Integrating customer relationship management in hotel operations: managerial and operational implications

Hospitality Management 24 (2005) 391 413 www.elsevier.com/locate/ijhosman Integrating customer relationship management in hotel operations: managerial and operational implications Marianna Sigala Department of Business Administration, University of the Aegean, 82100 Chios, Greece Abstract As travelers are becoming more price sensitive, less brand loyal and more sophisticated, Customer Relationship Management (CRM) becomes a strategic necessity for attracting and increasing guests patronage. Although CRM in hospitality has overstated the importance of ICT, it is now widely recognised that successful CRM implementation should effectively combine and align ICT functionality with business operations. Given the lack of a widely accepted framework for CRM implementation, this paper proposed a model for managing and integrating ICT capabilities into CRM strategies and business processes. The model argues that successful CRM implementation requires the management and alignment of three managerial processes: ICT, relationship (internal and external) and knowledge management. The model is tested by gathering data from Greek hotels, while findings provide useful practical implications and suggestions for future research. r 2004 Elsevier Ltd. All rights reserved. Keywords: Customer relationship management; Model; Implementation; Hotel industry 1. Introduction Information and Communication Technologies (ICT) crucially impact on travellers knowledge, attitudes and behaviour. The increased online price/product Tel.: +30 2310 801615; fax: +30 2310 801625. E-mail address: m.sigala@aegean.gr (M. Sigala). 0278-4319/$ - see front matter r 2004 Elsevier Ltd. All rights reserved. doi:10.1016/j.ijhm.2004.08.008

392 M. Sigala / Hospitality Management 24 (2005) 391 413 transparency and the new e-business models (e.g. online auctions) enhance tourists purchasing power, who are becoming more price sensitive, less brand loyal, more sophisticated and experience seekers (Gilmore and Pine, 1997; Sigala and Christou, 2002; Sigala, 2003a; Christou, 2003a; Christou and Kassianidis, 2003). The hotel industry is also experiencing increased globalisation, competition, higher customer turnover, growing customer acquisition costs and rising customer expectations, meaning that hotels performance and competitiveness is significantly dependent on their ability to satisfy customers efficiently and effectively (e.g. Olsen and Connolly, 2000; Gilmore and Pine, 1997). To enhance profitability and guest loyalty, hotels must nowadays focus on implementing Customer Relationship Management (CRM) strategies that aim to seek, gather and store the right information, validate and share it throughout the entire organisation and then use it throughout all organisational levels for creating personalised, unique guests experiences (Sigala and Connolly, 2004; Olsen and Connolly, 2000; Siguaw and Enz, 1999). Since ICT are a major catalyst for developing one-to-one experiences and implementing CRM strategies, CRM in the hospitality industry has been primarily defined by the myriad of ICT suppliers that overstate ICT s role. Consequently, many hotels have difficulty in implementing effective CRM strategies, because they allow software vendors to drive their approach to CRM, or retrofit a CRM strategy to match the CRM technology they have purchased. However, CRM is not a technology problem but a business problem that requires ICT tools and functionality to be aligned, designed and effectively co-ordinated along with the business operations and strategy. Indeed, several CRM projects have failed due to the lack of robust implementation approaches and measurement tools, the bad exploitation and integration of ICT tools with processes, people and business strategies as well as the inappropriate ICT and business re-engineering and management practices (Rigby et al., 2002; Corner and Hinton, 2002; Rheault and Sheridan, 2002). In the lack of a widely accepted framework for effective CRM implementation (Adebanjo, 2003), this paper aims to develop a model for managing and integrating ICT capabilities into CRM strategies and business operations. To that end the concept, aims and crucial factors for implementing CRM in general as well as in the hotel industry are analysed and summarised into a model that integrates three crucial managerial processes: knowledge, relationships and ICT management. The model s usefulness and applicability in the hospitality sector are illustrated by gathering data from Greek hotels. Managerial implications, suggestions for improving CRM strategies and directions for future research are also provided. 2. CRM: concept and implementation CRM has its roots in relationship marketing inaugurated by the influential work by Berry (1983) and Christopher et al. (1991). Relationship s marketing rational is to enhance long-term profitability by moving from transaction-based marketing and its prominence in attracting new customers, to customer retention by means of effective management of customer relationships (Christopher et al., 1991; Heskett et al., 1990;

