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Customer Relationship Management In Hospitality Industry Importance Tourism Essay

CRM entails all aspects of interaction a company has with its customer, whether it is sales or service related. It even uses technology to streamline processes that impact customer loyalty, service delivery and quality management.

Today, businesses are facing an aggressive competition and they have to make Efforts to survive in a competitive and uncertain market place. People have realized that managing Customer relationships is a very important factor for their success. Customer relationship management (CRM) is a strategy that can help them to build long-lasting relationships with their customers and increase their profits through the right management system and the application of customer-focused strategies.(Berry,1983)

‘Customer is the most important person for a business. He is not an interruption to our work but the purpose of it. He is not an outsider; he is a part of it. We are not doing him a favour, he is doing us a favour by giving us an opportunity to serve him.’ (By Mahatma Gandhi)

It has grown mainstream and is being implemented in a wide range of companies and organizations such as manufacturing, financial services, transportation and distribution,

Though the activity looks to be a simple one, but tools and workflows which are involved in the process can be quite complex, especially for large business. Previously the tools were generally limited to find out basic information’s like companies contact history with the customers or clients, monitoring and recording interactions and communications. (Parasuraman,et all 1985)

Background [P1]:

The reason of me to choose this particular research is very simple. As I have worked in hospitality industry and had a chance to know the day to day operations from a close point, I wanted to find out more ways to explore about how the improved guest service and loyalty creates a bond between a particular organization and the customers.

In this era of globalization where ‘Customer is the King’, customer expectations are going up which is making the situation more and more competitive. As the product is becoming generic in nature, the hotel industry can no longer rely on the traditional marketing strategies to retain the customers. Customer Relationship Management is one of the key tools to fight this cut throat competition and stand out as a superior brand

Research question(s) [P2]:

RQ1) How effective is the use of Customer Relations Management (CRM) in retaining customers in hospitality?

RQ2) What are the new marketing approaches in hotel industry?

RQ3) How will CRM help to retain customers in hotel industry?

Hypothesis [P2]:

H0: CRM has no significant effect in retaining customer in Hospitality Industry.

H1: CRM has a significant effect in retaining customer in Hospitality Industry.

H0: CRM do not help to retain customer in hotel industry.

H1: CRM do help to retain customer in hotel industry.

Research Aims & Objectives [P4]:


The study aims to understand the importance of CRM in the success of organisation in a hospitality industry. Moreover, it seeks to determine the effectiveness of the new marketing approaches in retaining customers in a hospitality industry. The study is to do an extensive research on the importance of CRM in Hospitality Industry, then gather relevant papers to support the study a survey will be conducted and data will be gathered from survey and from these data conclusion will be drawn.


To be able arrive to the desired answer, the following steps should be done:

Gather relevant past and current data related to the study

Design research questions for survey

Conduct a survey

Gather the relevant data from the survey

Make a table or graph

Verify data

Draw conclusion

Literature Review [P5]:

Customer Relationship Management (CRM) is one of those magnificent concepts that swept the business world in the 1990’s with the promise of forever changing the way businesses small and large interacted with their customer bases. In the short term, however, it proved to be an unwieldy process that was better in theory than in practice for a variety of reasons. First among these was that it was simply so difficult and expensive to track and keep the high volume of records needed accurately and constantly update them. (Payne,2000)

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In today’s competitive business environment, a successful CRM strategy cannot be implemented by only installing and integrating a software package designed to support CRM processes. A holistic approach to CRM is vital for an effective and efficient CRM policy. This approach includes training of employees, a modification of business processes based on customers’ needs and an adoption of relevant IT-systems (including soft- and maybe hardware) and/or usage of IT-Services that enable the organization or company to follow its CRM strategy. CRM-Services can even redundant the acquisition of additional hardware or CRM software- licenses. (Reichheld et all,1990)

Let us now look for the answers of the questions we were conducting the research for with respect to a live hotel.


“Customer Relationship Management is a process of managing customer relations in an organized way”. They aim at managing each “Moment Of Truth” that is experienced by the customer.

Q11 – How will CRM help to retain customers in hotel industry – There are various contact points where the hotel comes in direct contact with the customer which are known as ‘Touch points’ in the CRM language. These touch points are considered important as there is direct interaction with the customer and they provide valuable input to the hotel. The input provided by the customer has to be captured in such a way that it becomes information and can be used by various processes within the hotel. This can be done with the help of technology and the aim is that whenever there is a customer interface with any of those processes they are able to use that information in servicing the guest in a most efficient manner. (Sheth,1998)

Loyalty Programs

Second vehicle for CRM identified by Maurya Sheraton are the Loyalty Programs. These programs are designed to reward the loyal guests of the hotel. Every time a guest checks in the hotel at his every touch point or interface with the hotel, every time he spends on a service provided by the hotel (use of Room, Restaurant, Laundry, Telephones etc.), the transaction is recorded at each individual point and is added to the final bill presented to the guest at the end of the stay. There are certain points attached to the number of rupees spent by the guest. Therefore higher the amount of the bill, the higher will be the number of points attained by the guest. These points are credited to the account of each guest with the help of technology. These are called Loyalty points. These accounts having the loyalty points are unique to every guest. Therefore, whenever after the first time that guest checks into the hotels, the guest history also affects the loyalty points. The higher the number of points, more loyal is the guest. The points can be redeemed by the guest for either free stays at the hotel or free gifts as listed by the hotel or free meals depending upon the number of points accumulated.

