DEFINITE FEATURES OF THE HOTEL

INDUSTRY: PRESENT AND FUTURE

Olaru, Adriana
Capatina, Alexandru
Racovita, Margareta
University “Dunarea de Jos”, Galati
acapatana@ugal.ro, dcristea@ugal.ro

Abstract: Our paper emphasizes the main trends regarding the management
and marketing strategies implemented in hotel industries. We reveal the latest
technologies used in the booking systems and their benefits for the hospitality
industry, taking into account the globalization effects and the strong innovation
capacity for the main international hotels chains. These technologies allow
personalized marketing campaigns for the hotels and facilitate the application of
CRM principles. The multidimensional analysis of the sales applied to the
information about customers stored in the software's database using OLAP
technique provides a real support for the hotels’ marketing managers' decision
making process. We illustrate the possibilities to create a personalized CRM
strategy for a hotel, to determine customers' profitability and to determine the best
tourism offer positioning.

Keywords: hotel booking systems, optimization, innovation, trends, hotel

marketing

JEL Code: O32, M16

1. General aspects regarding the hotel industry

The hotel industry derives from the hospitality culture. As a result of the increase of the
tourists and merchants’ number along the centuries, the hotel industry has known a real
development adjusting its forms and services to the customers’ preferences. The modern hotels try
to preserve their traditions of hospitality and security.
Nowadays, the purpose of the hotel’s security has changed and it is adjusted to the present
requirements. Vigilance has increased especially after the War in the Persian Golf (1991), being
transferred to all the governmental and business activities after the Twin Towers had been
destroyed which included the Marriott Hotel from World Trade Center (2001). A part of the hotel
industry has responded to these events and consequently, it has adopted different decisions. Thus,
some of the hotels have refused to accept or keep the customers’ luggage at the reception.
Packages delivery was submitted to an X ray inspection. The customers’ cars were examined
before being parked in the garage. The luggage had to be carried directly from the customers’
rooms to their cars.
We must underline that the hotel industry was forced to reexamine its entire security even
before 1990, as a result of some extremely commented events such as the rape of a famous
Hollywood American actress in a hotel room, in 1971, exactly when the industry promoted
voyages for single women.
 These events have determined more and better security measures. For start, the installation
of electronic door bolts was extended, eye holes were put at the doors on the hall, a better
protection against fire was introduced, and the lightning was improved.
There have been brought improvements in the security equipment of all types. Television
with close circuit with video cameras was introduced in order to give the opportunity of a person
to supervise a large area of halls, parking areas and public places. Special alarms were introduced
in the rooms for persons with handicap. Phone and radio communication is more efficient. The
cards control the access to the hotel’s facilities such as swimming pools and garages. For example,
in Hong Kong the hotel’s security prepares for tornados, cyclones, floods, etc.
The hotels have been small for centuries, having a reduced number of rooms. But the
industrial revolution has brought many changes in the construction materials in what concerns
property (the corporations have replaced the family property), in transport.
The creative marketing developed by means of political and economic liberties – these
ones representing the final elements in the creation of the modern tourism.

2. The modern hotel industry

2.1Patterns of a new product

In order to face competition, the hotel keepers invent new products to satisfy the
customers’ extremely diverse requests.
The changes that took place, brought new products on the market, but in the same time,
they gave a new image to the older properties. Division is the latest adjustment of an industry
which responds to the new conditions with dynamic innovations.
The division of industry produced confusion both for the executive managers in the
industry and the hotel’s customers because more possibilities of accommodation and new brand
names were created. Setting a lot of similar or not hotels under the same name doesn’t
automatically create a brand. The customer’s satisfaction is what defines the brand. The guest may
recognize the logo of the hotel but he has a negative feeling towards the brand. The development
of the brand value, due to its value recognition, is based on four criteria: the immediate
identification (the name Marriott), a large distribution (Holiday Sun Hotels), quality (Hampton
Inns) and the services’ level (Four Seasons). Most of the times, the division adds a new image to
the older properties whose logos have no value any more even if they have the brand
acknowledgement.
In the same time, other hotel categories such as the economic ones, all suite hotels and a
variety of novelties: casinos, spa, conference rooms appear on the market.