M. Sigala / Hospitality Management 24 (2005) 391 413 393 Reichheld, 1996). Literature on CRM highlights the diffusion of relationship marketing practices into organisation-wide operations and multiple customer touch points with the aim to identify and understand individual customers requests and then customising/personalising customer services. The organisation-wide and multiple processes of the CRM effects as well as the vital ICT role are easily traced in the CRM definition. Kalakota and Robinson (2000) defined CRM as an integrated sales, marketing and service strategy that prevents lone showmanship and relies on coordinated actions. Dodds (2001) argued that CRM is about servicing customers better across the entire organisation, while CRM experts (Thomson, 2002) asserted that CRM is a customer-centric business philosophy and culture that sustains effective marketing, sales and service processes. Couldwell (1998) defined CRM as a combination of business processes and technology. At a lower tactical/operational level, CRM implementation is found to require the following procedural steps (Winer, 2001; Kalakota and Robinson, 2000; Loftness, 2001): creation and data mining of a database of customer activity; use of data analysis for deciding about which customers to target, how to target, contact and build relationships with them; development of personalised customer experiences; channel management for enabling efficient share of guest knowledge across the organisation, so that guests can get personalised and consistent service at anytime, anyplace, anywhere, any platform; management of privacy issues; and development and gathering of metrics for measuring CRM success. To achieve all these, businesses may need to undertake major organisational changes and transformations at a higher level, whose identification has generated wide interest and in-depth debates. Wells et al. (1999) identified four key elements for CRM implementation: business process analysis; integration and redesign of customer data; ICT enabled customer interaction; accessibility/transmission of organisational information. Hart (1995) highlighted the importance of building organisational/operational flexibility and a process technology that would enable product/service customisation as well as stressed the need of a marketing department that would support the identification and analysis of customer needs. To achieve these, Gronroos (1994) emphasised that businesses should be managed from a process rather than a functionalistic perspective, whereas Mok et al. (2000) stressed the importance of exploiting and adopting ICT. However, participants in a Tourism Society s seminar on CRM (Alford, 2001) concluded that CRM refers to a strategy that gets together a combination of ICT tools with business processes and services, e.g. automated call centre, customer data warehouses and data mining, customised content, targeted banner advertising and targeted e-mail delivery. Stone s findings (Alford, 2001) also revealed that people, customer management and detailed measurement are the most critical elements for successful CRM, while ICT was found to act as a CRM enabler only when the previous elements were in place. Loftness (2001) highlighted the development of measurement processes and organisational culture around customer satisfaction. Tiwana s (2001) comprehensive process for implementing knowledge-based CRM strategies stressed again the complementary role of ICT on other business processes, while it also integrated many of the previously identified key elements for CRM implementation. Overall,

394 M. Sigala / Hospitality Management 24 (2005) 391 413 Tiwana (2001) argued that CRM implementation requires a co-ordinated management and alignment of: strategic and operational (e)-business processes, ICT, leadership, change, cultural and measurement strategies. 3. An integrated model for CRM implementation Although an enormous debate has been initiated regarding the identification and the importance of different CRM implementation determinant factors, there is still no agreed framework as to how CRM can be best applied and adopted within organisations. However, previous debates have clearly identified the major issues for successful CRM implementation, which, coupled with the additional literature arguments, lead to the development of an integrated model for CRM implementation. The proposed model has both a strategic and operational value, as: (a) it identifies the major managerial areas whereby strategic plans and/or organisational change need to be developed; and (b) it depicts the tactical actions that the strategy in each managerial area should address and include. Overall, CRM implementation requires a co-ordinated and co-aligned management approach among the following three areas. 3.1. Knowledge management (KM) The success of relationship marketing heavily depends on the collection and analysis of customer information that are used for developing highly personalised offerings. Buttle (1996) pointed out that marketing problems are by nature information handling problems. Romano (2000) and Massey et al. (2001) strongly advocated the relation of CRM with KM and specifically customer KM, while the significance of customer knowledge is highlighted in several CRM studies (see review in Stefanou et al., 2003). However, information should not be confused with knowledge. Knowledge is produced when information is analysed and used to enable and leverage strategic actions. Sigala (2003c) argued that this confusion has led several businesses to make vast investments on ICT projects which have in turn yielded marginal results. To overcome the ICT productivity paradox, hotel management needs to embed ICT-generated customer and competitive information into its decision-making processes. These processes involve three broad phases that run in parallel (Tiwana, 2001) namely, information acquisition, sharing and utilisation. Hence, the collection and creation of insights, skills, and relationships (knowledge acquisition), when they are disseminated and shared (knowledge sharing) are followed by integration of learning, insights and experiential knowledge that in turn support effective decision-making processes (knowledge utilisation). Davenport and Prusak (1988) identified the following KM critical success factors: ICT and organisational infrastructure; friendly culture for knowledge sharing, creation and management; change in motivational practices for encouraging and rewarding staff when information is collected, shared and used; and open organisational structure. Malhotra (1998, p. 58) stressed the importance of ICT

M. Sigala / Hospitality Management 24 (2005) 391 413 395 for developing KM: yict embodies organisational processes that seek synergistic combination of data and information processing capacity of information technologies, and the creative and innovative capacity of human beings. Several other authors (Earl and Scott, 1999; Zack, 1999) also highlighted the importance of a customer KM strategy and the crucial leadership role that visionary knowledge officers should play for bringing together all the CRM stakeholders (e.g. frontline, finance, ICT and other staff) to share a common platform of beliefs, expectations and commitment. Tiwana (2001) also stressed that a knowledge-based CRM strategy requires the development of boundary spanning communities of practice whose members are empowered and inspired by a culture of trust that in turn fosters cross-functional collaboration, sharing of expertise and creation of new knowledge. Indeed, building trust and driving out fear of knowledge management are fundamental issues for supporting and fostering staff empowerment, as when they are established employees are confident that taking risks and decisions based on new information, customer insights and knowledge will be rewarded and not penalised. On the contrary, cultures that do not drive out fear face two side effects: they force employees to focus on short-term at the cost of long-term performance; and they encourage employees to focus on the individual rather than the collective organisation. However, Dev and Olsen (2000) reported that although hotels capture considerable amount of customer data, those data are rarely assembled to create useful knowledge about customers. Cline and Warner (1999) also found that the collection and use of customer information are frequently intermittent, delayed and fragmented. The lack of ICT applications integration and the legacy systems designed along functional lines creating fragmented guests profile have been reported as the major reason of duplication, inconsistencies, incompleteness and inaccuracies of customer data in hotels (Sigala, 2003a). Overall, knowledge-based CRM in hospitality requires: a hotel culture whereby every customer interaction is perceived as a learning experience and each customer contact as a knowledge-building opportunity and a chance to collect new information about hotels guest (Olsen and Connolly, 2000); a knowledge information system shaping the technical basis for information accumulation, retrieval and distribution of explicit knowledge, leadership that will motivate knowledge workers and orientation and team structures and knowledge circles that promote the personalised transfer of tacit and explicit knowledge (Bouncken, 2002); incentives and rewards to staff s efforts to capture, use and share knowledge for personalising customer interactions/experiences (Siguaw and Enz, 1999; Bouncken, 2002); a redesign of customer data across the organisation and a customer-centric ICT integration and infrastructure (Sigala, 2003b); understanding of guests value drivers and requirements as well as of the ways in which hotels contribute or fail to create customer value (Dube and Renaghan, 2000).

