Data-Driven Hospitality - InformationWeek

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7/30/2004
11:15 AM
Tony Kontzer
Tony Kontzer
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Data-Driven Hospitality

Hilton's customer-data system tells the people who need to know who the best--and occasionally the worst--customers are

John Fiorendino, a classic road warrior who spends more than 200 nights a year on the road as senior director of global business development for Hitachi Data Systems, is very clear on what it is hotels still get wrong. His short list: coffee that tastes like yesterday, desk chairs that double as instruments of torture, and shower curtains covered with grime. Business technology might not seem to have a role in preventing slimy shower curtains. But there's much within the hotel industry that stretches the mind--such as the fact that Hilton Hotels Corp. has learned that customers are more satisfied when they have a problem and the hotel staff takes care of it than if the stay goes flawlessly.

Hilton CIO Tim Harvey, seated, with Chuck Scoggins, senior director of Hilton.com. Photo by Brad Jones.

"The hospitality industry is a people business," says Hilton CIO Tim Harvey, seated, with Chuck Scoggins, senior director of Hilton.com.

Photo by Brad Jones
Giving hotel staff the information to make those critical recoveries--like knowing just how precious a John Fiorendino is and making sure that, at the very least, he doesn't have two straight nights in a creepy shower--is the reason for being for CIO Tim Harvey and the rest of Hilton's IT team. It's also the reason Hilton, during one of the industry's worst downturns in decades, piled $50 million into a custom-built customer-information system that since late last year has been integrated to cover 22 million guests in every property across eight brands that Hilton owns. "The hospitality industry is a people business," Harvey says. "It doesn't do any good to have great customer information that's only in the reservations system and available to the call center. We need to have it common across all systems."

Hilton is putting its customer-information system, called OnQ, to the test in a high-stakes expansion program. As the industry regains momentum, Hilton is opening 125 hotels this year and an estimated 150 in 2005. OnQ is the IT centerpiece of a 2-year-old Hilton customer- relationship-management strategy, officially known as "customers really matter," though company wags prefer "customers rejecting Marriott," Hilton's chief rival and the only other hotel company expanding at such a pace. The strategy is pinned on the idea that employees with a clearer idea of who customers are and what their past Hilton experiences have been can engineer constant improvement.

There's plenty of risk in the strategy. For one, Hilton needs to present its deep customer histories clearly enough that employees at the front desk, where turnover averages more than 100% a year, can put it to use. And Hilton is trying to use the integrated information system, combined with its HHonors frequent-guest program, to build loyalty with customers across an incredibly diverse mix of eight hotel brands--so the same customer is recognized checking into a $79 room at Hampton Inn in Davenport, Iowa, or a $540 suite at the Hilton Hawaiian Village in Honolulu.

When Fiorendino recently arrived at one of the Hilton properties he frequents most, the Doubletree Hotel in San Jose, Calif., front-desk manager Sheila Santos entered his name, was prompted to welcome him, and confirmed that the room he was getting based on his preferences in OnQ was what he wanted. Santos then asked him if he wanted to get frequent-flier miles for his stay--something OnQ can do for just about any airline. He provided an account number, and the miles were his. Next year, Hilton expects OnQ to help drive more revenue per visit, such as letting Santos sell restaurant reservations or tee times or concert tickets. Or it may let Fiorendino check in by himself at a kiosk.

OnQ might even make the high-stress, high-turnover front-desk jobs more appealing. Santos says it eases the pressure by speeding up a variety of check-in tasks and makes it more likely that she can give customers what they want, making the job more rewarding. "It has made me as a front-desk manager and desk clerk much more efficient," she says.

A lot of love and sweat went into building OnQ, a system that's about 70% custom-coded. The custom components, many of them written in Perl, include a property-management system, the CRM application, and a hotel-owner-reporting module. The 4 terabytes of customer-profile information are managed in an Informix database from IBM, and all the pieces are integrated with a Pegasus Solutions central reservations system, Newmarket International's Delphi sales-force automation tool, a modified legacy revenue-management system, PeopleSoft financial and human-resources apps, and its E-commerce site, Hilton.com.

The system is delivered as an IT service to the franchise-dominated chain. Hilton owns just 52 of its 2,216 hotels, and franchisees license the software, paying Hilton annual fees that work out to about three-fourths of 1% of a hotel's revenue.

A key measure of success for Hilton is share of wallet--of all the money a person spends on hotels, how much goes to Hilton? One of the main values OnQ delivers is establishing the value of a customer to Hilton based on personal history and on predictive modeling of the business the person is likely to do. The extra attention to VIP customers has been paying off: Among its 6 million most-valued guests, Hilton says, the percentage of their spending on hotels in one of Hilton's eight hotel brands grew from 40% to 61% over the last two years, coinciding with the "customers really matter" strategy and rollout of OnQ.

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