Travel Industry Set To Capitalise On Customer Relationship Management

26th Nov 2001

For many years CRM has been a hot topic in business, but until recently this interest has not especially concerned the travel industry. More recently the travel sector has been increasingly preoccupied with the Internet. However CRM has now been brought to our attention as a priority.
There is no factual definition of Customer Relationship Management, although ‘CRM’ has embedded itself within the collective consciousness of the business community. Some common elements include:

 It is a business strategy that is enabled by technology, not just a technology solution. This means that companies cannot “do” CRM, just by buying an off-the-shelf software application.

 It involves gaining and retaining profitable customers.

 Customers must be managed throughout all of their interactions with the company to maximise profitability

At the beginning of 2000, it might have seemed unthinkable that any single technology related issue could be as important to the travel industry as e-business. Today, however, the travel industry’s past preoccupation with Internet projects is being challenged by a growing interest in CRM.
KPMG, the global professional services firm, commissioned a report that was launched at this year’s World Travel Market. According to this international report, over 80% of travel companies see CRM as essential for the success of their business.
Furthermore, travel companies agreed that the need for improved customer retention and more strategically focused customer acquisition is more crucial than ever given the current economic climate.


The results of the survey were drawn from a cross section of travel and leisure companies in the US, Europe, and the UK. The main findings were as follows:

 Over 80% of travel companies see CRM as key to success of their business.

 CRM and the Internet are now the two biggest priorities for the travel sector.

 Mid-tier travel companies will demonstrate the most dramatic growth in CRM investment in the future. This sector is set to double its spend on CRM in 2002, as Mid-tier companies face increasing competition for customers from the largest travel groups.

 Travel companies view CRM as a long-term investment, not just a quick-fix solution. The majority of companies believe that it will take up to 24 months before significant benefits are gained from CRM initiatives.

Nick Pattie, Director of hospitality at KPMG said: “As a whole, the travel industry has recognised that CRM works best when it is integrated as part of a company’s overall business strategy, rather than bolted on to existing technologies and processes. The travel companies who will benefit the most from CRM programmes are those who will be able to maximise their understanding of their customers changing needs, and subsequently increase revenues, whilst managing their cost bases”
An issue that was raised at WTM was the poor level of attention given to customer service within CRM programmes. Despite companies claiming that customer retention was a major priority for their businesses, it seems that less than a third of these companies have actually extended CRM projects to cover customer service operations.
It has been predicted that Companies will find it difficult to gain a full picture of their customers since data is collated in a variety of disparate systems that could prove challenging to format.
 Over 50% of travel companies still hold customer data in a variety of isolated databases, supplemented by large volumes of paper records.

 30% of the largest companies still keep some customer records in paper format.

 On average, customer service accounts for less than 20% of the travel sectors CRM spend

Nick Pattie stated: “In the past, the travel sector primarily thought of CRM in terms of sales and marketing - or as gaining, rather than gaining and retaining customers. However, many travel companies are now developing far more sophisticated CRM strategies that take into account the potential for a customer to generate revenue even after their initial transaction has taken place. This can be either directly, or through incentive driven referral programmes”.



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