2.2 Marketing for the individual and international guest

The guests’ presence in a hotel tells a lot both about the guest and the hotel.
Analyzing the guest under different circumstances, the hotel keeper can build and make a
variety of market divisions. Generally, the research concentrates on the demographic profile, age,
income, residence, studies, sex, social status, performances and wealth.
There is a difference in preferences in what concerns the tourist who is in vacation and
business men. Thus, business men who must be in a certain place, at a certain hour, give less
importance to the price than the tourist who is attracted to the small price and prefers walking,
alpinism, rowing and archeological diggings.
Once with globalization, more attention is needed for the international tourist’s profile. As
they spend more time and money to get to the destination, they will be accommodated for a longer
time than the internal tourists. That’s why the hotels must offer them besides board and lodging, a
series of facilities such as swimming pools, Jacuzzi, special deodorizers, tooth brush, hair drier in
the bathroom, cafeteria, shelves for laptop, air purifying, warm towels, sound generators, etc.
For business men, the facilities can be double phone lines, faxes in the hotel room,
electronic check- in and check –out, electronic keys, mail messages with private voices in the
room, phone access without taxes.
Rewarding programs are offered to those who frequent the hotel and include: room cut,
travel partners cut for the airlines, for the car rent companies or the local tourist companies, free
lodging for exotic destinations.

3. Booking systems in hotel industry

The quick progress has changed the way in which booking is done nowadays, but a full
understanding of the complicated booking technologies imposes an analysis of the beginning
period. Even before Holidex had appeared (Central Booking System), the aeronautic industry
developed its own efficient booking system at low cost. The airlines were the developers and
investors in the new systems while the hotel industry was more conservative.
In the beginning, the first booking systems of the airlines were introduced in the travel
agencies’ offices. This was the first connection in the present network of the world distribution
system.
In 1970, the first booking terminals of the airlines were introduced in the travel agencies’
offices.
A new innovation, switch technology made that all the companies speak the same
language and it works as a clearing office. All the booking transcriptions are processed by switch.
In this situation, the travel agent must access only a terminal to send the booking request and the
confirmations at thousands of airlines, hotels, car rent, etc. Now the travel agent has access to the
same booking data of the hotel as the office worker inside which gives credibility to the travel
agents in comparison with the past.
Another advantage of this switch is to allow the travel agent to learn only a set of
procedures and introduce only a set of codes. This technology works as a translator and
communicator of the real-time.
This electronic system allows a code system to the user and translates that information in
every chain of the CRS language. Now, the travel agents and the clerks who book at the airlines,
the central booking agents from the hotel and the booking clerks interfere from the hotel accessing
the same information with the same speed. Under these conditions, all the bookings are done in
real time and bring up to date the room inventory when the booking is confirmed.
The benefits brought by the ASP applications (Application Service Providers) must also be
mentioned. Thus, the hotel chains mustn’t make big investments in hardware and software and use
specialized engineers in software to maintain the system and establish applications because each
hotel uses the same software. The new software is implemented to the ASP set and becomes
available for all the users immediately.
The most important benefit associated to the ASP applications is the single- image
inventory which allows all users to use the same database. The price and availability inventory is
researched by the phone centers for the central bookings and the distribution systems based on
Internet, thus, insuring fewer errors in bookings and an improvement in the services for the
customer.
The question is ‘Why all these changes?’ The reasons are of course various. Some specify
the high costs of the airlines before and after certain fusions like a main catalyst to reduce
allowances. It is known that when the operation costs are high and the competitive pressure keeps
the ticket cost low, allowances have to be eliminated in order to save 10%.
 Others suggest that the fusions of the airlines have created an anti- consumer airline cartel
with an extremely reduced competition. This means less options of the consumer regarding the
airline travels and consequently, fewer reasons to go to the travel agents.
There are also opinions according to which the attack of World Trade Centre led to the
reduction of the airline traffic immediately after the 11th of September 2001.
No matter what the reason, the airline industry was successful guiding the consumers from
the bookings by means of the travel agents to the Internet. The attractive and accessible airline
web sites helped simplifying this process. The reductions and the Internet have played an
important role in the consumers’ motivation to surf the airline websites.
Starting with 2002, most of the airlines cut or eliminated the allowances on the travel
Internet sites.

