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An analysis of NFC and it's impact on the hospitality industry.

An analysis of NFC and it's impact on the hospitality industry.

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  • 1. TrendsAnalysisApril 292013The introduction, impact, and future of Near Field Communications.NateWeisenbeck &Erin Wendorf
  • 2. Introduction to NFCNear Field Communications (NFC) was originated from RFID (radio-frequencyidentification) which was first patented in 1983 and was finally approved as an ISO/ISE standardin 2003. One year later, three successful companies – Sony, Nokia, and Philips-formed whatwould become the NFC Forum. According to NearFieldCommunication.org, “their mainobjective was to educate businesses about the technology and uphold standards to operatebetween different devices”.The first sets of NFC tags were produced in 2004. It is a small, sticker like object thatcontains information that a NFC compatible device, like a smartphone, can detect when passedover the NFC tag. Many of these tags were “read only”, however there were a few cases thatcould overwrite and edit the old information. In 2006 came “smart” posters which enable NFCcompatible devices to read as it is passed near the poster. It easily provides new informationthat adds to what is on the poster. An example given from NearFieldCommunication.com is ashort biography given of a famous person’s life on a poster with their image on it. NFCcompatible cell phones became popular and more successful around 2006 when the Nokia6131 came out. It featured payment methods, ability to share videos and photos and gaming.Android released their first NFC phone in 2010 with the Samsung Nexus S.NFC is starting to take the business industry by storm. People have a multitude of itemsto carry with them as they go throughout their day. These items can range to likes of car keys,credit cards, iP(Smrcka, 2013)(Dyer, 2013)ods, and if course the mobile phone. Businesses havebeen hard at work to make it possible for a consumer to carry less with them throughout life.Imagine a day in which your smart phone has everything on it such as your wallet, car keys,house keys and even hotel keys. According to Karel Smrcka at EngineeringNew.com, students atFraunhofer Institute have developed software called ShareKey that works with NFC enableddevices. This service would allow not only consumers to program their house keys into theirphones, but would also allow hotels to do the same. Of course NFC phones would have to be anabsolute standard before hotels could even apply this, but this is a springboard to a brightfuture that would allow phones to be nearly the center of our lives.NFC, while still fairly new, has caught on not only in the business side, but also on thecultural side as well. A site called Identive-Group has a product listing for NFC tags for use withNFC enabled devices. Customers can purchase these tags to make their phone do a wide varietyof tasks. They can place these tags on their nightstand so when their phone is set on it, it is setto silent and brightness is turned down. This can also be used for advertising. These tags arevery thin and versatile so this allows to be integrated into posters. A consumer could see anadvertisement for a product and can simply just hold their phone up to it to go directly to thesite of that product. This works similar to QR codes, another fad that caught on for a while, butis much faster and simpler for the user. With these examples, it is certainly clear that NFC isstarting to become embedded within our culture.One could say all they want about the buzz the NFC is creating, but the truth is in thenumbers, and they don’t lie. One site called TheGlobeAndMail reported that a Canadian
  • 3. wireless carrier called Rogers Communication is making a large push to provide more NFCenabled devices. According to the article Rogers said it had “about 300,000 customers withNFC” devices, but expects that number to “grow to 750,000 in 2013.” Drew McReynolds, ananalyst for RBC Dominion Securities, went on to say that “Mobile payments have been citied tobe the next ‘big thing’ on the horizon.”Another good example of NFC on the rise would be The NFC Experience conference.NFCWorld, a news source for articles related to NFC, reported on this conference which wasessentially a gathering of over 10,000 attendees that spent a day using the technology. Thosethat had NFC devices could download coupons and vouchers to be used in the city. While therewas some difficulty getting badges to work (since you had to line of the NFC chips directly),Pierre Combelles who was head of NFC at GSMA, said that “once the badges were activated, itwas an absolute pleasure.” The problems they faced are things that are very easy to fix andmanufacturers are working on it. These numbers however do show that there is drive in theindustry to make NFC a reality in the everyday life of a human being.NFC’s Impact on the World of BusinessNFC is still relatively new, so it is struggling somewhat find its place in the worldof business. Many good applications have already put into place in many industries, includinghospitality.Hospitality has barely grasped the potential of NFC. There are many applications thathave yet to be explored upon. It has been applied in restaurants, amusement parks, and severalconferences. One particular area that has something really going for it is hotels. Hotels areconstantly looking for ways to refine and streamline the experience of their guests, particularlywith the process of checking in. Let’s face it, no one likes checking in. Guests like to walk in, getto their room as quickly as possible and enjoy their visit. A company called VingCard hopes tointroduce NFC to the hotel industry to help make this process as fast as possible. In recentmemory, you need to call or go online to make a reservation, then after arriving you have yougo to the front desk to get your key. With the NFC technology VingCard has introduced, theguest can skip the checking in process entirely. All they have to do is make a reservation onlineand then they can use their phone to access their room without the need of a key. This solvestwo problems: The hassle of checking in and the issue of lost keys. Every time a hotel loses akey to the room they either need to change the lock (if they have old fashioned keys) or theyhave to reprogram it. This is somewhat of a hassle and NFC technology can help prevent thisissue. This technology is definitely not popularized yet as only a handful of hotels currentlyincorporate this technology. However, pioneers in the mobile phone industry are starting torealize the potential that this technology has. As more and more smart phones incorporate thistechnology it will be in the hands of much more customers and make it a much more feasibledecision for hotels to apply this to their locations.As stated before, NFC has been applied in amusement parks. A major example includesWalt Disney Parks and Resorts, who are working on creating a more personal and seamlessexperience for each guest. There are many new initiatives that Disney is creating; however
