A guest checks into one of the 10 Manhattan East Suite Hotels in Manhattan, requesting a nonsmoking room with a king-size bed and a copy of The Wall Street Journal.

Two weeks later, that same guest checks into a second Manhattan East property where the desk clerk pulls up the customer's information and tells the guest that the hotel has a nonsmoking room with a king-size bed available. The next morning, a complimentary copy of The Wall Street Journal is left at the guest's door.

Magic?

No, it's MAGIC or Marketing and Guest Information Center, our customer relationship management program that is a unique combination of integrated property management and guest database systems, training programs and operational procedures.

At Manhattan East, we have a unique product ­ 10 family-owned hotels in Manhattan, ranging from 80 to 522 suites ­ each featuring spacious accommodations and fully equipped kitchens. In 1997, we merged our 10 reservations departments into one dynamic reservations sales center. The benefits were significant, but the centralization process removed a great source of customer knowledge from our hotels, creating guest recognition and service delivery issues which could not be addressed with our existing tools.

Another database marketing issue was lack of in-house access to our existing guest database. We had been utilizing a database management company based in California, making information retrieval a slow and cumbersome process.

The new guest database system had to perform three important functions: enable us to identify repeat guests at any of our 10 properties to personalize their stay regardless of whether they were part of an existing loyalty program, develop a new guest loyalty program and create a clean database for strategic marketing purposes.

To achieve this, the system needed to be both accessible and usable by employees in marketing and other functional areas, have a two-way interface with real-time systems (e.g., property management and central reservations systems already implemented) and be accessible to all properties.

These were ambitious goals, but our executive team members enthusiastically supported the project. A critical advantage was that CLS, the property management system used exclusively throughout the company, allowed all information to reside in a single location, accessible to all users.

The risks were as clear as the potential benefits. Because functionality was new and untested, we could end up in a technological dead end. If that happened, the loss of time and money would be significant ­ months of employee man hours and at least $535,000 for the start up, covering purchase of new hardware and software, PMS enhancements, consulting fees and training.

The decision was made to proceed. A cross- functional management team, along with our consultants, Alliance Solutions Group, chose Group 1 Software's DM1 customized system for implementation at our corporate headquarters. We selected the Lanham, Maryland-based company because they offered a customer relationship marketing solution that met all our criteria.

Their solution combined the benefits of a traditional marketing system with complete systems integration, allowing us to identify guests in a unique way. The solution was fully integrated into our technology including Cognos, our business intelligence tool. MAGIC relies on two-way communication between our centralized CLS/PMS/CRS platform and the Group 1 designated database marketing product. Not only are guests profiled with each stay, but the data captured allows us to attend to guest needs and preferences during that stay and on future visits.

The technology provided cleansed and reliable data back to the PMS' guest history file, the ability to automate a two-way flow of data between the property management system and the DM1 data marketing system, the capture of erroneous addresses and a method to correct the address data and re-import the corrected customer information back into the system.

In April 1999, MAGIC went into effect. Our success was due to the centralization of the information, top-management commitment and having stakeholders from all functional areas involved in the process from the beginning. We developed a 12-week incentive program, encouraging employees to earn points for the completion and accuracy of guest information entered into the database. Prizes included trips to Walt Disney World (the "Magic" Kingdom), a Volkswagen Beetle and $15,000 in cash.

Our investment quickly began to pay off. We have increased guest loyalty through recognition of repeat guests, and we will be able to leverage extensive customer knowledge by developing more effective and targeted direct marketing programs. Two promotions early on generated $205,000 in incremental business, and an ongoing promotion is projected to add another $50,000.

Our greatest ROI is the improvement in the quality of the information residing in the database, which helped us increase the response rate on direct mail campaigns. Customer service has also improved due to the increased accuracy of information captured. Overall, guest satisfaction has showed a five percent increase, and hotel service ratings have improved by nine percent.

The primary lesson we can share is: Knowledge, knowledge, knowledge will replace location, location, location as a source of competitive advantage.

Group 1 Software DM1 is an open architecture suite of integrated database marketing products that can be tailored to an organization's specific requirements. Available via ASP or as a fully customizable package system, DM1 integrates Group 1's customer data quality solutions and third-party technologies from industry leaders such as Oracle, Cognos and MapInfo. With its ease of use, DM1 is a database marketing solution designed for marketers.

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