396 M. Sigala / Hospitality Management 24 (2005) 391 413 collection, analysis and use of three type of customer information (Park and Kim, 2003; Bouncken, 2002): information of the customer (personal and transactional data); information for the customer (product/service/organisational information that are perceived useful by customers); and information by the customer (customer feedback, complaints, propositions, claims). 3.2. Relationship marketing (internal and external) Within this new paradigm, interacting with customers and satisfying customer needs are vitally important (Christou, 2003b). Customer relationships are not built and sustained with direct (e)-mail themselves, but rather with the types of programmes and communication strategies that are available and for which e-mail may be a delivery mechanism. Winer (2001) argued that a comprehensive CRM is a collection of integrated components such as customer service (0800 numbers, faxback/customer comments cards, e-mail, FAQ), frequency, loyalty and reward programmes, customisation and community building (e.g. virtual communities). The aim of these integrated customer communication channels is to support the customer cycle (i.e. acquisition, enhancement/cross-up-selling and retention) by identifying profitable customers, differentiating the services/products offered to different markets of ones, interact with individual customers in an integrated way across channels and customise/personalise customers experiences. CRM also largely depends on staff attitudes, commitment and performance and so, success on the external marketplace requires initial success on the internal business by motivating and getting employees commitment (Gronroos, 1994). Hence, apart from developing the four P s of the marketing mix, a host of other resources and as well as of front-of- and back-of-house activities should be achieved (e.g. handling guests complaints and requirements) (Bitner, 1995). Although most of the people involved in customer-invisible activities are not part of the marketing department, their attitudes towards customers and their ways of executing their tasks are imperative. According to Gummesson (1990), these employees must be trained to become part-time marketers. While the idea of maximising transactions is nothing new, what is different is that this style of guest interaction will demand substantial conceptual skills from every employee. Because it might be impossible to create ideal guest experiences solely through expert systems, organisations might have to create intelligent-response teams comprising of employees with broad knowledge bases cutting across traditional organisations functions. For dealing with guests experience-related desires, employees will be required to have advanced social skills such as understanding of role conflict, role theory, communications and personality identification (Olsen and Connolly, 2000). Employees will need to be content experts who do not only know how to work with and exploit technology, but also can manage the information exchange and match guests to experiences. Moreover, as such knowledge-based work may take place electronically, staff should be able and know how to work collaboratively and electronically irrespective of their spatial,

M. Sigala / Hospitality Management 24 (2005) 391 413 397 time and cultural differences. For example, on its corporate website, Wyndham operates a virtual community and discussion forum for its women business travellers, which requires enhanced and specific technocentric communications skills (e.g. knowing the netiquette discipline) from Wyndham employees who moderate and operate this online community. Overall, CRM calls for new job descriptions, organisational structures, motivational thinking and reward systems. 3.3. ICT management Data warehouses and data mining are the most popular and highly needed systems for providing CRM capabilities or else for defining, developing and managing the segment of one. This is because by helping to wade through volumes of information and decipher meaning, patterns and relationships from many seemingly unrelated bits of data, they are necessary and valuable tools for trying to determine customer demographics, buying patterns, market segments, contribution margins, customer lifetime, etc. ICT is also instrumental for gathering and storing customer data (e.g. EPOSsystems, website analysis), providing ways for one-to-one interactions, e.g. website, call centre, kiosks, etc., as well as identifying ways for disseminating and accessing information across the organisation. However, to achieve the latter, a new ICT infrastructure is required that would enable the creation of consolidated customer databases and overcome limitations created by functional isolated digital field-doms. ICT s supporting role for fostering business process reengineering and restructuring processes around the customer is widely argued and does not stop at the traditional organisational boundaries. Aligning the ICT with the organisational infrastructure is critical so that the numerous systems at the customer touch points (e.g. Internet, PMS, EPOS, CRS, etc) do not become islands of useless information. Within the hotel sector, Sigala et al. (2001) argued the need to integrate yield management (YM), customer databases, corporate and distribution systems for maximising yield per individual guest during his/her business lifetime, per distribution channel and/or per hotel chain or properties-network. Currently, Fairfield and LeMeridien integrated their YM and CRM systems for personalising their rates, products, services and promotions to their frequent guests. Wells et al. (1999) described how electronic networks allow the distribution and share of guest databases across Ritz Carlton hotel properties allowing staff to accommodate and treat individual guests based on preferences from previous visits. Marriott International hotel chain installed a Codification System to virtually convert what all its employees knew about hotel day-to-day operations and standard operational procedures in order to provide consistent customer services (Gupta and Govindarajan, 2000). The company also designed a reward system for those who shared, created and mobilised new knowledge relevant to the firm. Accor is installing computers to their lounges for providing information access to employees, who do not have and need computers for their operations. Similar operations are initiated in Ritz Carlton hotels (Sveiby, 2000) for enhancing customer loyalty through detecting

