Information Technology & Tourism, Vol. 6 pp. 141–152 1098-3058/03 $20.00 + .00Printed in the USA. All rights reserved. Copyright © 2003 Cognizant Comm. Corp.

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Address correspondence to Valeria Minghetti, CISET, Ca’ Foscari University, Venice, Villa Mocenigo-Riviera S. Pietro, 83, 30030Oriago di Mira (Venice), Italy. Tel: +39–041-2346531; Fax +39-041-5630620; E-mail: ming@unive.it

BUILDING CUSTOMER VALUE IN THE HOSPITALITY INDUSTRY:

TOWARDS THE DEFINITION OF A

CUSTOMER-CENTRIC INFORMATION SYSTEM

VALERIA MINGHETTI

CISET (International Center of Studies on the Tourist Economy), Ca’ Foscari University, Venice, Italy

Increasing occupancy rates and revenue by improving customer experience is the aim of modernhospitality organizations. To achieve these results, hotel managers need to have a deep knowledge ofcustomers’ needs, behavior, and preferences and be aware of the ways in which the services deliveredcreate value for the customers and then stimulate their retention and loyalty. In this article a method-ological framework to analyze the guest–hotel relationship and to profile hotel guests is discussed,focusing on the process of designing a customer information system and particularly the guest infor-mation matrix on which the system database will be built.

Key words: Hospitality; Customer loyalty; Customer relationship management;Customer information system; Guest information matrix

define their customer mix, identify which benefitsare salient for different segments, ensure that thehotel supply and capabilities match the guests’ de-sires, and increase delivery efficiency. Enhancedcustomer satisfaction and retention lead to in-creased customer loyalty, occupancy rates, and rev-enue per available customer (Dubé & Renaghan,1999a, 1999b).

Yet the collection and use of customer informa-tion are frequently intermittent, delayed, and frag-mented (Cline, 1999). In some cases, especially insmall and medium-sized hotels, data are still keptby hand and recorded on index cards or a simple

Introduction

The strategic use of technology in marketing isone of the most significant opportunities the hospi-tality industry has at this moment (Cline, 1999; Dev& Olsen, 2000).

The implementation of a targeted sales and mar-keting plan and the development of a customer re-lationship management (CRM) policy require adeep knowledge of customers’ needs, behavior, andpreferences, and new technologies are one of themajor drivers of change in this context. Creatingautomated guest histories helps hotel managers to

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database of guests is built, which allows basic analy-ses to be carried out.

Even where an information and management sys-tem is implemented, very few hotel organizationshave a formal customer-oriented e-business strategy.Most of them focus actions and research primarilyon transaction-centric solutions, to improve the ef-ficiency of internal operations and administrativeprocedures [property management systems (PMS)],the core being the delivery of the guest folio. In somecases, guest services are also enhanced, but this isan indirect added benefit and not a primary goal(Siguaw & Enz, 1999).

The setting up of a customer information system(CIS) that automates information search and pro-cessing and provides a consistent view of the cus-tomer across every point of interaction, bringingtogether a wide array of data into actionable for-mats that support management decisions, is the chal-lenge for the future. The system, based on a datawarehouse with an accessible and user-friendly in-terface, will integrate different operational systemsand databases (PMS, Central Reservation System,etc.) and will be able to store multiple profiles forthe same customer, depending on his/her behaviorand nature of travel.

This article proposes a reference model to ana-lyze and profile hotel guests, describing the meth-odology followed to define the guest informationmatrix (GIM) on which the user interface and theCIS database will be built. The research work repre-sents the first step of a project that is being carriedout in cooperation with a hotel technology provider,whose aim is to develop a guest relationship optimi-zation solution for his clients.

After discussing the importance of managingcustomer value and the role information technol-ogy (IT) has in supporting customer knowledge(second section), in the third section a model toanalyze the main aspects of the guest–hotel rela-tionship is presented. An investigation of hotelmanagers’ propensity to build an automated guesthistory is included in the fourth section. The defi-nition of a guest information matrix that optimizesdata collection and minimizes the hotel’s invest-ment costs is the subject of the fifth section. Con-cluding remarks and indications for future workare given in the last section.

