Pre-COVID, hotel budgeting for the upcoming year could be an optimistic exercise, even an exciting one. But this year, the fact that there is nothing normal about the new normal makes budget season feel a bit different.
For many hotel owners, balancing the evolving expectations of guests with a necessarily “shoestring” approach to hotel budgeting is the challenge. Meanwhile, other hotel brands are attempting to nail down which leading hotel technologies will help them navigate an uncertain forecast for 2021, and so merit a new line item. No matter your budgetary quandaries, contactless technologies have emerged as a leading trend and a promising solution. But how do you know which technology you should budget for – and what that financial plan looks like?
Since many of the old formulas no longer apply, we’ve put together a little guidance on the why and how of budgeting for contactless technology. At its core, an assessment of potential solutions has a few simple – and familiar – metrics. Industry leaders suggest you build it into your budget if it:
- Meets guest expectations
- Establishes industry leadership
- Drives revenue
- Creates operational efficiencies
To give you an illustration, we’ve applied this framework to digital keys and mobile check-in. Because this hotel technology is at the forefront of a guest’s hotel experience – and because it was established before “contactless” became a valuable adjective – it is an easy use case for this crash course.
What solutions inspire guest confidence and budget allocation?
With room occupancy rates down 40 to 50% this year, the hotel industry is trying to find and put their finger on the market’s pulse. One study conducted by technology provider Citron used two surveys (one conducted at the onset of COVID in February-March and another deep in the COVID territory of July-August) to measure shifting guest preferences. After querying 7,000 travelers, they found that the majority of respondents (62%) said they would prefer to check-in through a hotel app. Not only that but:
Another global study conducted by Oracle and Skift surveyed 4,600 consumers and 1,800 hotel executives to assess attitudes and outlook on the hospitality and travel industry. Not surprisingly, they found that 84% of consumers agree “that creating social distancing rules for hotel public spaces will be the most influential factor in their decision about which travel brands to choose for upcoming trips.” Further, the study found:
- Contactless payments (35%), digital hotel room keys (26%) and digital messaging services (20%) were among the top three changes that would make them feel more comfortable staying in a hotel.
- And the hospitality industry executives surveyed are anticipating and reflecting this sea change in customer experience:
- Nearly 60% were considering or already using hotel room keys activated by smartphone.
- More than 70% agreed or strongly agreed that self-service technology will be important to assisting guests while minimizing unnecessary contact.
- 67% report that they were considering or are already using self-service check-in procedures.
Meeting guest expectations and establishing industry leadership
The key to meeting guest expectations in the current moment and in the future is to leverage contactless technology solutions that give guests the choice of how much human contact they engage during their stay. Clearly, digital keys and mobile check-in are at the top of the list of guest expectations for their hotel experience right now. Moving forward, it offers convenience while also leaving ample room for high-touch service – when “touch” is again safe and selected.
These smart hotel solutions also benefit from the long arc of industry trends that have been pointing in this direction for several years. When hotel chains like Hilton and Marriott are making this contactless technology the norm on their properties (and have previously rolled out versions for VIP programs), other brands and independent or boutique hotels are far from going out on a limb to adopt it themselves.
What do mobile check-in and digital keys look like in your budget?
With few exceptions, hotel budgeting for a new technology investment constitutes more than one line item. It’s the same when budgeting for mobile check-in and digital keys. There are three components to plan for: implementation, operationalization, and subscription.
Let’s take a closer look at how to budget for each.
Implementation – For most hotels, implementation of digital keys has three parts, hardware installation, and both the internal and customer-facing software integration.
Digital key-ready locks – Deploying mobile check-in and digital keys does not have to be as capital intensive as you may think. If you already have RFID locks, you can simply upgrade them so they have digital key capabilities. OpenKey has the most cost-effective lock upgrade solution with their BLE module. You can also install new digital key-ready locks for your hotel, where again OpenKey provides options that can fit into your budget.
