how to maximize hotel digital key ROI

How Much ROI Can Hoteliers Make With Digital Keys?

As hoteliers explore and consider new technologies and emerging contactless and digital trends, it’s natural to first ask: What sort of return on my investment can I expect? When it comes to hotel digital key technology adoption, answering that initial question calls for a broad understanding of what is involved in the implementation process and what advantages to expect for the hotel experience.

For every hotel owner, there are a few basic elements to consider when exploring mobile keys. The first is determining how to (if necessary) upgrade hotel room locks to add Bluetooth communication capability. The other is deciding whether guests will use a universal or branded app on their mobile devices to access their hotel digital key. With an understanding of the options available to you and how they can fit into and streamline your existing operations, you can begin to see the various ways that evolving your guest room access to keyless entry can deliver a solid ROI for your hotel.

But before we dive into ways hotels realize ROI with digital keys, let’s quickly examine why hotels should invest in a keyless entry solution in the first place.

 

The Evolution of Hotel Key Systems

Plastic keycards have been a staple of the hotel business for decades.  In the 1980s, standard metal room keys were replaced by plastic magstripe keycards across the hospitality industry. But though magstripe keycards, or swipe cards, proved to be relatively cheap, they are prone to demagnetization, driving guests back to the front desk for replacement and disrupting their hotel stay. And any hotelier will concede that is a significant customer service issue. 

The next wave of innovation in access technology for the hotel industry sought to address that pain point. In major brands and independent hotels alike, RFID hotel locks and keycards rapidly replaced the old swipe card reader hardware, providing a more dependable room entry and access experience, but at a substantially higher hotel key card cost. And that cost often impacts guests. Whereas most hotels aren’t concerned whether or not a guest returns the magstripe keycard at check-out, many will charge guests a fee when they fail to return an RFID keycard.

In the 2010s, yet another innovation in hotel access systems was being adopted by major hotel brands to a warm reception from guests. Back in 2014, Starwood began to pilot Bluetooth-enabled keyless entry in its Aloft brand as a premium guest services amenity and a means of driving membership in its SPG loyalty program. And when it provided a frictionless user experience, hotel guests loved it. When Marriott acquired Starwood in 2016, the mobile key program was mandated across their global portfolio. Not long after, Hilton adopted the same strategy to build up their Rewards program membership. 

Today, these same hotel groups have been joined by other leading hotel operators to provide digital keys to all guests as part of a global push for contactless check-in and guest services.

 

The Value of a Competitive Advantage

Of course, this rapid shift to a contactless experience and hotel digital keys was also led by the desire of travelers for an expedited check-in experience using their smartphones. Hotels leveraging mobile keyless entry gain a competitive market advantage by recognizing guest needs: 49% of hotel guests prefer staying at a property that offers tech engagement via smartphone to improve their customer experience. And a full 62% of guests would prefer to check-in and out through a hotel app. 

That being said, there are additional reasons that hotel operators across the hospitality industry are increasingly adopting digital key solutions:

  • Greater guest convenience with mobile check-in and mobile check-out
  • Increased guest security with multi-factor key authentication of digital key technology
  • Improved guest online hotel reviews (on average a 7 point improvement)
  • Ability to feature hotel amenities and drive revenue on mobile key app
  • Enhanced guest and staff safety by eliminating keycard handoffs and minimizing in-person interactions
  • Guests enjoy ‘straight to hotel room’ privilege and easier physical distancing
  • Hotels benefit from environmental credits by reducing plastic usage and waste

hotel digital key satisfies guests

 

The Cost of Unsatisfied Guests

In addition to their advantages, digital keys also help hotels avoid unnecessary costs. Namely, the cost of not meeting guests’ expectations for their stay. As mentioned above, guests are asking for convenient, contactless services they can access on their mobile devices. Keyless guest entry allows hotels to offer remote check-in as well as send a secure hotel digital key directly to their guest’s smartphone prior to arrival. 

Of all the digital key features that draw the attention of hoteliers, the ability to allow guests to skip the front desk is the most attractive. Why? Waiting for check-in is one of the most common complaints from American travelers. In fact, it’s been reported that a wait as short as five-minutes causes average guest satisfaction to drop by 50%.

Hoteliers are also increasingly recognizing the importance and impact of hotel digital key technology with millennial guests, and are looking for efficient ways to cater to this lucrative demographic. In 2017, nearly half of hotels planned to make significant investments in new hotel technology, with over a quarter specifically considering an upgrade to their door locking systems, which sets the stage for the transition to mobile keyless entry.

 

To Put It In Numbers

  • Nearly 2/3 of travelers prefer to use their smartphone as their room key.
  • Mobile key technology saves hotels an average of $1,000 per month in discarded RFID keycards.
  • Using a digital key solution can decrease front desk wait times by 40% or more.
  • Guests that use mobile keyless entry rate their stay on average 7 points higher on social media.
  • 70% of consumers are more willing to stay at hotels that implement contactless check-in procedures.
  • 73% of guests would opt to download and use an app to access digital key capabilities for their hotel stay.

 

A Caveat: Digital Keys Aren’t Always Cheaper

Given the value and benefits hotels experience following an upgrade to mobile keyless entry, it’s easy to assume that simply upgrading to hotel digital keys will result in a sharp cost reduction. And from a purely financial perspective, any hotel manager comparing digital keys to plastic keycards will see a better ROI if they use RFID keycards. 

But plastic magstripe keycards, on the other hand, will continue to be the cheapest form of room access in hotels for the foreseeable future. This is mainly due to the fact that many hotels sell the back of the magstripe keycard for advertising in exchange for a free supply of keycards. That said, most digital key mobile apps present opportunities for hotels to advertise their own amenities, so this feature could potentially be leveraged for the same purpose for partner businesses should that be financially advantageous for the hotel. 

 

How to Choose the Right Hotel Digital Key Option for the Best ROI

The general return on a hotel’s investment in a digital key solution can be further maximized with the right selection of implementation options. To determine the best fit for your hotel, you’ll need to consider both the hardware and software components of keyless entry systems:

Hardware: For hotel digital keys, guest room doors will need BLE-enabled locks. For hotels that already have locks with this capability, they need only implement mobile key software. But for those hotels that do not yet have BLE-enabled locks, they have two options. They can install new locks, or upgrade their existing RFID locks. For the latter option, solutions like OpenKey’s BLE Module are cost-effective and easy to install.

Universal BLE Upgrade Module Install from OpenKey.

Software: When it comes to implementing the software, there are yet more options. For the mobile app that guests will download from the app store and use to access their hotel digital key, hotels can opt for one of three approaches: a universal app supplied by the digital key provider, a branded version of that app, or the mobile integration of digital key functionality into the hotel’s existing app. 

The backend of the digital key software, which hotel staff will use for guest room access control and management, also has options. Hotels can either use the key management system generated by the digital key provider, or integrate hotel digital key management into their existing PMS. 

Each of these several options – for both hardware and software – will have a different price point. But keep in mind, the least expensive set of options won’t necessarily yield the best ROI. Rather, a solid ROI follows your choices for hotel digitall key implementation that best fit within your customers’ journey and hotel operations. 

Ready to invest in digital keys and realize the benefits for your hotel? OpenKey, the industry leader in digital key solutions, is here to help. Schedule a demo today and see how hotel digital keys will add value to your guests’ experience and your business.