers and Rogers IDIC model represents the first and basic model,

explaining the 4 steps leading to a successful outcome for CRM.

Likewise, The CRM value chain designed by Francis Buttle focuses on exactly the same

outcome, although based on the same principles, it is more elaborated providing an

alternative to suit better for different enterprises according to their standards. Basically, all

the models have the same purpose the differentiating factor is the complexity of each

strategy, in order to fit a certain business.

The Multi-Layered Model of CRM Strategy Implementation

Finnegan and Currie (2010), talk about the fact that the disappointments reflect that CRM

is very often executed with a concentration on a product bundle without a top to bottom

understanding of the issues of coordinating society, process, individuals, and engineering

inside and crosswise over hierarchical setting. The idea of affordance alludes to the

versatile property of structure and objects for people. This paper draws on the idea of

affordance as a practice lens to investigate the CRM strategies and to create a multi-layered

methodology to CRM execution.

 Figure 2. Multi-layered model of CRM strategy implementation (Finnegan, Curie, 2010)

There are three interconnected matters important to this CRM study. First and foremost,

affordances stresses different activity potential outcomes by making note of the double

characteristics of social, processual, individuals and mechanical layers and components

inside them (Figure 1). Next, affordances accentuates the connection between layers,

components by making note of the versatile nature and joined impact of affordances of

these components in a solitary environment. Thirdly, affordances attract thoughtfulness

regarding the liquid state of these components by considering affordances as constitutive

of the nature's turf (Finnegan, Curie, 2010).

Cultural Layer

The cultural change can be helped by powerful correspondence through the whole extend

and touching all levels of workers. On one hand, it can improve representatives' aptitudes

and learning; then again, it can likewise help inspiring the workers and diminish their

resistance (Finnegan, Curie, 2010).

People Layer

Applying CRM procedures is equal to including a rich palette of individuals – bleeding edge

deals, promoting and administration suppliers, business investigators, IT experts, and an

expansive cluster of directors, every one of whom must work together to guarantee that a

CRM method is overall characterized, conveyed and sent. (Finnegan, Curie, 2010).

Process Layer

As indicated by the essential principle of CRM procedure, it is less expensive to hold a

current guest than to gain another one, although the substance of a client driven method is

to distinguish gainful clients and make them even more financially beneficial. Methodology

can assume a vital part, however in this research proposal it is the importance of the

procedure layer which is much more essential (Finnegan, Curie, 2010).

Technology Layer

The fourth classification represents innovation related elements. CRM systems exploit

engineering advancements with their capacity to gather and dissect information on guest

examples, decipher guest conduct, create prescient models, react with convenient and

powerful tweaked communications, and convey item and administration quality to

individual guests (Finnegan, Curie, 2010).

CRM in Hotel Operations

Living in a customer-oriented era, the awareness level has tremendously increased

amongst the travellers, and with it, the transparency of pricing strategy, marketing and

even Customer Relationship Management (Christou and Kassianidis, 2003).

Hence, the guest loyalty has decreased whilst the turnover has increased. Sophisticated and

unique experiences have become guests’ ultimate pursue, merging with exquisite services

at a convenient price, whilst the hotels are pursuing the guest satisfaction (Zineldin, 2014).

CRM has for the most part been expected to make a competitive edge for an association,

and additionally to have a prolific effect on the organizational outcomes of a company (Sin

et al., 2005).

Figure 3. Main reasons for implementing CRM in hotels (Sigala, 2004).

Most of the enterprises have the same purposes, although they are being expressed

through different strategies. On the other hand, some hotels adopt the first method which

has been discussed earlier in the conceptual part, regarding the Peppers and Rogers IDIC

model, although focusing more on the interacting strategy. Guests have more access to the

insights, tips and tricks through ITC, which constitutes a tremendous impact on the

travellers’ awareness (Sigala and Christou, 2002).

CRM strategy is being adopted in small and large hotels, although it has a completely

different approach. While for the large enterprises CRM stands for the standardized

concept of keeping the guests satisfied whilst offering high quality guest service, the small

hotels have a more deeper insight of CRM, concentrating on developing the one-to-one

relationships. This strategy is commonly used in the small enterprises, being one of the

most effecting in creating a “wow factor” and bounding a strong connection with the guest

(Sigala, 2004). Comparing these situations, the author would like to emphasize how CRM is

applied in two different scenarios of hospitality, revealing the motivational factors, the

aspects each company chooses to focus on more and how do they differ.

The Significance of CRM to the Strategies of Hotel Companies

CRM is fundamental for the hotel business, specifically for chains of hotels functioning

either broadly, overall or through universal associations (Luck, Lancaster, 2013). Zineldin

(1999) talks about the differentiation the hotels strive for, especially when offering the

same core products, approximately similar quality guest service and having the same

ranking stars. Due to their tremendous resources, capabilities to strive and high potential

of achieving all the mentioned factors, they seek to win the battle of differentiation as

through conquering it, borns the development of customer relationship (Zineldin, 1999).

Thus, more and more companies aim to differentiate themselves through their CRM

strategies and how bounded are the relationships between the organizations and guests

(Luck, Lancaster, 2013).

There are visions that sustain the difference between product loyalty and service loyalty,

arguing that they are not necessarily that much interconnected and depend one of the

other (Gremler et al., 2001). On the other hand, with a different vision, it is thought that

administration devotion is more subject to the improvement of interpersonal connections

than on substantial items, and that the process of enhancing relationships with guests

bounded on long term can be applied for both quality guest services as well as for products

(Luck, Lancaster, 2013).

