Management Information Systems
Ted Teng has two specific problems going forward in his management of Wyndham International. First, Teng must find how to extract more value (revenue and ultimately profitability) from the ByRequest system. Second, Teng must address how the company will maintain a competitive advantage with ByRequest. Analysis The ByRequest program was launched after a careful analysis of customer preferences and allowed Wyndham International to carve out a unique strategy for a sustainable competitive advantage.
Wyndham was able to change its organizational structure before implementing ByRequest by consolidating its franchises and owning over 75% of the properties. It was also able to consolidate its IT infrastructure (unlike the competition) which was very essential for a program like ByRequest to deliver any value. Wyndham also hired new managers and provided training to the hotel staff and integrated the ByRequest system into its corporate strategy. The program is an ambitious initiative to deliver value for the customers and is not without its risks.
The risks of not implementing the idea correctly are detrimental to Wyndham in the highly competitive hotel lodging industry. The program allows for analyzing customer specific data to tailor the experience for each customer. Wyndham has to be very careful in storing and
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Exhibit one of the case demonstrates that revenues since ByRequest has been implemented have actually dipped (possibly attributed to divestiture of non-strategic hotels). Cost of goods sold has increased slightly as a percentage of sales. Further members only contributed to 9% of sample revenue in 2001 as indicated in Exhibit A. 2002 financials aren’t known but member revenue as a percentage is expected to be much higher than 2001 judging from exhibit twelve. Recommendations Wyndham should be doing more with its new system to derive more value.
Like Harrah Hotels, Wyndham should be using the system (through data mining) to attract and retain customers through incentives beyond the walls of the hotel. They should use the system to fully understand what incentives draw customers back after the initial visit and understand which customers drive the most profitability. Wyndham executives are pursuing a greater membership without fully understanding which type of members are the most profitable. To sustain the competitive advantage provided by this CRM initiative in the long term.
Wyndham should continue to define its business model away from the prevailing business model of the lodging industry. It should continue to acquire more hotels and should aim for 100% ownership of its hotels. It should also remodel all the hotels to provide a standardized lodging experience to its customer no matter where the customer is. Wyndham should also invest heavily in retaining trained staff in the high turnover lodging industry to make sure it captures the learning curve benefits of a trained staff. The more experienced Wyndham staff will be in using ByRequest, the harder it will be for the competition to catch up with them.
Wyndham should also look into providing more value added services to business customers and marketing these services effectively. These can include the communication needs of their business customers. They should also focus on making Wyndham the hotel of choice for business meetings and conferences. The system can also be used for defining preferences for whole companies and groups of business travelers. Wyndham can also derive value by partnering with other companies like car rental companies, leisure service companies etc to provide customized services to its customers.
It can provide discounts or attractive rates for these external services to its ByRequest members. Implications of recommendations To use the data effectively and launch an effective data-mining program, Wyndham would require additional resources devoted to the analysis of data. As the number of ByRequest members increases, the amount of data and hence the resources needed to mine the data will increase too. This might be a challenge given the current financial situation of the company. This would also be true for a sustained marketing campaign that is also required.
Marketing resources for the program are needed to have a wide appeal among its target customers. If the value of the ByRequest program is lost on its target customers, the built momentum will be wasted. Wyndham has decided to use technology to effectively service its customers. This commitment will require additional investments in technology to always stay ahead of the curve and bring technologically advanced services to its customers. These will require additional partnering with software, hardware and telecommunication vendors. Wyndham will have to also concentrate on technology apart from the other challenges of the lodging industry.