138 Hospitality Upgrade | Spring 2007 www.hospitalityupgrade.com Guest Loyalty In the Fall 2006 issue of Hospitality Upgrade, Mark Haley described many of business drivers for both points- based and recognition-based loyalty programs. This article describes the evolution of the basic systems infrastructure used to support these loyalty programs. I n the mid-1970s, property management sys- tems retained a property-based hotel guest history database. This property database was used to track a limited number of guest stay histo- ry fields such as room type preference and agent entered preference information. It was also used to track a limited number of stay transactions. Its purpose was primarily for guest recognition, for direct mail (cards from the general manager), and pre-populating name and address informa- tion for hotel direct reservations. As an example, let’s look at the customer life cycle of Ms. Lauren Schott, a fictitious 25 year-old guest in 1977. Having spent four nights at the hotel, the general manager would send Ms. Schott a thank you card and invite her to return. When Lauren calls the hotel to make a future reservation, the agent would check the property management system for Lauren Schott and then welcome her back to the hotel. Her address would be pre-populated in the system and confirmed. Over the next 20 years the amount of data fields grew to include personal preferences and other information useful to increasing the personalization of reservations and stays. In ad- dition, basic database analytics enabled better market segmentation and profiling. Red Lion, Signature Inns and other smaller chains offered programs such as stay 10 nights get one night free. So in 1992, Ms. Schott was now recognized as a frequent guest and offered a free night after her tenth night. When the database was property-based, guest information resided on a minicomputer and later, as technology evolved, on a PC server. All the business rules were built within this system. Large hotel companies gathered stay information from the property-based systems and sent it to a corporate-based enterprise data warehouse (EDW) which resided on a main- frame. Smaller chains used minicomputers to store the centralized data. As airline point programs became more By Paul Manley Systems Supporting popular and ubiquitous in the 1990s by offering miles for flights, hotel companies recognized the potential benefit of increasing guest affinity by offering points for hotel stays. As pointed out in the previous article, large multibrand companies could leverage their broad distribution so guests could earn points at many different locations. In addition to offer- ing points from stays at their own hotels, they also offered points from partners such as rental car and flower companies. Redemptions were expanded from their own hotels’ room nights to gift cards, merchandise sometimes direct or through a partner such as SkyMall. Now in her forties with a family, Ms. Schott is carrying two or three airline frequent flyer cards to earn miles and two to four hotel cards to earn points. So her spend is divided among a small set of airlines and hotels as she accumulates miles and points to take her family on a free flight or hotel stay. In the last few years, these programs began to offer the soft benefits of recognition programs from room upgrades, to concierge level services to guaranteed availability and more. In addition, the data collected from the loyalty program enhanced the database marketing function by providing additional insight to segmentation, behavior, trends and other analytics resulting in more effective marketing. Loyalty Systems of Today Loyalty programs, whether points-based, benefit-based or a combination of both, are a component of a chain’s overall customer relationship management (CRM) strategy where the goal is to maximize a customer’s lifetime value. The technology components of these systems – whether used by large inter- national chains or small regional chains – can be broadly grouped into database, application and integration technologies. Databases Without speaking to any specific archi- tecture the focus here is to a logical view of the data. At the core of the system is a loyalty member database. It keeps data associated with member address, tier status, points transac- tions, partners and data associated with busi- ness rules. This system needs to know which rates qualify to earn points so that a member does not get points for a non-qualified stay. Yet the system also needs to be flexible so if the hotel wants to give points for a non-qualified stay, there is a function to enable this requirement. In addition to the core loyalty member database, there is a transaction database of hotel stays. The consumed stay records containing the member number, the base dollar amount (either room revenue or total net folio amount), the ho- tel identifier and other relevant data which goes through a number of steps to ensure the data is accurate. The stay records are then loaded into the loyalty database. Additionally, data marts are created (a data mart is a database that serves a specific group, such as the marketing department, so they can more easily and effectively analyze data that may be stored in the EDW and other internal or exter- nal databases). Data marts are used to support the various marketing campaigns to acquire new members and activate existing members. These campaigns comprise seasonal promotions, e-mail campaigns and direct mail. Hotel companies ac- cess a variety of databases which identify market segments, campaign success and filter opt outs or do-not-contact attributes. Assuming Ms. Schott hasn’t opted out of marketing communications, she now receives e-mail or direct mail with targeted offers that are driven by her behaviors based on factors that include when she books, where she lives, how much she travels and so forth. Applications Applications support the business require- ments of a loyalty program. These requirements can be broadly grouped into three groups. The first group, member profile management, covers the enrollment of new members and maintenance of demographic data. Accounting is the second group which covers the earning and redemptions of points, source transactions, financial liability, franchisee billing for points given to members as well as reimbursement of free hotel nights, and partner billing. Lastly, member services cov- ers the call center and Web applications for the member profile management noted above, han- dling of customer service requests, fulfillment of member kits or cards, fulfillment of redemptions, and the issuance of online (e-mail) and off-line (postal delivery) member statements. HOTEL LOYALTY © 2007 Hospitality Upgrade No reproduction or distribution without permission. For permissions, high quality PDF or reprint fees contact [email protected].