Mr. Kasavana

Mobile Technology

Mobile Technologies and the Hospitality Industry: Creating a Mobile Strategy

By Michael Kasavana, NAMA Endowed Professor, School of Hospitality Business, Michigan State University

When considering mobile technologies, many hospitality managers are not convinced of the potential benefits resulting in enhanced guest engagement, improved customer satisfaction, and increased consumer spending. The common goals of mobile technology implementation are acceleration of guest traffic, heightened interactivity, promotion and sales of goods and services, and gathering of feedback relative to the guest’s experience.

Mobile services include special website configurations, fluent marketing campaigns, location-based activities, digital couponing, and point-of-sale settlement. Currently, the fastest growing segment of m-commerce service is mobile payments featuring cashless and cardless payment platforms. If not already in place, hospitality management should consider business payment choices of coin and currency, credit and debit card, and mobile options.

Why a mobile strategy?

According to Mobilize Worldwide, a leading developer of mobile applications for promotional e-campaigns, interactive websites, and related marketing media, there were two-hundred and seventy-one million mobile device service subscribers in the US as of May 2011. This data equates to approximately eighty-two percent (82%) of US adults owning a cell phone of which thirty-one percent (31%) were classified as a smartphone. According to the company’s extensive research, twenty-five percent (25%) of Americans rely on a mobile device to access the Internet, as opposed to a desktop computer, and ninety-five percent (95%) of mobile devices are capable of transporting multimedia messaging service (MMS) and/or short message service (SMS) such as text messages. Interestingly, the data indicates that ninety percent (90%) of text messages are read within three minutes of being delivered. Also discovered was the fact that seventy-nine percent (79%) of smartphone users use their phone for shopping and seventy-four percent (74%) of those shoppers make a purchase as a result of smartphone searching. According to Pew Research, more than half of all mobile phone users rely on their portable device to find information on local hotels, and restaurants. With the steadily increasing volume of mobile network users, now is the time for a hospitality business to go mobile!

Mobile Services

A consistent mobile service is dependent on a reliable platform for effective delivery. The two popular technology platforms for applications being iPhone-based and Android-based. The menu of mobile technologies for the hospitality industry typically includes:

Mobile Website

Standard website formatting does not ensure that a web page will be viewable on a portable device with fractional screen dimensions. Given that web pages are typically configured for desktop-sized display screens, smaller screens found on portable devices provide significantly less viewable space for content and thereby discourage lengthy documents. The speed of webpage loading (server side) is also an important consideration as slow mobile data transference likely will result in poor pagination and/or content display. Additionally, mobile device user input formats (touch or keyboard) have restricted capacity for data or response entry (client side). As a result, navigation and dialogue formats at the mobile website are often streamlined, specific, and simplified. Web-capable mobile devices often play a central role in a successful m-commerce strategy.

Mobile Marketing

In-store and online purchases can be directed, promoted, and distributed by mobile media. In addition, mobile marketing can occur on an opt-in or opt-out basis. For an opt-in program (e.g. Groupon, LivingSocial, etc.) the user enrolls or registers with a web entity dedicated to distributing special deals, opportunities, savings, or benefits to the user. This can be done on a free-to-end-user (FTEU) basis or on a fee basis. In either case, the user chooses to participate. This is unlike an opt-out program in which the user serves as an involuntary participant until the time of disenrollment, cancelation, or unsubscribe notification. Mobile marketing messages originate on a messaging platform and may be sent on a one-time or recurring basis. Mobile marketing evolves into viral marketing when content delivered via text messaging is shared or forwarded to additional users. Mobile marketing content is often divided into alerts, coupons, calls to action, chat sessions, contests, polling, voting, and peer-to-peer gifting.

Mobile Location

Identifying marketing programs, coupons, and other location or time dependent services are possible given the auto-identification of device locators (GPS tracking). Location awareness is becoming a highly important consideration, and advantage, to evolving mobile applications. Location algorithms depend on either spatial information or infrastructure coding to locate a portable device’s current position. Location-based services (LBS) vary from check-in services (e.g. Foursquare and Google Places) to locator services (pocket guide) to couponing services, to rewards programming to flash deals notification.

While critics do not always agree on what makes an effective LBS campaign, deal based solutions (e.g. discounts and specials) and locator solutions (e.g. nearest restaurant or hotel) tend to be the most popular LBS formats for hospitality industry practitioners.