398 M. Sigala / Hospitality Management 24 (2005) 391 413 and recording their guests special interests and requests at the first time encounter and then providing personalised attention in return visits. 3.4. Summarising In summarising the previous arguments, Fig. 1 was developed as a graphical representation of the proposed integrated CRM model. The figure identifies: (a) the three managerial areas and their roles/aims for implementing CRM; and (b) for each managerial area, the operational changes and strategies that are required for achieving the former goals. The arrows illustrate the need to align strategies among the three managerial areas, which is also evident by the compatibility of the strategies amongst the managerial areas. The practical applicability of the figure is illustrated by example of initiatives already found in the industry. 4. Methodology The paper aimed to develop a framework for developing CRM strategies. After reviewing the literature, arguments are summarised into an integrated CRM model, whose validity and value were tested by gathering data from Greek hotels. Specifically, based on the model, the study investigated: how and why Greek hotels are implementing CRM; the CRM success implementation factors as considered by hotel managers. A structured questionnaire was developed for gathering information regarding the three CRM managerial areas as well as the characteristics of the hotels (including hotel size, star- category and management arrangement, Table 1). In developing the research questions for the KM and ICT area, the following issues were considered. It is generally agreed that a survey investigating information management strategies should include who what where when questions, while KM investigations should include why and how (strategic) questions. So, KM why decisions were addressed with the questions (in Table 2) investigating the hotels strategic motives for implementing CRM. For investigating the who where when what questions, hotels were required to indicate (Table 3): the ICT applications/systems used for information acquisition, storage, retrieval and dissemination; the type of information hotels gathered through ICT (based on Park and Kim, 2003); and the integration of their ICT systems with organisation-wide guest data warehouses (which actually reflects ICT management). As in small and family run hotels, information is frequently gathered manually (Palmer et al., 2000), a research question was also set for investigating three options for recording/storing information without ICT support namely storing data in business books and files (non-computerised), collecting data through guests observation and interactions (Table 4). The how questions of knowledge management were addressed by the questions set in Table 5 that investigated how guest knowledge is used and the degree

Knowledge Management Role/aim: acquire, store, retrieve, analyze, disseminate data, Why and How questions Strategies: knowledge culture/orientation, customer-centric knowledge information system, leadership, team structure, knowledge circles, incentives/rewards Examples: Wyndham: financial rewards for data capture and storage, HARMONY customer database and mining, Byrequest manager at each property Accor : decentralized Internet-based intranet including data about best practices, services innovations and training possibilities & schedules, films/videos, knowledge manager, open corporate culture & decentralization ICT Management Role/aim: acquire, store, retrieve, analyze, disseminate data, Integration of 3 managerial areas who what where when questions Strategies: customer-centric knowledge information system, business reengineering, integrated internal and external systems Examples: Wyndham: HARMONY customer database integrated with internal systems (PMS) and externally with Internet based systems (Website) and corporate YM systems Accor : decentralized Internet-based intranet in order to enable both internal and external integration, business decentralized structure is facilitated with the decentralized ICT infrastructure Internal Relationship Marketing Role/aim: motivate and create a knowledge orientation and Customer centric culture Strategies: new job descriptions, part-time marketers, organizational cultures and structures, social and communication skills online & offline Examples: Wyndham: financial promotional rewards, training and development Accor : motivational strategies such as idea contests, bonuses, benchmarks, training and knowledge circles, meetings with experts decentralized culture/structure Fig. 1. An integrated CRM model. Relationship Marketing Internal & External Relationship Marketing External Relationship Marketing Role/aim: provision of personalized quality services in every customer touch point at any time Strategies: integrated and multiple communication strategies, loyalty and frequent guest programs, community building Examples: Wyndham: Byrequest guest loyalty program. Personalized guest communications Business women virtual community and discussion forum Accor : frequent guest loyalty program, personalized communications M. Sigala / Hospitality Management 24 (2005) 391 413 399 ARTICLE IN PRESS