In 2005, one of the first hotel groups to develop a system through which they were

monitoring guests’ preferences regarding bookings and the whole period of stay, was the

De Vere Group. Through this program, the company aimed to have a better understanding

regarding guests inquiries. Ever since, a large number of companies have adopted this

strategy (Luck, Lancaster, 2013). The Ritz-Carlton Company has a property management

system which allows them to gather information about guests’ inquiries, booking wishes,

allergies, etc. Whiting all properties, one of the staff’s main task is to note the customers

wishes and introduce them into the system. If a guest visited the Ritz-Carlton South Beach

Miami and had a Virgin Mojito daily by the beach, when he visits the Ritz-Carlton Abama, at

the check-in, the front office agents will be waiting for him with his favorite drink. The

same applies for all guests’ preferences (Michelle Delio, 2000).

Primary Research Background: The Ritz-Carlton Abama

As mentioned in the Introduction, the primary research context is located in Tenerife,

Spain. The Ritz-Carlton Abama, successfully manages to keep its guests satisfied, striving

each day to create unforgettable and unique experiences for its guests.
Nadia Kyzer, Corporate Manager of Guest Recognition (2000), reveals in an interview some

of the company’s insights regarding their CRM approach strategies and how this impacts

the hotel both from staff turnover sight and guest satisfaction. In Abama’s case, the primary

and most important resource represents the Ladies and Gentlemen. Having a credit of 2000

euros per person, each and every staff member (including trainees) is empowered to take

decisions in order to solve the possible complaints as rapid as possible. They are

encouraged to create “wow-stories” for their guests, bounding them forever. The hotels

emphasizes the concept of happy staff that leads to satisfied and returning customers.

Therefore, through the high number of staff rewards, they manage to satisfy them, creating

a peaceful environment at work, which motivates them to work better and create special

interactions with the guests. Furthermore, utilizing the PMS program, the hotel carefully

deals with each guest’s potential inquiry, leading to guest satisfaction (Delio, 2000).

Conclusions and Recommendations

Despite the beneficial outcomes that CRM might have, numerous hotels that implemented

CRM strategies have reported disappointing levels of enhancement (Becker et al. 2009).

The achievement estimation of CRM application is low, evidence implying that numerous

hotels are finding it difficult to acknowledge business advantages from this technique

(Finnegan and Curie, 2010). Even if there are cases in which CRM successfully strives

(Sprint, 2002), the number of failed estimations is high (Mendoza et al., 2006). Therefore,

CRM strategies implementations have dramatically decreased (Steel et al., 2013), as the

reason behind this is the fact that CRM strategies fail to function up to the companies’

expectation.
Although, within this research proposal, there has been a variety of examples regarding

successful CRM strategies implementation, belonging to the top five star properties in the

world. Evidence suggests that the positive cases fade away in front of the negative (Wilson

et al., 2006).

In conclusion, the author would like to emphasize the exceptional outcomes that CRM

might have if implemented correctly. The models presented in the Conceptual part,

represent good evidence of how CRM strategies should be applied. However, one of the

main reasons these tend to fail is mainly due to the exclusive focus on guest satisfaction,

neglecting the concept of long-lasting relationships and guest retention through delivered

promises regarding services provided (Kandampully and Duddy, 1999)., as guest

satisfaction is not necessarily equal to guest loyalty (Ignatius, 2012).

To summarize, the writer has achieved the targeted aim of emphasizing the consequences

of CRM strategies on hotel staff skills and abilities in relation to guest satisfaction in The

Ritz-Carlton Abama, based on analyzing the CRM strategies within the company, evaluating

the effects of databases on customer loyalty and, last but not least, the role staff

empowerment plays in this equation.

One of the areas in which future researchers might look into is the validity testing of CRM

models and data in other countries. As the cultures vary from nationality to nationality, it

would be interesting to see how guests perceive the outcomes of the CRM strategies in

different corners of the world. Also, it would constitute a good opportunity for managers to

analyse the effects of their CRM implementations and how these impact the guests (Moreno

and Melendez, 2011).

As a large number of CRM strategies implementations fail considerably (Steel et al., 2013),

future researches might wish to focus on discovering additional factors that lead to the

failure of CRM practices and finding methods to prevent it. Additionally, this might lead to

proper measurements in the cases when CRM implementation triumphs (Richard et al.,

2007).

Moreover, the concepts and models exemplified within this research with a very successful

and prolific outcome (as shown for the Ritz-Carlton Company, Hilton, etc.) could be also

tested in other areas of activity and monitor the results in order to test its generalizability

(Moreno and Melendez, 2011).

As a final aspect, the author wishes to redirect the attention of future researchers on

conducting the studies also in different ranking hotels, other than five star luxury

properties. As these benefit of a large number of resources and high potential to achieve, it

might be for this exact reasons that many companies complain regarding the failure of CRM

practices. Conducting the studies in low ranking hotels might reveal accurate reasons for

their low performance. Considering the fact that the author focused her attention on filling

the gap in the studies that have analysed the relationship between staff skills and abilities

to achieve customer satisfaction (Sigala, 2005), the writer encourages future researches to

enrich the consequences of this interconnection.

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