Promoting Customer Loyalty and Retention: FromTraditional to Knowledge-Based Marketing

Customer Loyalty Versus Satisfaction

As mentioned by Dubé and Renaghan (1999a),“managing customer value by creating quality andservice that customers can see now is considered acritical component of companies’ strategic market-ing. Customer value is what builds loyalty” (p. 79).Orientation to customer retention, continual cus-tomer contact, and high commitment to meetingcustomer expectations are the new strategic rules ofrelationship marketing, which are based on factorsother than pure economic assessment and productattributes (Bowen & Shoemaker, 1998).

Loyalty usually implies satisfaction, but satisfac-tion is not loyalty. In a hotel, a guest may be satis-fied by his/her stay because the services purchasedhave met his/her expectations, but this does not im-ply that he/she will repeat the experience and/or rec-ommend it to friends and relatives (Bowen & Shoe-maker, 1998; Shoemaker & Lewis, 1999). Apartfrom transient travelers, who do not generally re-turn to the area where the property is located, somepeople choose different hotels according to the pur-pose of trip (e.g., whether they travel on business orwith their family), others look for novelty and liketo sample different properties in the same area, oth-ers are price sensitive and shop for the best deal.Finally, some guests do not develop loyalty simplybecause they are not encouraged to return.

Although keeping guests satisfied is important,loyal customers bring more value than satisfied cus-tomers. They generally show a lower price sensitiv-ity over time, tend to resist changing service pro-viders, identify themselves with the brand, andmaintain a strong preference for the service pur-chased against competitors (Butcher, Sparks, &O’Callaghan, 2001). This allows the hotel to reducemarketing costs and to significantly increase occu-pancy rate and profitability. According to researchcarried out in a group of service industries, a 5%growth in customer retention can result in a 25–125%growth in profits (Reichheld & Sasser, 1990).

To stimulate loyalty, hotel managers need to havea clear understanding of guests’ value drivers and beaware of the ways in which their business contributesor fails to contribute to the creation of such value

BUILDING CUSTOMER VALUE IN THE HOSPITALITY INDUSTRY 143

(Dubé & Renaghan, 2000). These drivers may be dif-ferent according to purpose of trip (e.g., leisure vs.business), kind of travel party (a single tourist vs. afamily), culture (e.g., a Japanese vs. an Europeanguest), sociodemographic characteristics, revenue, etc.

Managing Customer Relationship and Value:Towards a Cross-Functional Business Strategy

Relationship orientation implies business intelli-gence, that is, the capacity to understand customers’needs, behavior, and preferences, identify key cus-tomer segments and then maximize the profits de-rived from each of them (KPMG, 2001; NykampConsulting Group, 1999).

Understanding the customer is among the top fivemost troubling problems for hotel managers (Enz,2001). Obtaining precise customer information iscrucial to define the hotel attributes that fulfill theirrequirements, to foster innovative and tailor-madeservices, and develop targeted marketing strategies,the final goal being to acquire and retain valuablecustomers.

Each interaction with the customer either buildsor erodes value in the relationship and then impactsfuture contacts, depending on the information andbehavioral insight hotel organizations gain duringthe process and the ability to translate it into a co-herent response. For example, the improvement offunctional and interpersonal aspects of services (e.g.,customization, personal recognition, speed, check-in and check-out efficiency, etc.) is among the top10 attributes that make the greatest contribution tocustomer value in two key phases: at the point ofpurchase and during the guest’s stay (Dubé &Renaghan, 2000).

To be successful, hotel companies must first adopta customer-centered cultural mindset, which impliesa change in cultural norms, organizational structures,and the way the performance of employees is mea-sured and rewarded. Secondly, they have to developa cross-functional integration between different func-tions and information systems (booking, marketing,sales, administration, etc.) to accelerate processesand facilitate customer information sharing. Finally,they should have a strategic view of investment inproperly managed IT and adopt an enterprise-wideapproach to the use and integration of IT systems(Ryals & Knox, 2001).

Data Management and Service Customization:New Opportunities From Technology Convergence

The convergence between IT, telecommunica-tions, and media and the use of data warehousing/data mining techniques facilitate hotel organizationsin managing the customer relationship and supportthe collection and consolidation of comprehensivedata across every point of interaction, before theguest arrives at the hotel and during his/her stay(Cline, 1999; Olsen & Connoly, 2000). Call center,email, Web site, central reservation system (CRS),point of sale (POS), etc., are just some examples ofthese applications.