400 M. Sigala / Hospitality Management 24 (2005) 391 413 Table 1 Profile of respondents Management arrangement 5 stars 4 stars 3 stars Total No. No. No. No. Independently managed 16 47 12 54 25 90 53 63 Part of a hotel chain 18 53 10 45 3 10 31 37 Total 34 100 22 100 28 100 84 100 Hotel size 1 60 8 33 14 54 19 56 41 49 61+ 16 67 12 46 15 44 43 51 Total 24 100 26 100 34 100 84 100 Profile of telephone respondents. Three independent properties: 14 (5 stars), 27 (3 stars), 45 (3 stars). Two hotels part of a chain: 150 (5 stars), 459 (5 stars). Table 2 Reasons for CRM implementation (knowledge management) Indicate the importance of each statement to CRM implementation (5 point scale, irrelevant essential) 1 60 SD 61+ SD t-value p Increase guests loyalty 4.01 0.82 3.91 0.94 0.251 0.802 Increase service quality 4.32 0.76 4.12 0.97 0.054 0.164 Increase guests satisfaction 4.65 0.98 4.44 0.99 0.065 0.187 Process improvement 3.73 1.04 4.03 1.09 2.654 0.026* Increase profitability 3.87 1.03 3.66 1.23 1.138 0.393 Reduce guests complaints 3.44 1.21 3.79 1.09 0.037 0.039* Increase product quality 3.02 1.18 2.99 1.43 0.345 0.749 Reduce costs 3.29 1.17 3.65 1.10 3.28 0.001* Increase employees satisfaction 2.92 1.09 2.74 1.14 1.538 0.136 *Indicates significance at a ¼ 0:05: to which its use has improved several practices (external marketing). Hotels were also required to indicate their use of specific human resource management strategies (e.g. management style, reward systems, organisational structure and culture) and their importance to CRM success (internal marketing, Table 6, Figs. 2 and 3). Given the low response rate experienced in previous studies in Greece (Sigala, 2003b) and for boosting responses in this research, three methods for data collection (postal mail, e-mail and telephone) were used for exploiting the advantages of each method. A convenience sample of 200 hotels, drawn from the Greek National Tourism Organisation (GNTO) hotels directory, was selected. Hotels were initially telephoned in order to identify those that had initiated efforts that aimed to personalise their offerings and build customer relationships. Qualified hotels were

Table 3 ICT availability and infrastructure Information Management (ICT and Information Management) (% of hotels) ICT availability 1 60 61+ Total Integration with customer database Personal data Aspects of hotel stay ICT in division Front office system 34 86 61 44 100 2 0 Property-based reservation system 32 91 62 71 100 0 0 (PBRS) Customer database 10 74 43 0 67 22 6 Hotel website 88 95 92 2 48 0 1 Central reservation system 0 7 4 2 100 33 0 Yield management 2 72 38 0 0 0 0 Global distribution systems 5 63 35 0 100 0 0 Marketing and sales system 2 65 35 75 97 48 14 (M&S) Check in/out Kiosks 0 0 0 0 0 0 0 Smart cards 0 0 0 0 0 0 0 ICT in food and beverage division Electronic point of sale systems 7 42 25 0 0 100 0 EPOS Stock and inventory systems 0 58 30 0 0 0 0 Food and beverage (FB) 0 49 25 0 0 0 0 Conference and banqueting systems 0 28 14 0 0 0 0 Complaints opinions M. Sigala / Hospitality Management 24 (2005) 391 413 401 ARTICLE IN PRESS

Table 3 (continued ) 402 ICT availability 1 60 61+ Total Integration with customer database Personal data Aspects of hotel stay In-room ICT TV based services 0 26 13 0 0 0 0 In-room Internet and e-mail 5 21 13 0 0 0 0 access On demand movies/games 10 67 39 0 0 0 0 Automated mini-bars 15 67 42 0 0 46 0 General ICT Property management system 22 91 57 42 0 0 0 Intranet 0 7 4 0 0 33 0 Finance and accounting systems 2 86 45 2 0 0 0 (F&A) Electronic lock systems 27 65 46 0 0 0 0 Management support systems 0 23 12 0 (MSS) Decision support systems (DSS) 0 14 7 0 Complaints opinions M. Sigala / Hospitality Management 24 (2005) 391 413 ARTICLE IN PRESS

M. Sigala / Hospitality Management 24 (2005) 391 413 403 Table 4 Informal/non-computerised ways of information collection and storage Personal data Aspects of hotel stay Complaints opinions 1 60 61+ 1 60 61+ 1 60 61+ Gather guest information through guests observations and/or interactions Store guests information in business books and/or files 87 11 98 75 68 57 97 38 99 21 99 23 then inquired about their willingness to participate in the study and their most convenient method for filling in the questionnaire, i.e. post, e-mail or telephone (30 min conversation). Overall, 147 qualified and willing to participate in the study hotels were identified, of which 43 replied by mail, 36 by e-mail and nine claimed a preference to respond via telephone. However, due to time and costs limitations, only five telephone calls were ultimately conducted, but calls were further exploited for gathering as much as possible qualitative information. Thus, overall 84 usable questionnaires were collected. 5. Analysis of the findings The respondents profile is provided in Table 1. Based on previous studies (Sigala, 2003b) and other governmental publications, the study s respondents comprise a representative sample of the Greek hotel sector, as: the majority of the hotels are independently managed; respondents being part of hotel chains usually represent 5 star hotels; small size hotels (less than 60 ) concentrate on the 3 star category, while larger-scale hotels on the 5 star. Previous studies (Sigala, 2003a) and governmental statistics (e.g. Paylopoulos, 1999) have also revealed and indicated that 30 and 60 is a good metric for distinguishing micro/family hotels from small and bigger hotel properties, respectively. As there were only few hotel properties having less than 30 the cut off point of 60 was also used in this study for distinguishing between small and large hotel properties. When inquired about their motivations for implementing CRM (Table 2), although all hotels declared a customer-centric approach to CRM implementation, small and large hotels significantly differ in some specific motives, which clearly indicate hotels different operational problems and managerial situation. Analytically, all respondents claimed that enhancing service quality and so, customer satisfaction and loyalty are the most important reasons for pursuing CRM, while they reported less importance in implementing CRM for increasing employee satisfaction and/or reducing costs. However, a t-test revealed that large hotels

