Searching for Long-term Profitability? The Need to Integrate CRM and RM
By Paul van Meerendonk Director of Advisory Services, IDeaS Revenue Solutions | November 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.