Through specific electronic devices (e.g., pay perview system, interactive TV, etc.), hotels can also storehuge amounts of information on a client’s satisfac-tion at the end of his/her stay, just before check-outprocedures, which are very useful each time the cus-tomer goes back to the same property or to other prop-erties of the same chain and generally to help planmarketing actions (frequent-stay programs, specialdiscounts, etc.) for different key market segments.

The spread of IT creates valuable knowledge, pro-motes a high level of connectivity between the hoteland its guests and within the hotel departments/func-tions, forces out distribution inefficiencies, and en-larges the number of distribution channels available.

Yet, while hotel managers purport to emphasize acustomer-oriented strategic focus, their technologyinitiatives do not support that contention(Namasivayam, Enz, & Siguaw, 2000). A poor ITawareness and the inability to communicate a com-mon and consistent vision of their requirements tohotel technology vendors are the primary causes ofthis (Hotel Technology Next Generation [HTNG],2002).

Modeling Customer Intelligence inHotels: The Process

To be really profitable, the application of a CRMapproach and of database marketing techniques re-quires large volumes of easily accessible and ana-lyzed information. All information collected shouldbe stored and processed into the hotel database,which allows each actual customer to be identifiedas a record and recognized through online details ofhis/her previous visit (Robledo, 1999).

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The starting point for investigating the guest pro-file and building an effective customer database ismodeling the information flows that take place in ahotel organization according to four important as-pects:

1. WHO: who are the information providers?2. WHEN: when is the information acquired?3. HOW: how is the information collected and

transmitted?4. WHAT: what kind of information should be

collected?.

Buyers Versus Guests

Customers generally provide information on theirrequirements and preferences to hotel managers andstaff members at the time of purchase decision, upontheir arrival, and during their stay. In turn, hotelmanagers and staff give them information on ser-vices offered and communicate their requests to dif-ferent departments/functions within the hotel (e.g.,room service, food & beverage, etc.).

Considering hotel customers, a distinction shouldbe made between (Rispoli & Tamma, 1995):

• buyers: those who buy hotel services for theiractivities, but may not use them directly (e.g.,sales accounts, intermediaries, businesses, etc.).Here there is a direct purchase decision but anindirect hotel experience/assessment.

• guests: those who use hotel services but maynot have bought them directly (e.g., packagetourists). In the last case, the experience is di-rect but the choice of the product experiencedcan be made by other actors (Fig. 1).

Apart from individual clients—independent lei-sure tourists or transient business travelers, who arebuyers and guests at the same time—buyers gener-ally include distributors like intermediaries [travelagencies, tour operators, professional congress or-ganizers (PCOs), meeting planners, etc.] and busi-nesses who book rooms for their leisure/businessclients or their managers and staff traveling on busi-ness, who represent the hotel guests. This distinc-tion is important to maximize the hotel’s data store,because buyers are the only information source ontheir clients until check-in.

Crossing PMS data on allotment agreements,fares, and economic results with the hotel guestdatabase helps managers to identify the most prof-itable market segments. Furthermore, taking intoaccount that travel agencies, PCOs, and businessesoften generate the bulk of hotel turnover, the in-formation collected on their guests, segmented bybooking channels, allows the hotel organizationto plan targeted promotional actions on buyers aswell.

The application of the workflow theory can sup-port hotels in optimizing business and informationmanagement according to a set of procedural rules(Workflow Management Coalition [WfMC], 2000).Following this point of view, modeling a hotel in-formation system requires the identification of anumber of information processes related or linkedto each other by a client–server relationship (wherethe client can be the buyer and/or the guest), in whicheach process provides a set of services (Aguayo,Caro, Guevara, & Gonzales, 1997; Caro, Guevara,Aguayo, & Galvez, 2000) (Fig. 2).

Focusing on the interaction between the hotel andits guests, which is the main goal of this analysis,every time the client asks for a service, an informa-tion loop is generated. From the initial request (e.g.,a nonsmoking room away from the lift), a negotia-tion process is opened during which an agreementon conditions that should ensure the maximum levelof satisfaction is reached. Then an action is carriedout by the hotel according to the terms agreed upon(e.g., checking room availability and assigning theroom) and at the end of the process the client re-

Figure 1. Demand of hotel services. Buyers and guests (adaptedfrom Rispoli & Tamma, 1995).

