Checking in for the Data Revolution

By Curtis, James | Marketing, May 9, 1996 | Go to article overview

Checking in for the Data Revolution


Curtis, James, Marketing


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 marketing strategies.

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 10,000 [pounds sterling] each last year the majority of Hyatt guests, 72%, spend just 800 [pounds sterling].

"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 2000 [pounds sterling]. 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. …

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