3.1. Other tendencies in the electronic bookings

It is said that an adult is exposed in one day to more information than a person who lived
100 years ago in a whole life and this tendency will continue. The storing of the information and
the recovery capacity of the PC is anticipated to increase to a rate of 60% per year in the next five
years. Considering these progresses, the central booking system has opportunities of increase for
the most efficient way to do its own business.
The voice recognition
In the last period of time, a great progress was made in the domain of the voice automatic
recognition. There are systems that can recognize thousands of words spoken by a hotel keeper for
different consumers. Dragon Systems’ Naturally Speaking and IBM’s Via Voice are two
applications of the PC. Each of them can recognize thousands of words (more than 50.000) with
99% precision (after a few minutes of training and using the acoustic optimizer).
In the present, thousands of voice recognition systems work in different industries. AT &T
uses the voice recognition for the phone calls processing in the phone book. The doctors’ offices
use the voice recognition to transcribe the detailed medical reports. The business corporations use
the voice recognition to dictate letters. As unique as the booking might seem there are more things
in common than differences. Every booking contains the city, the date, the room’s price, the type
and other basic data. There are functions that a computer system may operate logically. Actually,
the simplest software applications of voice recognition use the ‘order’ system that recognizes more
hundreds of words in a programmed list of orders.
The computer may easily recognize the day of the week the customer travels (seven
possible words), the departure date (31 possible words), the type of the insurance credit card (6 -10
possible words), the number of the credit card (10 possible words).
This program concerning bookings of voice recognition may raise questions for the
customer to answer to. With each answer, the program recognizes the answer, it allows the
customer to make changes when it is necessary and generates a series of questions based on the
answer given previously. There are situations when the computer can’t recognize the customer’s
voice either because of a strong accent or as a result of deterioration, when it can be used an error
– fast system – the customer can push the button twice on the phone’s keyboard to contact a
personal assistance operator. When the booking office workers of an airline company are very
busy, the system researches the key elements of the customer’s flight information (the airport
location, the destination airport, the travel day, the flight period of time, etc).
Such computer systems can control availability, they can specify the taxes, suggest
alternative data and thank the customer the same as the office worker from bookings. This system
might be less personal than when you talk with the respective office worker and less expensive.
An advantage of this system is the ability of the hotel to give information to the customer
about the hotel’s past. The information in the data base is used only in the hotel chains.
 The standard information requested for bookings becomes a marketing instrument but also
administratively correct because the hotel knows the customer’s name, address, the date of his last
visit, the tax payment, the type of room requested and the payment way. If some marketing
information such as the type of the reduction package bought, the special tax or the promotion that
was used is added to these data and if the booking was made in the middle of the week or in the
weekend, the manager will dispose of a huge amount of extremely useful information.
From the data base that contains the customer’s history to the voice recognition,
automation changes the booking system and the way in which the hotel keepers lead this process.

3.2. Artificial intelligence systems

The management systems for profit* have in view the immediate response to the conditions
which change. Seven days a week, 24 hours a day, the system compares the present performance
with the predictions and adjusts the rates appropriately. In order to carry out these changes, the
evolved systems of the computer use either a series of standard logical functions or operations of
state-of – art artificial intelligence. Artificial intelligence or the expert systems use stored data that
were developed during a period of time to create rules that should govern the profit management
decisions.
The present expert systems are indeed artificial intelligence. They think what it is
requested, they formulate decisions and offer the user the opportunity to talk with the computer.
The expert system contains a list of features from which the ones that refer to the
following aspects are the most significant:
• quantitative facts and quality data;
• a data analysis when a decision is made;
• explanations offered to the user regarding the way to get to a conclusion;
• permanent communication between management and employees in both directions;
• the application of some rules that can be programmed;
• the voluntary omission of some basic rules when the additional decision criteria are
justified;
• the maintenance of a data base of historical facts that include:
1. Requests for similar periods in the last years;
2. Rooms lost by the internal bookings and chains in the last years;
3. The request changes;
4. The rate and request for the transit rooms in comparison with the corporate rooms in the
last years;
5. The request for group room blocks in the last years.

4. Opportunities for CRM systems which can be customized for the hotel services
industry

The hotel services industry is highly competitive and the right knowledge about customer
demands and expectations is essential to differentiate from competitors and gain sustainable
competitive advantage. Implementing traditional marketing strategies is often no longer enough to
achieve this goal. CRM has increasingly become more important, as this concept suggests more