CHOICE - DECISION

EXPERIENCE -

ASSESSMENTBuyers - Guests

Buyers - Non Guests

Guests - Non Buyers

direct indirect

direct

indirectTour operatorsTravel agenciesPCOsBusinesses

Individual leisuretouristsTransient businesstravellers

Package touristsConferenceparticipantsBusinessmen

BUILDING CUSTOMER VALUE IN THE HOSPITALITY INDUSTRY 145

ports the level of satisfaction effectively reached asregards the action carried out.

The Guest–Hotel “Touch Points”

Guests get in touch with hotel organizations andwith single departments/functions within these orga-nizations in a variety of different places and ways(Cline, 1999). Before arrival, they speak with book-ing assistants by phone or in person, contact opera-tors at the call center or the CRS, or connect with thehotel through the Web or email. At the hotel, they askfor and provide information to receptionists uponcheck-in, request special services from hotel staffduring their stay, and speak with cashiers upon check-out. Five main points of interaction can be identified,at which information should be collected:

• Information and query• Booking

• Check-in• Stay (use of hotel services)• Check-out

At each of these so-called “touch points,” a numberof information loops are generated in a sequentialmanner, representing the steps of the customer’sdecision-making and consumption process (Fig. 3).All information collected at every step has to be re-corded and stored in the hotel information systemdatabase.

Data collection during the query phase is gener-ally omitted, because hotel managers and staff mem-bers do not find it cost-effective (because most in-quiries do not translate into a real booking), even ifthis would provide valuable information on poten-tial guests (e.g., why they have not chosen the ho-tel).

As for clients, data collection should be maximizedin the booking phase, to speed up check-in proce-dures. The reduction of time waste in the registrationprocess is one of the most important factors that en-genders business travelers’ loyalty (Bowen & Shoe-maker, 1998). Some of this information may be inte-grated or upgraded upon check-in. Other informationmust be input fully when the customer arrives at thehotel and during his/her stay (e.g., use of restaurant,bar, and other hotel facilities such as transfer, swim-ming pool, business center, etc.).

Across all points, it is crucial to ensure real-timecustomer data synchronization, because guests want

Figure 2. The buyer/guest–hotel relationship: The informationloop (adapted from Aguayo et al., 1997).

Buyer/

Guest

Hotel

NegotiationInitial

request

Satisfaction/

acceptanceDevelopment

Figure 3. Modeling a hotel–guest consumption process: interaction points and IT support sys-tems (adapted from Aguayo et al., 1997).

Guest Hotel

Front office, callcenter, WWW,

email, etc.

Hoteldatabase

Front office,cassa, PMS, etc.

Front office, F&Bsystem, roomsystem, etc.

Use of hotelservices

Booking

Check-in

Check-out

Information/query

NegotiationInitialrequest

Satisfaction/acceptance

Servicedevelopment

Purchasingprocess

Front office, CRS,call center, WWW,

email, etc.

Front office,PDA

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to give and receive information from various chan-nels, but they do not like to repeat the same infor-mation across all those channels (Berube, Breucker,& LaFrance, 2000).

Information Channels and Systems

At each “touch point,” customer information andservice requests can be collected through differentchannels and using a variety of customer-facing sys-tems and back-end information systems (call cen-ter, front office system, email, Internet, etc.) and thendownloaded into the hotel information system, whichdelivers orders to all hotel departments (e.g., roomcontrol system, food & beverage system, etc.).

The type of information channel generally affectsthe amount of information the hotel gathers at eachstep. For example, minimum data are generally ob-tained when the client reserves the room directly byfax or email (e.g., arrival and departure date, type ofroom, credit card information, etc.), unless he/shehas specific requests. Maximum information, on theother hand, can be collected through the call center,when the booking assistant interacts with the guestand can investigate his/her preferences, or throughan online reservation, where a suitable form can bearranged that “binds” the booking process to thecompletion of some fields.

