Hotels in the Savoy Group have increased occupancy and profit by using better targeted marketing information gleaned from a sophisticated computer program.
The program, called Iolanthe, collects and analyses huge amounts of guest information. According to Sam Bodley-Scott, assistant to the managing director at the Savoy Group, the information allows the marketing team to precisely target promotions to individual sectors and afterwards check the success and profit.
Iolanthe has been installed in the group's UK hotels for the past year and in that time is likely to pay back the development costs. Bodley-Scott is unwilling to reveal the actual costs, however, he says the Savoy Group and computer giant IBM have invested a considerable amount of money and time in the program.
Guest information is taken from the existing property management system (PMS) and is analysed by the program. Business information such as room/night analysis and demand for other services is reorganised and used as a base for planning promotions.
Accessing the program
Iolanthe is accessed by a desk-top personal computer linked to an IBM AS/400 mid-range computer. The program is operated by on-screen options and a "mouse" - there is no need to touch the keyboard or remember any codes.
When the program is turned on the first screen shows a range of business information about performance trends: occupancy, average room rate, yield, room nights per market sector, room nights per sales channel, future reservations and average reservation lead times.
Also on the first screen are five options which open up the system for further information analysis including: geographic, market segment, sales channel, marketing programme and division. Bodley-Scott says examining the data in these sectors gives access to information which is crucial to planning marketing campaigns.
Most important, though, is the program's ability to keep records of the campaign throughout. This allows the manager to measure the effectiveness of the promotion. Bodley-Scott says that at the end of the promotion the Iolanthe program produces a graph showing the break even point. All the fixed costs of the campaign, the variable costs and revenue generated are shown on one graph. A quick look at the screen shows the true financial picture of the promotion.
Although he professes to fear information technology (IT), Bodley-Scott developed the idea for the program and worked with IBM on it. "There was simply no other product which could give me the marketing information I needed. But I was reluctant to hand complete control to the technologists."
Bodley-Scott's brief at the Savoy Group is to look at the business and to establish methods of improving quality and making it more efficient. That role, and the recession in the late 1980s, made him look carefully at how to improve occupancy and the bottom line profit.
"At that time many hotels were having to make harsh business decisions. Basically there are three ways to increase profit: reduce the number of staff; discount room rates; or improve marketing.
"Our hotels in the five-star luxury market make heavy staff cuts at their peril. Clients have a perception of quality and we wish to maintain that image. We have spent 100 years building the reputation that we offer some of the best hotel services in the world - but that could be lost in six months."
Cutting room rates, believes Bodley-Scott, is not the correct approach either. "People stay in Savoy hotels as a way of positioning themselves or their company. While they are delighted to be offered lower room rates, it changes the perceived value for money. They do not take kindly to seeing rates raised when demand increases."
So that left him with the one acceptable option - better marketing and added value promotions.
This is where the Iolanthe computer program came in. It helped the marketing department identify the areas and clients who offered potential growth. Specific, well timed and targeted campaigns were created for each particular sector or market.
As well as retrieving information from the PMS, the program uses data gathered by the front of house staff about customers while booking and staying in the hotel.
By using the information held in the system, Bodley-Scott says the group can now design a marketing package tailored to a precise market. It can look for the most profitable segment, find out what the clients want to do; what hotel services they use and how they book. Then knowing the lead reservation times, the promotion package is launched in the market to encourage reservations to be placed in the time the hotel wants to fill.