This article provides facts and figures to understand and calculate potential cost savings for the hotel industry.
Where are we with mobile room key deployments today?
Smartphones have entered most businesses across regions and markets. In the hotel industry, smartphone usage started with loyalty apps. It was a welcomed device to reach out to guests, get closer to them and improve the overall experience for a stay. Whether browsing hotel photos, maps, city guides or making special requests for early check-in or a different pillow, apps entered the hotel market already and are used by guests today.
Guest convenience, branding and potential cost savings are usually key drivers for the chain¡¦s decisions towards their own app. With the introduction of hotel apps, chains continue their search for content and services to increase the usage of their apps.
It was therefore no surprise that hotels started to look for mobile room key deployments in order to enrich their apps. Receiving room keys directly onto smartphones allows guests to go straight to their room without queuing at the reception to check in. The necessity of searching the key card when accessing the elevator or the room would belong to the past. Mobile room keys are therefore recognized as a significant improvement for guest experience.
To deploy room keys onto smartphones, smart watches etc., hotels need to align some of their existing systems and technologies:
- Property management system must be able to process room reservations for remote check in procedures
- Hotel back-end system must be able to process and submit mobile key requests
- A new system is needed to execute over the air deployments of room keys
- Mobile app or existing loyalty app of the hotel needs to be able to receive a mobile room key and unlock a room
- Hotel lock needs to be able to process a Bluetooth Low Energy (BLE) command next to a regular key card
Usually, these steps are executed by the technology providers hotels are using today. This way, the actual integration for an individual hotel is fast and painless. Once the technology provider has integrated its back-end system with a mobile key delivery service and the chain has integrated a simple App SDK into their existing hotel app, any of the chain¡¦s properties can start issuing mobile room keys, assuming that they have upgraded their room locks to BLE. Then, upgrading a property from RFID or magnetic stripe locks to BLE is only a matter of a few days.
Large chains like Hilton and Starwood have officially announced their commitment towards mobile room keys and started to upgrade hotel after hotel. It is probably safe to say that all other chains are currently testing mobile solutions and soon announce their go to market plans for mobile room keys. LEGIC on its own is currently involved in a number of proof of concepts, trials and roll outs with several major and medium chains. The mobile topic is dominating the hospitality industry and we see a constantly increasing demand.
What explains the massive demand for mobile hotel solutions?
Besides branding possibilities through the hotel app and the improved guest experience, potential savings are significant and often encouraging the hotel to go for mobile solutions. Whereas everybody sees saving potentials, until now, no calculation model has been available to get a first impression about the possible saving aspects.
To calculate the potential cost savings through a mobile room key system, major cost saving items need to be considered. Cost savings / benefits result out of…..
- less consumption of traditional room key cards
- increased direct bookings without any online travel agent involved
- staff savings at the reception
- additional room bookings thanks to improved guest experience
The benefit for an individual chain or hotel vary of course and depend on the hotel type. A luxury property with high average room costs and predominantly business guests can save more costs than a typical holiday hotel.
How much money could hotel chains possibly save?
To calculate the potential individual cost savings, LEGIC provides a free calculator. Interested parties can calculate their benefits (over three years) free of charge and anonymized. Please visit www.legic.com/hospitality/en.
Cost savings can be significant: a hotel chain with 10,000 rooms worldwide, an utilization of 70% and the assumption that only 15% of their guests would be using mobile keys in the first year could save around 1,2 million USD in the first year or 120 USD per lock and year. The annual lock saving costs will increase with the increased usage of mobile room keys. With a 20% usage in the following year and a 25% usage in the third year, cost savings would go up to 177 USD per lock in the second year and 258 USD in the third year.
The LEGIC calculator also compares the cost savings for the use of alternative and more secure room key cards. Here the savings could be between 11 and 20 USD per lock and year. In a fairly conservative scenario, such a chain could save over 6 million USD in a three year period.
Of course, there will also be investments for the hotels, which are not considered in the calculation, but once a hotel understands how much it will be a able to safe, it is evident how much it can afford to spend for a solution.
In most cases, the hotel could break even in the first year.
Using the LEGIC online calculator allows you to generate a PDF with your numbers and discuss the relevance and likelihood of achieving such results internally.
What to consider when migrating towards mobile hotel solutions?
We encourage hotels that decided towards a mobile solution to consider other potential cost savings and system improvements that go with their mobile enablement. Keep in mind that a Bluetooth enablement for your hotel locks means changing the lock or adding a module. In both cases, you have to get an engineer in front of the lock. In many issues, you could possibly kill two birds with one stone and upgrade your lock with a reader that can read all Mifare cards (Classic, Plus and Desfire) and other key cards that could save you money.
We recommend to keep the following topics in mind:
- Make sure a mobile solution scales up to 10 thousands of properties for different chains.
- End-to-end security, a high availability design of the solution and professional hosting in a secure data center are typical key success factors.
- Easy upgrade of existing locks, e.g. magnetic stripe locks could be upgraded to BLE and RFID locks in one.
- Locks should not be restrained to only one technology. Hotels should be able to switch from a mifare card to another and save costs as well as improve security.
LEGIC’s role in the hotel industry
LEGIC Identsystems Ltd is an independent organization that does not directly provide solutions to the hotels. We work together with over 250 partners in the contactless chip card industry. Some of these partners provide solutions to the hotel industry. Every day, millions of people use technology that is designed around LEGIC components, standards and services. Just like a chip set in a computer, these components are usually invisible to the end user. End customers like the hotels benefit from LEGIC solutions as they are interoperable, secure, highly flexible and simple to deploy. As a provider of standards, base technology (transponder chips and reader chips) and trusted services, LEGIC works closely with these partners enabling them to deliver best in class technology. Through the work of many partners, we gain industry expertise and market knowledge that was shared to some extent in this article.