The main issue is that each application imple-mented usually has its own database, creating iso-lated islands of information that prevent the sharingof knowledge on a customer’s behavior and prefer-

ences (Xchange Asia Pacific, 2001). This impliesthat each system may have personalization capabili-ties that independently provide a sort of guest pro-file, but they do not support a cross-analysis of data.

The Guest Information Matrix

Three basic categories of information can be iden-tified, according to the way the information is gath-ered (Table 1):

1. Front-line data: “Compulsory” informationneeded to complete the booking procedure (e.g.,name, address, type of room, length of stay,credit card number, etc.) and to manage the guestfolio (fares, service charges, etc.). Most of thisinformation is the same as that collected by thePMS for administrative purposes.

2. Spontaneous data: Information provided di-rectly by the guest to the hotel staff, such aspersonal preferences and requests (e.g., a featherpillow, a special diet, an additional blanket, etc.).

3. Behavioral data: Information that the systemrecords automatically (e.g., use of the hotel fit-ness center through a chip card that records theentrance) or that the hotel staff can input intothe system by observing guest behavior (e.g., aguest that always chooses the same menu at thehotel restaurant).

The kind of spontaneous and behavioral data tobe collected and the sharing of information between

Table 1

The Guest Information Matrix

Front-Line Data Spontaneous Data Behavioral Data

Personal information Name, sex, address, date of birth, Special needs and preferences Language spoken;contact details, nationality, credit card (diet, allergies, favorite newspaper, Kind of clientnumber, business name and address, handicap, etc.) (e.g., fastidious,frequent guest, etc. demanding, etc.)

Information on all Booking data (time, channel, source, etc.); Special requests for room furniture Use of the hotel facilitiesaspects of the hotel stay Room arrangement (type of room, bed, etc.); and amenities (e.g., feather pillow, (e.g., restaurant, shuttle

Length of stay (arrival and departure date); orthopedic bedspring, bus, business center, etc.)Rate applied (e.g., rack rate); work equipment, etc.);Accompanying persons (number, name, etc.); Reservation of external servicesIn-house expenditures (food & (e.g., theater, car rental,beverage, bar, etc.) restaurant, taxi, etc.)

Guest complaints Direct complaints, customerand opinions satisfaction forms

BUILDING CUSTOMER VALUE IN THE HOSPITALITY INDUSTRY 147

different hotel departments/systems have to be care-fully assessed to respect privacy rules.

The more sophisticated the information to be col-lected, the more complex the information tools andIT applications to be implemented, the more impor-tant continuous staff training and motivation be-comes. If front-line data are generally input throughthe front office system, the collection of spontane-ous and above all behavioral data requires the hotelemployees to record every preference gleaned fromconversation or observation through special devicessuch as, for example, “guest preference pads.” Inthis case, an accurate and consistent recording ofinformation depends heavily on the ability of staffto multitask across functional boundaries (Ryals,Knox, & Maklan, 2000).

Given these categories, the guest profile basicallyconsists of three main parts (Table 1):

• Personal information, such as name, sex, con-tact details, nationality, language spoken, ifphysically challenged person, business address(if business traveler), means of payment, etc.This includes both front-line data (e.g., date ofbirth) and spontaneous data (e.g., allergies, spe-cial diet).

• Information regarding all aspects of the ho-tel stay, such as accompanying persons, typeof booking (e.g., individual, group, etc.), typeof room arrangement (e.g., double room, king-size bed, etc.), length of stay, type of room ser-vices required, use of food & beverage servicesand other hotel facilities, etc. This informationincludes “compulsory” data as well as sponta-neous and behavioral data.

• Guest complaints and opinions on qualitystandards of hotel services and hotel staff per-formance, which can be collected during the stayor just before check-out (customer satisfaction),through printed forms or online questionnaireson interactive TV.

Table 1 shows the guest information matrix, ob-tained by crossing the two groups of information.

Supplementary information on loyal customers(such as household, hobbies, etc.) can also be de-rived from frequent-stay programs and then linkedto the hotel information system.

Developing Customer Intelligence:Hotel Managers’ Information Requirements

and Technology Use

Once the main aspects that characterize the guest–hotel relationship had been defined, an investiga-tion was carried out to analyze the managers’ per-ception of the importance of building a consistentguest history, their attitude to use technology toimplement it, and the main factors that can promoteor inhibit its use.

