Technological transformations are meeting marketing innovations at
Hyatt’s hotels. James Curtis reports
Think about the amount of information you give when you check into a
hotel - your name, address, credit card, car details and morning paper.
Any direct marketer worth their salt would be able to construct a good
lifestyle profile from these facts.
But the hotel industry has not capitalised on this. It routinely
collects vast quantities of customer data but, with a few exceptions,
does little with it. This is all the more surprising when you consider
that people are often loyal to particular hotel groups, especially when
in an unfamiliar city.
It seems things are changing. The data revolution has hit the hotel
industry and targeted marketing is set to play a key role in their
Hyatt International vice-president of marketing and sales John Wallis
says: ‘We had so much information about our customers, but no
understanding of their behaviour. Things have changed. Hotel companies
not involved in database marketing will not be in business in 2000.’
Hyatt’s first priority was to clean its databases, starting at a local
level. Dirty data is a major problem for hotels, says Wallis. Narrow
categories and no understanding of individual behaviour characterised
Hyatt’s data. ‘We never understood the total revenue and value of the
person,’ says Wallis.
Hyatt’s plan centred on identifying its most- and least-profitable
customers, retaining the most-profitable and switching the non-loyal. It
zoomed in on the most profitable 10% and discovered that just 3200
customers spent over pounds 10,000 each last year - the majority of
Hyatt guests, 72%, spend just pounds 800.
‘We were communicating with them in the same way,’ says Wallis, adding
that Hyatt now directs more marketing spend toward the top. ‘It becomes
a question of investment versus expense; do you want to spend more on
your least-profitable customers?’
Increased data awareness has shown Hyatt the value of retaining its most
profitable customers. ‘It is quite scary to see how much it costs to
acquire new customers,’ says Wallis, calculating that each acquisition
costs around pounds 2000. It has also shown Hyatt that spending varies
with nationality: Germans spend 40% more than the English in Hyatt
hotels and Mexico is popular for Brazilian travellers.
To bring off such a radical change in its marketing strategy, Hyatt had
to people its marketing department with staff from outside the hotel
industry. It has gone for marketers from other industries and MBA
graduates. Hyatt has also implemented a group-wide training course for
all management, teaching them the basics of direct marketing and how it
can be utilised to maximise customer retention and build relationships.
Last year, 420 senior managers attended the five-day course. This year a
one-day version will be open to all workers. ‘We have to change the
culture of the company,’ says Wallis. A key achievement has been to
involve the IT department in marketing, functions that previously
operated on separate levels.
Hyatt is now using customer data to track the lifetime value of its
promotions and is more accountable. ‘This industry has never worked out
returns on investment or cannibalisation factors. Now we can prove what
is an investment and what is an expense.’
One example is Hyatt’s Great Deal Packages, designed to fill hotels
during the quiet January/February period. Wallis says this winter’s deal
in Hong Kong attracted 72% of new business with a cannibalisation factor
of just 28%. Revenue from Great Deal Packages has already been tracked
at pounds 10m.
Hyatt International operates 68 hotels in 35 countries, while Hyatt
Hotels Corp is responsible for 103 locations in the US. Currently, all
the data work is done at a local level but, eventually, Wallis wants to
build a global database. ‘The battle is to clean our data locally. Once
that is completed we can start thinking globally. It’s a huge
challenge,’ he says.
The job of assimilating data from all over the world into one database
is hard, especially when trying to translate Japanese script. On top of
this, customers need to be given a smart card with a PIN which they
present when checking in. Wallis says Hyatt plans to have a globally-
linked database in place by 1998.
Though Hyatt is well advanced with its programme, Wallis is aware that
the rest of the industry is hot on his heels. Technology will play a
major role in how hotels gather and analyse information. The speed with
which systems are being implemented means, according to Wallis, that a
three-month head-start is the most any company can hope for.