404 Table 5 Use and value of guest information for external marketing The extent to which the use of the stored guest information helped: (1 not at all 5 very much) 1 60 SD 61+ SD t-value p Do not do it 1 60 61+ Understanding guests needs and 3.41 1.09 3.82 1.1 2.305 0.022* 0 0 requirements Product development and innovation 3.78 1.08 4.56 1.32 2.671 0.027* 0 0 Personalising promotion and 3.6 1.45 4.23 0.87 2.893 0.028* 27 5 communication strategies Personalising staff-guests encounters 3.51 1.13 3.85 0.89 1.001 0.132 1 2 Developing frequent, loyalty and 4.00 41 42 reward programmes Personalising guests ICT 3.00 41 42 interactions Enhancing customer service 3.10 1.16 3.65 0.99 3.372 0.001* 0 0 Enhancing internal communication 2.10 0.81 3.40 1.07 4.001 0.000 0 0 Personalising reservation process 3.44 1.15 3.66 1.04 2.046 0.041* 1 2 Personalising pricing/yield 3.98 1.21 3.20 9 42 management strategies Identifying and handling guests 3.91 0.99 4.02 1.23 0.251 0.802 0 0 complaints Developing affiliate marketing strategies with other partners 41 43 M. Sigala / Hospitality Management 24 (2005) 391 413 ARTICLE IN PRESS *Indicates significance at a ¼ 0:05:

M. Sigala / Hospitality Management 24 (2005) 391 413 405 Table 6 CRM internal relationship determinant factors Indicate the importance of the following factors for successful CRM implementation (5 point scale, irrelevant essential) 1 60 SD 61+ SD t-value p Autonomous and/or 2.42 1.14 3.61 1.04 4.03 0.000* interdepartmental teams Assignment of a knowledge/ 2.31 1.03 3.34 1.12 3.85 0.002* information officer Organizational culture 4.04 1.02 4.34 0.87 0.852 0.872 Organizational structure 2.99 1.02 3.30 1.31 1.032 0.056 Structural factors/external 4.02 1.23 4.12 1.09 2.041 0.991 conditions ICT 2.21 1.06 4.02 0.67 4.967 0.000* Staff motivation 4.04 0.67 4.23 0.71 1.962 0.978 Staff multi-skilling 4.32 1.21 3.98 0.95 3.032 0.035* Staff empowerment 2.76 1.23 3.34 1.06 2.945 0.029* Staff qualification 2.04 1.07 2.54 1.11 1.968 0.938 Staff social and communication 4.05 0.86 4.24 0.65 1.095 1.006 skills Top management support 4.44 0.78 4.56 0.79 1.112 0.995 Training, seminars, further 4.03 0.98 4.13 0.98 1.028 1.300 education Rewards 4.61 0.77 4.54 0.83 0.984 1.395 *Indicates significance at a ¼ 0:05: 61 + 1-60 Seminars & training 2 28 Visualisation of success, e.g. feedback Expansion of activities and responsibilities 56 93 93 91 Promotions 60 78 Rewards 26 17 0 20 40 60 80 100 % of hotels Fig. 2. Human resource motivation strategies. perceived significantly higher than smaller hotels the value of CRM implementation for reducing costs, guests complaints and improving processes. This finding indicates that CRM in large hotels is greatly driven by a need to streamline and

406 M. Sigala / Hospitality Management 24 (2005) 391 413 61 + 1-60 openess and trust have high value a common language isused our employees are encouranged to exchange knowledge our employees act and learn autonomously errors are tolerated up to a certain extent 67 91 10 0 86 95 93 90 84 78 93 0 20 40 60 80 100 120 % of hotels Fig. 3. Characteristics of organisational culture contributing to CRM success. integrate fragmented, disconnected processes and guests information for enabling: enhanced monitoring/control and improvement of processes; handling and reduction of guests complaints; and reduction of errors costs. The latter was also confirmed during telephone conversations whereby interviewees reported that CRM enabled the formalisation and standardisation of guest staff encounters and service processes. This was achieved by using guest information for updating and writing the standard operational procedures, which were in turn used for staff training, development and induction purposes as well as for identifying problematic areas. According to one interviewee CRM was viewed as a way to incorporate the voice of the guest into the operational procedures and to fostering the guest listening and learning hotel. However, the frequency for updating these documents varied among respondents. Only one interviewee mentioned that standard operational procedures manuals are reviewed and updated every summer season, while two others mentioned that reviews are done occasionally. On the other hand, in smaller hotels, the need to use CRM for monitoring and managing service encounters and guests requirements/complaints was not reported as very important. This is not surprising when considering that hotel managers (who are also frequently the hotel owners) are always on the hotel floor. Indeed, all three small hotels claimed that guests complaints/requests as well as stories/experiences are always discussed amongst staff and them in the form of informal and gossiping discussions. However, although this personalisation of guest information is an effective way for learning the guest and acting upon his requests/preferences, it does not allow for wide guest knowledge dissemination but only for selected staff networks. To address this, small hotel managers/owners claimed that developing and maintaining good and personal relationships with hotel staff is an effective way for participating in such gossiping conversations and later motivating staff to act upon guest requests. Managers/owners also reported that it was important that they learned about their guests, as it was difficult to keep the