Once you’ve selected your locks you will need to allocate funds for installation. This line item will depend on whether you’re upgrading your existing locks or installing new ones.
Property management system enablement – Next, you need to budget for enabling contactless check-in and digital keys in your property management system (PMS). OpenKey’s digital key solution integrates with major PMS vendors and also partners with PMS vendors to deploy digital keys and mobile check-in simultaneously.
Mobile app – The last implementation expense is the customer-facing component within your hotel mobile app. This can mean modifying your existing app, developing your own app, or branding a whitelabel digital key app for your hotel. OpenKey provides all these options. For hoteliers looking for a fast and cost-effective solution, using OpenKey’s elegant digital key app for your hotel is the easiest transition to adopting contactless technology.
One benefit, budget-wise, of choosing a vendor that provides both the hardware and software of digital keys, like OpenKey, is that it streamlines the overall implementation process and costs.
Driving additional revenue – If it’s not obvious, it’s worth noting that your hotel’s mobile app is much more than a line item. It opens a direct marketing channel to your guests. A huge percentage of guests will download your app to access mobile check-in and digital key capabilities. For many hotel owners, this means they can lean less on online travel agency apps to provide guests the information about hotel property and amenities. Instead, they can offer it on their guest’s mobile device directly, branded for the hotel and targeted for the guest journey.
Leveraging the revenue-driving possibilities of your hotel’s mobile app in this new normal is critical for long term success. You have a captive audience for upselling, promotional content, even advertising for local partners. For example, 47% of travelers would be more likely to order room service and 48% would be more likely to patronize the hotel restaurant if the hotel would give them the option of ordering food via an app.
Operationalizing – Once you’ve deployed mobile check-in and digital keys and readied your mobile app, you need to roll it out for guests and hotel staff as well. When budgeting for operationalizing contactless technologies, consider how you’ll tell your guests you’re making good on your brand promise of safety and convenience.
You’ll want to update your website copy and social media profile to reflect your new guest experience and convey that you’re invested in delivering guests a safe, streamlined, and contactless hospitality experience. You’ll also want to prepare welcome emails for mobile check-in that prompt users to download your mobile app. Lastly, you’ll want to invest in signage within your hotel that informs guests of their choices to navigate your property and amenities in a way that makes them comfortable. Point to your new innovative technology, but always reinforce that if they prefer to talk directly with the front desk they can also do that in a safe, socially distant manner.
Creating operational efficiencies – While contactless technologies will be a differentiator for hotel guests in 2021, some add more layers of operational complexity for hotel management. It is important to frankly assess which solutions can be – as frictionlessly as possible – integrated into your ways of working.
Digital key solutions like OpenKey readily fit into typical front desk workflows and provide easy, intuitive user interfaces and hotel staff onboarding. And when staff is freed from managing social distance in a crowded lobby, handling check-in with limited front desk workstations due to distancing requirements, or sanitizing keycards, they can focus on providing superior customer service.
This sort of contactless technology solution allows you to be more flexible with your operations and to manage the uncertainty of the coming year. As hotel owners build operations around the contactless guest experience, the right solutions are helping them find operational efficiencies and make a stronger case for their adoption.
Subscriptions – The final concept in hotel budgeting for contactless technology is simple: it’s important to keep in mind that it’s an ongoing service. Digital keys and mobile check-in require secure cloud technologies to enable check ins, provision keys, and process payments. Vendors are able to provide these services through monthly or yearly subscriptions. Most contactless technologies for hotels follow this model.
And understandably this last part may give budgeting hotel owners pause. Given the prospect of a new, recurring line item, they may wonder: Should I budget for it this year, or wait? Well, if it meets guest expectations, establishes industry leadership, drives revenue, and creates operational efficiencies – what are you waiting for?
Ready to take the first step in your hotel’s contactless guest experience? OpenKey, the industry leader in digital key solutions, is here to help. Schedule a demo today and see the benefits for hotel budgeting firsthand.