Mobile Couponing

Digital discount displays, QR codes, bar codes and an array of additional iconic expressions can be used to create m-commerce deals and rewards. Mobile coupons can be found on websites, through web advertisements, received via email, pushed by opt-in programs, or available through related digital media. The difference between a traditional printed coupons and mobile coupons is that m-commerce features a ‘call-to-action’ (e.g. click here, download now, etc.) and instructions for coupon redemption, regardless of the user’s interest.

There is an opportunity for interactivity and attention-grabbing alerts and promotions. Mobile coupon programs can involve multiple entities including product manufacturers, distributors, franchisors, and/or co- retailers (each sharing in the financial success of the promotion) or a single company serving as both issuer and redeemer of the coupon. Both formats are popular in the hospitality industry.

Mobile POS

A cashless, cardless transaction platform built on Near Field Communication (NFC), or a comparable, technology platform is rapidly becoming a force in the POS marketplace. The recent release of the Google Wallet and iPay Mobile, for example, illustrate the growing demand for portable device-based settlement (including iPad). A mobile POS system presents many advantages to settlement as transactions are closed in sight of the guest, the system can be seamlessly connected to the property’s back office system, and reconciliation is accomplished in rapid access. While system security is always a constant consideration, mobile POS devices have been shown to be highly effective, lower in cost, and faster in account resolution.

Despite some of these noted shortcomings, mobile devices have become extremely popular with steadily increasing applications and capabilities. The main advantages of mobile marketing revolve around the personalization, portability, and connectedness of the mobile network. These factors can play a prominent role in the marketing efforts of hospitality businesses.

Hotel Examples

This past fall, Loews Hotels launched its mobile website containing location awareness features (www.loewshotels.com/m). The website thereby became viewable on all portable devices and touch-screen friendly to enable property searches and reservation creation through the Loews Hotels’ mobile booking engine. The application is also capable of auto-identifying the GPS position of the device and the company is striving to provide more readily available information to existing and prospective hotel guests at the time, and place, it is most needed. The addition of a location awareness capability helps promote the closest property to a guest’s current proximity. For example, a mobile device inquiry from mid-town Manhattan will automatically receive a prompt to book the Loews Regency Hotel while promoting special deals and packages. This geo-aware capability also provides streamlined data handling while personalizing guest transaction details.

In November 2011, Motel 6 launched an Android-based application to parallel its mobile iPhone application. This app provides a convenient way for Android users to search and book rooms at more than 1,100 locations in the US and Canada. Motel 6 claims it has provided more than 25,000 mobile app downloads from its iPhone platform since its release in June 2011 and anticipates similar requests and corresponding revenue generation from its Android exposure. Similar to Loews Hotels’ application, Motel 6 relies on smartphone GPS recognition to locate the nearest property, with available accommodations, as well as a search engine alternative activation (based on geographic specification). Once an acceptable Motel 6 property is located, the mobile application displays property-specific details (e.g. amenities, policies, photos, and rates) as part of the reservation process. The application also enables guests to create a Motel 6 profile for monitoring and tracking account information and upcoming reservations.

Restaurant Examples

Perhaps the first company to originate a mobile technology strategy was Starbucks. The company has been able to effectively use this technology for product branding, customer acquisition, and retention/loyalty. One of the firm’s latest initiatives is the implementation of the Pandora’s iPad application, featuring a mobile Internet radio platform designed specifically to target consumers across a broad range of market segments. With this Starbucks iPad advertising campaign, the user can click a feature in the advertisement that launches a linked musical interlude thereby providing musical accompaniment during brand exploration. This form of advertisement, for example, was applied to promote the company’s “however-you-want-it” Frappuccino drink. Clicking the ad led to a landing page that included a short, frenetic video advertisement for the product’s promotional campaign. The video contained a clickable graphic that was integrated with a database enabling review of previous visitor drink recipes (www.frappuccino.com). The campaign dovetailed with a Starbucks online campaign on Pandora’s Web site, which allowed music lovers to design their own drink, then generated playlists based on the beverages selected. In this case, a somewhat complex mobile technology strategy worked more efficiently and effectively than would appear at first blush.

Similarly, Starbucks involvement with Loopt Star’s mobile social networking rewards game enabled both iPhone and iPad users to complete with friends to earn brand-specific prizes by checking into select locations. For example, the customer who checks into any individual Starbucks unit the most becomes the “Honorary Barista” of that Starbucks; or the the Frappuccino Happy Hour promotion in which a location-based multichannel campaign offerred discounts to consumers who professed brand loyalty on various social networks. These examples are among a wide array of mobile technology campaigns Starbucks has sponsored over the past several years in an attempt to link real-time consumer experiences with online communities. The company’s stated goal being to gain a high-level of connectivity and engagement with its customers through mobile technologies. Starbucks also is a leader in mobile payments and loyalty programming with its Starbucks Card Mobile application.

