Impact of CRM implementation on hotel efficiency: Evidence from the Slovenian hotel sector

Managers know that it is easier to get business from existing customers than to attract entirely new customers. Many firms therefore aim to form deeper and stronger relationships with their customers in order to increase loyalty and repeat purchases. A central concept in this regard is customer relationship management (CRM). However, while previous research shows there are benefits attached to forging closer ties with customers, there are also some costs involved. Yet, very little research has investigated the central question of whether CRM endeavours are an efficient use of a firm's resources. In this paper, the authors address this gap and investigate the effect of CRM implementation on the cost and technical efficiency of hotels. They find support for the hypothesis that while CRM increases technical efficiency, it decreases cost efficiency. The authors discuss the managerial implications of their findings and provide directions for future research.