*
The profit management system represents the act of controlling taxes and restricting the
occupation degree in order to maximize the gross income per rooms. The practice of this type of
management is not new and has in view the automation of this approach in a complex
management system of a hotel.
 focus on retaining the customer and creating a win- win situation with a long- term perspective. In
traditional marketing there is more focus on the customers’ acquisition. We considered that a good
balance between customers’ acquisition and retention directed to the right segments is essential for
future success of the hotels CRM strategies.
In this context, we consider that CRM data warehouses provide great opportunities for
marketing managers to realize multidimensional analysis, by taking into account OLAP functions
(On-Line Analytical Processing), which is a capability of a data warehouse to manipulate a great
amount of data from multiple perspectives; it focuses on providing a set of data attributes from a
data-warehouse organized around certain dimensions, such as time, locations and products. For
example, a marketing manager access a data-warehouse which contains information referring to
company’s sales, displayed by geographical regions, types of products and distribution channels.
Using an OLAP session, he can extract the sales from each region and for each type of product.
Requesting a new OLAP session, he can obtain the sales volume from each distribution channel, in
correlation with the other two dimensions: region and product type; in this way, he can choose the
most efficient strategy to sell the company’s products.
The CRM software that we projected and developed on a SQL Server platform is designed
to marketing managers’ decisions in hotel services industry and has as a purpose the customers’
tourist services packages management on a certain period of time. These data represent the basis
for generating some cubes that will allow the carrying out of some multidimensional analyses on
the sales using the OLAP technology (On Line Analytical Processing).
One of the multidimensional analyses that can be performed by means of the information
transferred in SQL Server database consists of the sales allocation on personalized hotel services
packages, according to different segmentation criteria. In this way, the marketing manager of a
hotel can identify exactly the offer positioning when he develops customer value management
strategies. The data transfer from the operational database integrated in the CRM software to SQL
Server offers the possibility to view the tables diagram, accessing Enterprise Manager (figure 1)

Figure no.1 – The visualization of network diagrams between CRM application designed for hotel industry
 The multidimensional analysis can be realized using a Pivot Table from Microsoft
EXCEL, in which we import an external data source - the operational database from CRM
software in which we uploaded information about the four hotel services packages and about
customers that bought them.
The OLAP cube, created by a star structure of tables, represents the simplest data
warehouse model, in which the number of aggregations is determined by the hierarchy
possibilities of entry data. This OLAP cube allows the sales analysis according to hotel services
packages categories and specified segmentation criteria, after the definition of the SQL queries.
Using a cube means to extract data from it which will become information after adding some
context to it and in the final stage of its evolution will be transformed into actionable knowledge.
The cube we defined can be implemented by using its browse option which will generate a
common form which will be populated with data, drop downlists and drilling features.
In order to analyse the hotel services packages sales depending on the revenue level and
customers’ sex (male, female), the introduction of the SQL query in Microsoft Query Analyzer
will generate an OLAP cube, the SQL script being emphasized in figure no. 2

Figure no. 2 – SQL script configuration in view to generate the cube which facilitates hotel
services packages sales in function of specified segmentation criteria

The analysis dimensions are the hotel services packages categories, revenue level and
customers’ sex (male, female), while the analysis measure is the sum of all invoices’ values
inserted in the database, which corresponds to each values combination of the dimensions.
The marketing databases offer numerous opportunities to manage efficiently the
information about customers from a hotel and to create links between its components, providing
answers to some questions like: what is the average expense of each customer to acquire the hotel
services packages?, what is the acquisition frequency?, what type of hotel services packages the
customers prefer?, which promotion techniques have a strong impact upon the customers targets?
etc.
The OLAP systems allow to the analysts and marketing managers from a hotel to improve
the sales performances, by means of a fast interactive access to a great number of data reports
efficiently managed.
 Conclusions

1. We observe that sophisticated automation changes the way in which bookings are
requested and accepted. The introduction of the availability technology of the last room has started
a revolution in the booking management in the hotels.
2. Electronic technology has allowed an increased access of the industry to the member
hotels. The travel agents, the airlines, the on-line services can access electronically a booking
system in a hotel. If we consider the profit management, the rooms’ price changes according to the
request and the accommodation period of time.
3. One of the benefits associated to the present electronic system’s speed and accuracy is
that it increased the data storing capacity. The information about the customer, brought in the
normal circuit of booking for the room, can be stored in the customer’s data base, managed and
used for marketing, for recognition purposes and customer’s services. The hotel’s use of the data
about customers has increased once with the storing in the computer and the processing
possibilities. Knowing these data, not only the hotel has the benefits of the customer’s increased
loyalty, his repeated satisfaction and return, but the data base about the customer is available for
the marketing activities.
4. The families who are in vacation, the tourist groups and the old persons know the exact
date and the travel location a year before. These customers book the tickets in time to have
reductions or to benefit of special packages and the profit management works in their advantage.
5. The corporations’ customers don’t frequently benefit of the same advantages because
they book their accommodation in the last moment. In this case, the profit management works
against them taxing additionally for the last minute bookings when the hotel has a high
occupational degree.
We propose also direct online distribution includes Internet distribution channels, business
models, e-Marketing programs, and Internet brand and exposure building techniques that all share
the same collective goal - to draw in the Internet user to end up transacting on the hotel website. It
is all about benefiting from the Internet as the greatest direct-to-consumer distribution channel and
positioning your hotel at all possible "touch points" of interaction with the potential online
customer.

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