M. Sigala / Hospitality Management 24 (2005) 391 413 407 same staff for more than one summer operating season. Another small hotel owner also claimed that she had to act as the middlemen between back-office (immigrant) and front-office staff that did not want to socialise or even talk together. Table 3 provides data regarding respondents ICT availability and information management activities. Data reveal that apart from the wide availability of a hotel website, small (1 60 ) hotels are less computerised than large hotels (61+ ). This implies that small properties have fewer possibilities for gathering, storing and disseminating guest information electronically. Previous research also indicated that the number of ICT applications in the hotel sector is positively dependent on hotel size (Siguaw et al., 2000), while other studies provided evidence of the existence of a threshold level of ICT investment that is also dependent on business size (Weill, 1992; Sigala, 2003c). Findings also revealed that hotels have a very fragmented ICT infrastructure. The low integration levels between the different ICT systems and the customer database indicate that even when ICT is available there is no seamless transferability and accessibility of guest information to different ICT applications and hotel staff. As a result, several manual, laborious and timeconsuming data entries and retrieval are required. A clear pattern also emerges regarding the use of ICT systems for the collection of different types of guest information. Hotels tend to heavily use: reservation, distribution and M&Ssystems for collecting personal data regarding their guests; EPOSfor gathering aspects of hotel stay; and customer databases, the website and the M&Ssystems for collecting guests complaints and feedback. Hence, several opportunities of gathering guest information are being lost (e.g. gather guest behaviour and preferences through website cookies technologies, guests preferences on TV programmes mini-bars, etc). Hotels also reported that they heavily collect guest information by observing and interacting with guests and then store data into books and other files (Table 4). The latter was reported more frequently by small than large hotels. However, manual collection and storage of guest data limits large hotels ability to disseminate and share information across staff, hotel properties and time. Interviewees from small hotels highlighted again the need to gather guest information in informal and personalised ways, while large hoteliers noted that although all staff is motivated to gather information, fewer staff store information in databases. Hoteliers claimed that this was mainly due to the fact that data collection is considered as a competitive race among staff, who perceive guest information as a technique for personalising the quality of their services and getting higher tips or promotions. Consequently, staff are reluctant to share guest information with colleagues. This coupled with the high labour turnover in hotels significantly impacted in CRM implementation. However, respondents from small hotels did not feel that staff turnover posed problems in information sharing and gathering, because they usually develop family, informal and long-term employment relationships with their staff. On the other hand, in small hotels personalising guest experiences and increasing guest satisfaction is not viewed as a staff incentive and motivation, as staff are inherited with the problem of no promotion in small hotels (that are very flat organisations with owners almost always being the managers). However,

408 M. Sigala / Hospitality Management 24 (2005) 391 413 respondents generally agreed that staff was usually reluctant to share and report information and ideas when these involved changes in their daily routines or may increase in their work load. Finally, few respondents also highlighted staff inability to understand which knowledge is required and how it can be integrated into their daily operations. Table 5 provides data regarding the use and importance of guest databases for developing external relationship marketing strategies in respondents hotels. Generally, findings revealed that guest databases are not exploited for developing frequent, loyalty and reward programmes, personalising guests-ict encounters and affiliate marketing. Consequently, numerous opportunities for fully exploiting guest data (e.g. welcome message in TV sets, personalised website content/reservation process) are missed. Moreover, t-tests revealed that the importance of guest databases was perceived stronger in large rather than small for the following practices: understand guests needs and requirements; product development and innovation; personalising promotion and communication strategies; enhancing customer service; and personalising the reservation process. This is not surprising when considering the greater number of guests/staff and high labour turnover that large hotels have to address daily. Indeed, all telephone interviewees highlighted the need to adopt and use ICT for minimizing the loss of intangible knowledge assets due to high staff turnover and providing a way of accessing/sharing organisational knowledge amongst their properties and operating seasons. On the contrary, in small hotels personalisation of hotel rates and guests services is guaranteed by the owner who is always present and remembers his/her frequent guests. Findings regarding the human resource practices of respondents also confirmed several of the previous findings (Table 6). Overall, organisational structure, staff motivation, social and communication skills rather than qualifications, top management support and rewards were perceived as the most important internal relationship factors contributing to CRM success. However, some differences between large and small hotels were found once again. Staff multi-skilling was noted as more important in small than large hotels, while respondents from large hotels gave significantly higher importance to ICT on CRM success. Autonomous and interdepartmental teams and knowledge officers were considered as more crucial in large than small hotels. Interviewees also claimed that multi-skilling is more difficult to achieve in large properties as a minimum number of staff is required in certain departments. On contrary, boundary spanning teams are more valuable in large hotels. Small hotels reported that it was easier to rotate staff in different positions and they usually required staff to change between posts, e.g. breakfast service, reception and bar area. However, staff rotation may also be related to the star-category of hotel respondents, since small hotels represented low category properties that need to provide fewer services, e.g. not a 24 h reception or a cafe /bar service. Overall, the importance of organisational aspects on CRM success is highlighted by a substantial majority of the respondents. Specifically, concerning staff motivation (Fig. 2) the most heavily used motives reported to be the visualisation of success, promotion and expansion of activities and responsibilities, while rewards