At first, about 10 face-to-face interviews wereconducted in Italy with managers of hotel structureschosen according to location (e.g., a city, a beachresort, etc.), category, ownership structure (hotelchain or single unit property), type of guests (e.g.,leisure vs. business tourists), and PMS used (e.g.,Fidelio, Hotel Cube, Sysdat, etc.), to ensure a goodcoverage of the market.

Starting from the results of the first phase, a ques-tionnaire was drawn up and an email/fax survey wasconducted with about 50 hotel organizations selectedaccording to the same variables, the main goal be-ing to analyze the data the hotel usually collects andstores according to the information matrix discussedabove (Table 1), whether and how the management/information system currently in use supports thisoperation, the (information, technical) gaps the man-ager perceives, and finally the propensity to adopt aspecific customer-centric interface and the charac-teristics it should have.

The results show that automated customer dataacquisition and processing is still at the early stageof development. This not only depends on hotel cat-egory, ownership structure, and organization (e.g.,multiple location, etc.), but also on management andtechnology culture.

Hotel chains lead the process. Hotels belongingto an international brand chain or a corporate-ownedchain have already planned or are planning a guesthistory program or use loyalty program databasesto determine their most valuable clients, even if thesedatabases frequently do not include the most profit-able clients (Cline, 1999; Schubach, 2000).

Hotels belonging to voluntary chains, franchisedchains or small networks express the need to en-hance their knowledge on guests, but their analysesare still based on PMS reports. Even if a guest datacollection is being implemented, the guest history

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is frequently not centralized and remains stored inthe database of each hotel, thus preventing otherhotels from sharing customer profiles.

Independent hotels lag behind. Even if these ho-tels (and especially SMEs) have a privileged rela-tionship with the guest (implicit CRM), they lack acustomer-oriented management culture and often donot perceive how technology can contribute to in-crease their profits and create value for the guest. Inmany cases managers still rely on staff experienceand personal recognition of the customer to identifyreturning guests and then accomplish their requestsand preferences. This can be a risky choice becauseof staff turnover: if the receptionist, the concierge,or the housekeeper decides to leave or retire, a valu-able amount of customer knowledge created overthe years can be lost forever.

Going into detail, many hotels still have poor un-derstanding of what CRM, and particularly datamanagement or business intelligence, actually im-plies. Fifty-five percent of hotels interviewed claimto produce a guest history and this is mostly man-aged through the PMS, rarely through a dedicatedsystem, while 15% support data analysis with exter-nal tools (e.g., Excel, SPSS, etc.). Fifty-seven per-cent of hotel managers think that an ad-hoc customerinformation system could contribute to improvingguest relationships and business growth.

Focusing on the kind of information collected,the guest history basically builds on front-line data,

both personal and related to the organization of thehotel stay (e.g., name, address, arrival and depar-ture dates, length of stay, hotel arrangement, typeof room, etc.), and this is justified by the extensiveuse of PMS (Table 2). Personal requirements andpreferences were recorded by a third of hotels in-terviewed, on average, and only if they refer tospecific hotel services (e.g., bedsprings, specialmenus, etc.) (Table 3). Behavioral data were gen-erally neglected, especially where hotel facilitiesare provided for free, or collected indirectly throughcharges. For example, many hotels derive the useof restaurant from expenditure made by the guest.Sixty-nine percent of hotels collect information onguests’ complaints.

Guest information is mainly used by the hotelmanager (100% of total answers), the marketingmanager (86%), the room division manager (86%),and, to a lesser extent, by the administration (57%)and the food & beverage department (27%).

Data are basically processed to develop targetedmarketing strategies (100% of total answers), ana-

Table 3

Information Regarding the Hotel Stay: Data Collected byHotels Interviewed

Information % Answers

ArrangementRate applied (e.g., rack rate, etc.) 100Type of arrangement (e.g., bed and 100

breakfast, half board, etc.)Type of room (single, double, etc.) 100Room location (away from the lift, sea view, etc.) 69Smoking/nonsmoking room 62Room with work equipment (fax, modem, etc.) 46Type of bed (king size, etc.) 46Additional bed 62Cradle 46

