DBM as a Source of Competitive Advantage for the Hotel Industry

Abstract

In the decade of the individual, mass marketing is no longer valid; relationship marketing is the key to success. The purpose of relationship marketing is to build long-term relationships with customers. In order to achieve this objective many actions can be undertaken but in nearly all of them, DBM will play a central role. This paper examines the applicability of Database Marketing (DBM) and its current use in the hotel industry. Research was undertaken to answer those questions. DBM is a customer-orientated approach to marketing that builds a continuous relationship with the customer. DBM is measurable, targeted, personalized, it builds loyalty and it involves adopting a customer focus. Typically, a hotel marketing database will contain personal data, planning data and global sales information about every customer or prospect. The hotel industry (an industry where the Pareto rule is particularly true) is considered very suitable for the adoption of DBM since the presence of the customer in the facility makes easier the process of gathering the information. The applications of DBM that the hotels examined are using include customer loyalty programmes (e.g. frequent-stay programmes), personal attention and recognition (noting preferences, rewarding repeat business and building long-term relationships), programmes for catching new customers, direct marketing used as a sales promotion tool, as a means of targeting specific customers or as a means of selling directly, cross selling and line extensions programmes to identify customers who could be interested in other products of the company, control tool for the reservation desk, opening up new channel possibilities, strengthening relationships with the sales channels and becoming list vendors of their own databases. There are different levels of usage of DBM within the hotel industry ranging from the mere uncomputerized guest-history system to sophisticated networks. The data gathering process uses sources such as the current guests, financial databases, list vendors or directories plus census data. The paper concludes that DBM is crucial for achieving a competitive edge in the hotel industry and all hotels should implement it regardless of size or target market.