M. Sigala / Hospitality Management 24 (2005) 391 413 409 and seminars/training were reported less frequently particularly amongst small properties. However, since staff social and communication skills were previously reported as crucial determinants of CRM success, hotels should consider staff training and rewards more seriously. Respondents also highlighted the importance of all CRM culture characteristics on instilling employee empowerment (Fig. 3). However, some differences between small and large properties were also noted. Small hotels gave more weight on the existence of openness, trust and tolerance for errors than large hotels. Interviewees contributed this to the fact they are frequently very closely related to their staff and so, it is more difficult for them to practice more formal managerial procedures. Moreover, because owners of small properties frequently want to give a personal touch and way of running their hotels as well as prefer to act and behave on their own style, they are more reluctant to release staff autonomy. According to an owner, she viewed the hotel as an extension of her house and so hotel decoration, quality and operations were treated with a personal flair and interest. Another owner s claim revealed more patriarchal and authoritative management styles: this is my business and I want to serve guests according to my personal spirit and character. I do not want my employees behave on their way. However, such approaches may sometimes inhibit staff empowerment and innovativeness. 6. Conclusions, discussion and recommendations The service industry is undergoing remarkable developments. Marketing strategies shift from acquisition to customer retention; product strategies are built around customisation; the internal organisation is reengineered around customer focused processes; and ICT is applied to gain customer insight, build relationships, enable customisation and provide new opportunities for service distribution. CRM is a crucial strategy for sustaining competitive advantage in the current marketplace. However, theory has been unsuccessful to provide so far an overall framework on how businesses can better adopt and implement CRM. This paper developed a model for CRM implementation, which instead of overstating the role of ICT, it suggests that an integrated managerial approach among three areas namely ICT, relationship and knowledge management, should be adopted. The applicability and value of this approach is illustrated by several examples and cases from the international hotel industry. Moreover, data from the Greek hotel sector provided evidence that ICT is not the panacea and the exclusive CRM determinant factor. So, ICT are more important in large than small hotels, while other organisational and managerial factors such as culture, staff motivation and development also play a vital role on CRM s success. CRM implementation may also be driven and so affected by different (strategic) motivations. Indeed, CRM in small hotels was found to frequently adopt the owner s/manager s personal style and flair, whereas in large properties CRM is usually viewed as a way for formalising processes, enhancing customer service and reducing costs. However, because such a patriarchal and authoritarian leadership

410 M. Sigala / Hospitality Management 24 (2005) 391 413 style of hotel managers sanctions open knowledge transfer, it is imperative that hotel managers establish knowledge oriented leadership, foster empowerment and minimise hierarchical boundaries. To generate knowledge and empower employees to identify and solve problems, hotels can also learn and benefit from small hotels. The institutionalised informal and gossiping way for sharing guest information and commenting on staff experiences may also be an effective and personalised way for disseminating knowledge in large hotels. Analytically, although hotels have traditionally perceived codification and personalisation of knowledge as opposing knowledge strategies, evidence has revealed that personalisation, codification and digitisation of guest knowledge can co-exist as a hybrid solution. This is because tacit knowledge and skills (embedded in service routines) can only be transferred in direct personal relationships, while ICT is only effective for the effective storage and dissemination of explicit knowledge. Similar to the quality circles, the informal networks and gossiping discussions groups in small hotels, hotels can institutionalise knowledge circles between employees that enable them to discuss problems, insights and new ideas. In turn, this can increase the transactive memory and lead to meetings with experts that can further transfer more tacit knowledge. Moreover, input regarding new challenges and ideas, as well as commitment and maybe leadership from hotel management into knowledge circles can further promote learning and staff motivation. As in any study, the findings present some limitations, but which in turn identify and provide ideas and directions for conducting future research. So, although respondents represented a representative sample of the Greek hotel sector, the small and convenience sample that was used eliminates the possibilities for generalising findings to the whole Greek hotel industry. Moreover, although the data collection methods guaranteed the return of a respectable number of usable questionnaires, they did not allow for the collection of more qualitative data. Some in-depth information was gathered through telephone conversations, but that was not always easy and feasible since respondents were busy and the limit of the 30 min telephone call had to be respected. Finally, findings revealed and represent the perceptions and opinions of hotel managers/owners only and not of a wide sample of different operational and managerial hotel staff. In this vein, future research of a greater sample scale and qualitative data nature is required. A topic of great interest that future studies could investigate is the implications of CRM and KM strategies on hotel staff skills, competencies and working environment. As such skills may also differ depending on the hotel characteristics, opportunities to conduct more in-depth research into the field of small business management are also revealed. The different styles as well as the motives behind CRM implementation in the two different hotel sets also suggest that studies and theories in entrepreneurship can significantly contribute to the body of knowledge regarding CRM implementation. Cross -industry and -sector research is also valuable for examining the impact of any cultural and contextual factors on CRM implementation. Future research can also be enhanced by gathering and comparing data from a multi-level and multi-departmental sample of hotel staff.