Length of stayArrival and departure dates 100Length of stay (number of days) 100

Special requests for room facilities and servicesRoom and bathroom amenities (e.g., feather 46

pillow, additional blanket, special towels, etc.)Orthopedic bedspring 31Allergies to materials/cloths/flowers 38Specific food and drinks in minibar 15Preferred newspaper 38

Food and beverage servicesDiet/special menu 23Preferred menu (e.g., à la carte, etc.) 8Food allergies 31

Table 2

Guest Information: Data Collected by Hotels Interviewed

Information % Answers

Name, address, date and place of birth, nationality 100Telephone/fax number 92Email address 46Mobile phone 38Language spoken 62Type of market (e.g., leisure, business, etc.) 69Booking source (e.g., travel agency, 77

business, PCO, etc.)Booking channel (e.g., telephone, fax, email, etc.) 62Name of the business (if business guest) 92Professional address (if business guest) 62Current position (if business guest) 23Means of payment (e.g., cash, credit card, etc.) 69New/repeater guest 46Type of guest (VIP, demanding, etc.) 54Member of a fidelity program 54

BUILDING CUSTOMER VALUE IN THE HOSPITALITY INDUSTRY 149

lyze hotel operating profits (costs and revenue: 71%),define pricing strategies (57%), plan loyalty pro-grams (57%), and enhance customer care (43%).

This result confirms that hotel managers are awareof the importance of having reliable customer infor-mation to improve the services delivered and thenincrease revenue, marketing, and sales, but there isa confusion between transaction-centric and cus-tomer-centric systems (i.e., between operational dataand customer knowledge). They do not have a clearidea of how to get these data and whether or not themanagement system currently in use is able to sup-port data collection and processing.

Towards a Structured Guest History:Merging Theory and Practice

The building of an operational customer informa-tion system depends on the trade-off between thetheoretical information framework discussed in thethird section (what kind of data should be collected)and hotel managers’ requirements.

Generally, it would be simple to provide them withthe information they want, but this may be not ef-fective because, except for compulsory data, theyoften tend to choose the information that is easy tocollect and deal with and not the information thatwould aid decision making (Jones, 1995).

On the other hand, an information overload maybe equally unproductive, the risk being to create anamount of data too large for managers to digest oreven process, thus making it hard for them to iden-tify information useful for defining guest patternsand high-profit market segments (Olsen & Connolly,2000).

From the hotel’s point of view, a cost–benefitanalysis is then required, which means to assess theconvenience of different solutions in terms of:

• technology: the investment required to developthe system components (hardware and soft-ware),

• time: the time the hotel departments/staff de-vote to data input instead of executing othertasks,

• human resources: in terms of staff realloca-tion or enlargement,

• training and motivation: training of manag-ers and staff to use the new system,

• reorganization of internal procedures (e.g.,booking, etc.).

Given this evaluation, the main goals to beachieved and which the CIS should support are asfollows:

• on the content side: to optimize data collec-tion through selecting a set of primary infor-mation (especially within spontaneous and be-havioral data on a guest’s stay) that is crucial toimproving customer care, promoting loyaltyprograms, and/or developing targeted market-ing strategies, and a set of secondary informa-tion, which can contribute to integrating theanalysis according to the specific needs of eachhotel organization;

• on the technology side: to create a dynamicguest history maximizing the automation of datacollection, also through the identification of aset of static and variable information, to sig-nificantly reduce data inputs and upgrades.

Static or fixed data (in the short/medium term)forms the guest’s identity card, that is, the data thatare input the first time the client arrives at the hoteland do not depend on the kind of hotel stay (e.g.,name, address, allergies, etc.) or that represent aguest’s habit. Variable data change according to thepatterns of the hotel stay (e.g., leisure vs. business)as well as to guest behavior (e.g., use of hotel ameni-ties).

For example, the guest history of a frequent busi-ness traveler who spends 3 days in the hotel everyfirst week of the month, uses the same room, and hasdinner in the hotel every night is basically composedof fixed information. On the other hand, a businessguest who returns during the weekend with his fam-ily shows a higher level of variability in his choices.

Table 4 lists, as an example, the set of primaryinformation, divided in static and variable data, thatshould be collected for a frequent business traveler.

Concluding Remarks and Future Work

In the future, hotel market power will lie moreand more in satisfying guests’ knowledge-basedneeds (Olsen & Connoly, 2000), and technology willaccelerate this pattern of change.

