Searching for Long-term Profitability? The Need to Integrate CRM and RM

By Paul van Meerendonk Director of Advisory Services, IDeaS Revenue Solutions | November 20, 2011

In these economic times, hoteliers across the globe need to be more aggressive in pursuing demand in order to deliver profitability. Ensuring coordination between key hotel operational departments is paramount in targeting the right guests and helping to establish customer loyalty amongst profitable guests.

In this environment, hotel owners and managers alike need to be mindful that their marketing and revenue management departments are working together and it is important that open channels of communication are maintained. Both the marketing and revenue management departments are unfortunately siloed in many companies, but each holds an important key to the business, which, when used together, become a powerful tool for generating hotel revenue.

Revenue management is responsible for the demand forecast and pricing setting for the hotel. The Revenue Manager knows when demand is forecasted to be high or low, and he/she knows the value of the remaining rooms (and therefore can recommend discounts or offers that will not dilute expected revenues). Typically, the marketing department is responsible for Customer Relationship Management (CRM), managing the various marketing activities across the entire spectrum of past and future clients.

Industry experts see the integration of revenue management and customer relationship management as one of the key areas through which hoteliers can enhance their approach to maximizing total guest revenues. Rom Hendler, Corporate Vice President Strategic Marketing, Las Vegas Sands Corporation recently highlighted the corporation was successfully aligning CRM and revenue management processes across their properties to enhance their offering to profitable customers. He said, “We have stepped into the future of profit optimization by combining revenue management, sales and marketing, and CRM. By aligning all distribution channels with pricing strategy, we’re allocating inventory in ways that better serve our most profitable customers.”

Working together within a single hotel or even across an entire hotel group, the Marketing and revenue management departments can ensure that revenue is not diluted during peak periods by offering discounts at the wrong times, and help to identify the right offers for the right customers that will help to generate demand during off peak periods.

A robust CRM system helps to keep track of a hotel customer’s previous purchase history. While, room rates still brings in a highest portion of profit, retail, food and beverage, spas and entertainment are increasingly important sources of income, in many cases generating more revenues than from the sale of guest rooms. With disparate systems for each arm of the business, it is difficult to get a complete view of total guest spend without proper systems. A regular hotel guest may not be worth as much as a patron that may stay infrequently, but who spends freely on a variety of activities. The decision of which reservation requests to accept not only impacts the revenue of a specific hotel facility, but also company-wide profitability.

Coming up in January 2018...

Mobile Technology: Relentless Innovation

Technology has become a crucial component in attracting and retaining hotel guests, and the need to enhance a guest’s technology experience is driving a relentless pace of innovation. To meet and exceed guest expectations, 54% of hotels will spend more on technology in 2018, and mobile solutions in particular will top the list of capital investments. Many hotels are integrating mobile booking, mobile keys, mobile payments and mobile check-in into their operations. Other hotels are emphasizing the in-room experience, boosting bandwidth and upgrading flat screen TVs to more easily interface with guest mobile devices. And though not yet mainstream, there are many exciting technology developments on the near horizon. The Internet of Things (loT) is taking form in some places, and can be found in guest room control systems, voice activation systems, and in wearable sensors that can be used for access and payment options. Virtual reality headsets are available at some hotels so guests can enjoy virtual trips to exotic locations or if off-property, preview conference facilities and guest rooms. How long will it be before a hotel employs a fleet of robots for room service, or utilizes a hologram as a concierge, or installs gesture-controlled walls that feature interactive digital displays? Some hotels are already using augmented reality for translation services, or interactive wall maps, or even virtual décor. This pace of innovation is challenging property owners and brands to stay on top of the latest technology trends while still addressing current projects. The January Hotel Business Review will explore what some hotels are doing to maximize their opportunities in the mobile technology space.