Distribution Points/ Central Reservation System

A customer can simply make a call at the reservation centre to make a booking with the hotel. It sounds simple but it could get complex in case he does not receive the expected or the desired response. Therefore, Maurya Sheraton sees this distribution point as an opportunity to establish CRM as the respondents at the reservation centre could turn a prospective customer into a ‘sale’ or could let go off the opportunity to do so by not being polite enough or not giving out the information as desired by the guest. The information regarding all guest reservations is managed through computer software, therefore, when a customer make calls to query about a reservation, all his hotel usage history pops up in the system which gives a chance to the executive at the reservations to instantly recognize the customer and address him by his name. This moment of truth is experienced by the customer with a feeling of recognition and feels it as good service at the first touch point itself. The input or instruction received from the customer at the stage is recorded in the reservation system for further reference by the hotel operations. Therefore the wheel does not get reinvented every time a standard instruction is to be followed. This leads to removal of an irritant and that ultimately leads to a satisfied customer willing to return. (Sheth and Parvatiyar,1995)

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Welcome Award – Rewarding Relationships

Welcome Award has earned the distinction of being India’s premier and most powerful frequent guest programme. The Welcome Award programme recognizes customer as a business traveler and through its strategic alliances with travel partners endeavors to build a rewarding relationship customer. As a Welcome Award member customers can earn ‘Stars’ on every aspect of their business trip…hotel stays, business entertainment, Car rentals and even air travel.

Welcome Link- Bring home the rewards

Welcome Link, India’s most popular programme for key professionals offers many value-added benefits. It is designed to help members in making reservations for their company executives. For every materialized room night booked by a member at ITC-Welcome group Hotel, points are earned that can be redeemed for a wide range of rewards. With Welcome Link, the member can look forward to many exciting promotions and prizes coming their way plus an exciting range of rewards… complimentary dining, free holidays, air tickets, car rentals and privilege shopping with Credit Card Gift Vouchers countrywide.

Sheraton Plus- The art of fine dining with a special edge

Welcome group Sheraton Plus brings the pleasures of the palate, in a truly rewarding manner. As a member, customers can savour the finest in cuisine ranging from authentic Indian, Mughlai and Chinese specialties to Continental fare in a selection of over thirty ITC-Welcome group restaurants. From a 24-hour coffee shops called Pavilion to the specialty restaurants such as Dum-Pukht, Bukhara, Dakshin and West View.

Q3 – How CRM can be effectively administered –

Customer relationship management (CRM) is more than the practice of collecting guest-centric data. It’s the art of using historical, personal and experiential information to personalize a guest’s stay while generating incremental revenue opportunities. Knowing a traveller is an avid sports fan creates the opportunity to market tickets to a game. Industry surveys show that guests are less likely to return if they experience a problem during their stay. Recording and storing of relevant database of guest history and information’s and analysis of those provides with the information to eliminate recurring problems and keep guests coming back, so to lower operating costs and increase guest satisfaction at the same time. So the most important factor is how well it needs to be handled and administrated. There has to be a dedicated team and a suitable user friendly software to help the team with the detailed records of the customer choices and preferences and all possible information’s which may require to be kept in mind always and the most important step in this has to be the constant updating of details with each minute details with each visit or contact of the guest with the hotel. Another important part of smooth handling and administration of CRM process would be to keep everyone updated and informed about the collection of information’s of each individual choices and preferences so in every point of contact the guest feels at home. (Sheth et all ,2000)

Rationale [P6]:

One can infer the present scenario of the practices and programs being followed by the leading players in this sector and the steps being followed by them to enhance customer retention, customer satisfaction and in turn, leading to enhanced profits and brand image in the minds of the customers.

Reflections [P6]:

In the true spirit of thinking outside of the box, experts at the Gartner Group believe “the most successful organizations will be those who, through innovation and focus on business effectiveness rather than merely efficiency, manage to break the mold of traditional business thinking”. Being effective is paramount. The end goal of better serving customers and enabling a high percentage of customer retention cannot be met with out creative thinking and effective planning and actions. The task of perfecting the relationship between business and customer is always on going and requires special dedication and innovation as the commerce markets.

Scope and Limitations [P6]:


To study Customer Relationship Management in the Hotel Industry. The other objectives would be to study the programs and practices of CRM employed by the leading hotels in India and to study the measures to build a better relationship between the customer/guest and the hospitality unit. Finally to conclude the findings and suggest any recommendations regarding the future growth prospects.

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Limitations of the Study

•Due to the availability of mainly secondary data, authentication of the same is not sure.

•Since the authentication of the data is not sure, the result of the project may not be precise.

•Customer relationship management is in itself a complex topic, therefore, there may be certain mistakes in the assumption

Action plan [D2]:















Topic & Title

Abstract & Keywords



Research question(s)


Research Aims & Objectives

Literature Review



Scope and Limitations

Action plan

Ethical consideration

Theoretical Framework / Methodology

Research design

Analysis and discussion

Implementation of Research project

Implementation of Research project


Recommendations and future work

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