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Nevertheless, there is currently a great disparitybetween the importance the hospitality industry (andespecially SMEs) places on customer relationshipand the number of companies that are already com-mitted to any form of CRM program.

Hotels, especially those that develop a customer-centric model for the first time, have to adopt a step-by-step policy, based on a learning-by-doing pro-cess. In particular, reorientating the hotel companyaround its customers basically requires:

• the implementation of a customer-centric strat-egy, which not only means information man-agement but a change in organizational culture,business processes, and working practices (hu-man resources empowerment);

• a clear view of the role of IT in customer-ori-ented programs and the ability of hotel manag-ers to translate their technology requirementsinto proper investments;

• the convergence of all information systems anddatabases that can be used at each point of in-teraction (call center, CRS, front office system,Internet, etc.) into a central data warehouse, toavoid the creation of separate islands of infor-mation and facilitate “whole guest” informationsharing.

This article has proposed a reference model tobuild an effective customer–centric system and par-

Table 4

The Guest Information Matrix for a Frequent Business Traveler: Static and Variable Data

Front-Line Data Spontaneous Data Behavioral Data

Fixed informationPersonal information Name, date of birth, contact details, Special needs and preferences Language spoken; Kind of

nationality, credit card number, (allergies, favorite newspaper, etc.) client (e.g., fastidious,company affiliation, company demanding, etc.)address, fidelity program member

Information on all aspects Booking data (time, channel, Special requests for room furnitureof the hotel stay source, etc.); Room arrangement and amenities (e.g., feather pillow,

(type of room, bed, etc.); work equipment, courtesyLength of stay; Rate applied service, etc.)

Variable informationInformation on all aspects Accompanying persons (number, Use of the hotel facilitiesof the hotel stay name, etc.); In-house expenditures (restaurant, shuttle bus, etc.)

Guest complaints Direct complaints, customerand opinions satisfaction forms

ticularly the guest information matrix on which thesystem will be designed, analyzing the interactionbetween the hotel and its guests, on the one hand,and the hotel managers’ understanding and require-ments, on the other.

Starting from this model, three further develop-ments are planned:

• Firstly, the specification of the final guest in-formation matrix, taking into account the con-siderations discussed in the fifth section. Atechnical audit is currently under way withthose hotel managers who showed the highestinterest in customer knowledge and a strongcommitment to creating an electronic guestprofile, to test the choices made and identifythe sets of primary and secondary informationthat should be stored in the database, by cross-ing front-line, spontaneous, and behavioraldata. This is the preliminary step to the defini-tion of the data model and then to the databasedesign.

• Secondly, the design of a user-friendly inter-face for data input, which follows the structureof the GIM (primary and special fields) and iseasily linkable to the PMS and other hotel sys-tems (front office, room control, food & bever-age, etc.), where guest data will be displayedand shared on a permission basis, according tothe information needs of each department.

BUILDING CUSTOMER VALUE IN THE HOSPITALITY INDUSTRY 151

• Thirdly, the planning of a complete customer-centric data warehouse, which automaticallyretrieves key information from different cus-tomer-facing and back end information systemsand databases (CIS interface, PMS, CRS, inter-active TV, yield management system, Web res-ervation engine, etc.) as well as from externalsources and builds a consistent guest historystoring different profiles for the same guest. Thedata warehouse (DW) architecture and the dataand functional models will be specified accord-ing to data structure (e.g., operational or trans-actional data sources), key informational dimen-sions of the shared database, and end-userapplications (Griffin, 1998; Shin, 2003). TheDW will act as a data center where informationfrom different sources will be captured, cleaned,transformed, standardized, and then analyzedby using OLAP (on-line analytical processing)and data mining techniques (e.g., decision trees)(Min, Min, & Eman, 2002).

Biographical Note

Valeria Minghetti is Senior Researcher at CISET, the Inter-national Centre of Studies on the Tourist Economy of Ca’Foscari University, Venice, Italy. After specializing on Tour-ism Economics at the same university, she now coordinatesvarious national and international projects for CISET. Someof these projects concern the application of information andcommunication technologies in different sectors of the tour-ism industry. She is a member of the IFITT Board and of theENTER Programme Committee.

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