DIRECT MARKETING: Checking in for a data revolution

Technological transformations are meeting marketing innovations at Hyatt’s hotels. James Curtis reports

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

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 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.’

Packed-out package

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.