Buffalo Wild Wings Grill and Bar employs mobile marketing strategies to obtain a high level of customer satisfaction. The company attempts to reach its customer base through a variety of communication channels. A recent campaign dealt with URClients, an integrated text, email, and voice messaging software product from Tega Technologies. This program required Buffalo Wild Wings to create a Mobile Loyalty Club composed of its current clientele but with incentives to attract prospective new members. This approach featured a simplistic registration process and identification of preferred method of communication. Once the database was populated, key data elements (e.g. birthday, favorite sports, preferred dining days and times, etc.) were highlighted as a basis for individualized market campaigning. In order to motivate customers and prospects to opt into this mobile loyalty club, the company offered a discount coupon sent immediately by text message at the time of registration completion. The club strongly promoted on-site with each restaurant server presenting the loyalty club program, and its benefits, to every customer along with the eatery’s daily specials. The campaign was a success as evidenced by increased sales revenue, stronger attendance at special events, and an extensive set of repeat customers.

Buffalo Wild Wings also applies its mobile marketing strategies through a diverse set of initiatives including a geo-social campaign. The company relies on an application called Scvngr. This program requires customers notify the software (check-in) by accessing the application via cell phone upon arrival at a Buffalo Wild Wings restaurant. For single check-ins, Scvngr players might be awarded a complimentary menu item or a beverage or discount on logo merchandise. The Scvngr platform, which has more than one million active users, allows players to complete ‘challenges’ to earn points that count toward grand prizes. Grand prize offerings have consisted of a special experience (e.g. dinner with a famous athlete), merchandise (electronic gadgetry), and monetary value (gift cards). The Scvngr program is an iPhone/Android app that provides the opportunity to post a national leader board of individual participants as well as compile a comprehensive restaurant’s score to rank locations across the Buffalo Wild Wing landscape. Although still early in its development, the impact of mobile marketing appears to be a significant factor in the company’s success.

Other Examples

Royal Caribbean recently announced its plan to place an iPad in every guest cabin of the 1,804-passenger Splendour of the Seas ship as early as first quarter 2012. Each iPad will be programmed to provide passengers access to information relative to the ship’s daily events and activities and to enable development of a personalized daily itinerary consisting of onboard schedules and shore excursions. Additionally the devices can be used for web surfing, account review, room service order placement, entertainment downloads, and dining room menu review. The placement of these tablet devices is considered an industry first and the beginning of a two0year project involving guest cabins of five additional Vision Class series cruiseliners (Legend of the Seas, Grandeur of the Seas, Rhapsody of the Seas, Enchantment of the Seas, and Vision of the Seas).

Summary

The evolution of mobile technology applications for the hospitality industry continues to grow at a rapid pace. Such applications are designed to change the way business is planned, managed, controlled, and evaluated. With all the positive attributes of mobile apps, there appear to be commonly cited reasons for non-participation, including: a) budget (no dedicated resources for mobile developments), b) demand (lack of perceived guest value); c) support (lack of trained in-house staff), and d) standards (no established best practices). In the case of mobile technologies, the benefits available to the hospitality industry clearly outweigh these challenges.

Mobile technologies can offer potential guests a personalized marketing channel with direct, real-time, location-based reservation and promotional abilities enabling hotels and restaurants to attract and retain more customers. Mobile marketing has been shown to be an especially powerful means of attracting new clientele, creating brand loyalty, and driving incremental sales.

Best Practices

In order to maximize the effectiveness of mobile technology opportunities, hoteliers and restaurateurs should be mindful of the following guidelines:

a. create a mobile-optimized website with simple navigation tools
b. apply user-friendly, intuitive, and logical lead-through processes c. sponsor video (YouTube), social (Facebook), and mobile (LBS) content d. employ opt-in marketing campaigns that encourage customer engagement e. provide instant rewards, discounts, and incentives to qualified clientele

Mobile technologies can be a critical component to a hospitality firm’s strategy for obtaining a competitive advantage.

Michael L. Kasavana is the NAMA Endowed Professor in the School of Hospitality Business at Michigan State University. His teaching and research efforts are sharply focused on information technology and transaction settlement systems for self-service and full-service applications in hotel, restaurant, club, and casino environments. Dr. Kasavana received his B.S. in Hotel, Restaurant and Travel Administration, his MBA in Finance, and his Ph.D. in Management Information Systems from the University of Massachusetts-Amherst. Mr. Kasavana can be contacted at 517-353-9211 or Kasavana@bus.msu.edu Extended Bio...

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