  • 4. there is one that really stands out. Using the RFID and NFC technology, Walt Disney has createdthe MyMagic+ experience for guests. The Disney Experience website along with a new mobileapp, MyMagic+ comes to life allowing families to spend more of their vacation relaxingtogether. Planning a vacation in advanced is now become an even easier task because thisnew experience allows families the flexibility to plan as much or as little as they’d like. The appallows you to set up dining reservations, book specific ride times, and times for shows orattractions instead of keeping track of and splitting up the paper FastPasses.Tom Stags, Chairman of Walt Disney Parks and Resorts explains that together with theMyMagic+ experience, Disney has created a piece of technology that uses NFC called theMagicBand. It is a bracelet like wrist band that will serve as the guest’s room key, theme parkticket, FastPass, a PhotoPass card and an optional payment account. It can easily be encodedwith personal information allowing for a more personalized interaction with Disney Employees.According to Clark of NFC World, “Disney can gain deep insight into how guests use its resorts,create tailored marketing programs and generate additional revenue”.Disney is still in the trial process with the NFC technology, but we think that the startthey have is very strong. Allowing families more flexibility and a more personalized experience,Disney is using the right mindset and strategies to complete their goals. The idea of becomingmuch more accommodating and convenient will make customers happier because it is lesswork for them on their vacations. We like the idea of using the wristband as a wallet, keepingall personal information automatic and secure. In order to make this process smoother, wethink it would be smart for Disney Parks and Resorts can advertise the security of these NFCwristbands and how they can deactivate if lost. Along with this, it would be smart to posttechnology areas for guests without NFC based smartphones to stay connected to theirMyMagic+ experience. This would be allowing the guests to access the app and log in to theiraccount in order to keep their registered times on track. We believe this would make the newtechnologies more appealing to the not-so tech-savvy guests.One area in which NFC has been applied out of the hospitality industry is in mobilepayments. Google, one company that is all too familiar to us, is seen as maybe not introducingthe idea of mobile payments, but maybe popularizing the idea with Google Wallet. GoogleWallet functions almost the exact same way one would think it does. It is a service that storesall of your credit and debit cards in the cloud along with other payment services like PayPal.This solution makes it easier to not only purchase products not only online, but in retail storesas well. Imagine something as simple as buying a cup of coffee. One goes to the local Starbucksand orders a medium Café Latte. After receiving it they must pull out their wallet, choosewhether to pay with cash or credit, and if credit they choose which card. Google Wallet allowsan individual to skip all of that, they simply pull out their phone, swipe, and the payment isdone. This simplifies payments greatly for not only the customer, but the seller as well. GoogleWallet is not all that popular yet as it is mainly used on Googles flagship phones. But accordingto an article on NFCBootCamp.com, it says that NFC payments may surpass “$180 billionglobally by 2017.” That is an impressive and encouraging number. As more NFC phonespopulate the market, Google Wallet very well may replace the credit card as we know it.
  • 5. Another example of using Near Field Communication would be at a concert or sportingevent. Just like purchasing a transportation ticket, it is easy to purchase concert tickets using aNFC compatible smartphone to gain access. Using smart posters, all the information that isneeded, like schedule of events, upcoming performances, information about the band or team,can be at your fingertips. Like recently stated, just waving the phone at a merchant’s registerwhile at the event can buy a snack or drink. “Less tickets and cards to juggle makes the eventhassle-free and reduces your chances of being pickpocketed”, saysNearFieldCommunication.org.The Future of NFCHotels and amusement parks are all wonderful places for NFC to fit right in. Yet anothergood spot for it in the hospitality industry is in restaurants. We took it upon ourselves tointerview a manager at the local Buffalo Wild Wings in Eau Claire Wisconsin. Lindsey Smith wasvery happy to answer our questions about the location she worked at and all locations ingeneral.Our first question was what Lindsey’s opinion was of NFC technology. She said that it“can certainly help streamline operations. It can also help catch mistakes a lot earlier so it isdealt with in the restaurant quickly.” This is an excellent point she made as mistakes in your billat a restaurant are frustrating and in the mix things can be somewhat difficult to deal with.With NFC all credit transactions take place at the table instead of at a POS terminal across therestaurant. The server can review the bill along with the customer to ensure that theinformation is correct and make changes as needed. It simply would “make things easier forservers and customers in the long run.”Knowing that she showed interest in the technology, we next asked her if any BuffaloWild Wings locations use NFC. Her response was “Currently I have no knowledge of anylocations using this technology right now.” She told us that she knew of several locations theuse “iPads as the POS system for all of the servers.” “I think NFC would aid this system alreadyset in place to open up new possibilities.” Many restaurants have invested in iPads as part oftheir POS systems, or even had their entire POS system based around them. NFC would “allowthe server to deal with everything at the table allowing him/her to further enhance the diningexperience.”Our final question for her was if she saw Buffalo Wild Wings investing in this technologyin the near future. “Buffalo Wild Wings always has tried to be the first to incorporate newtechnology or techniques in the restaurant industry.” Some examples she gave use were ofcourse the iPads, but in addition to that were “the tablets for games and trivia, the bottom ofbeer glasses being frosted to keep it foamy on top, and any other little things that customer(s)appreciate to enhance the dining experience.” She felt that NFC seems like a very interestingconcept for “not only Buffalo Wild Wings, but the hospitality/restaurant industry in general.”This interview goes to show that NFC still has to gain a little more steam before itbecomes mainstream. The demand is obviously there though. Many sectors of the hospitality
  • 6. industry have incorporated this technology already, and more are following with many fingerspointing to restaurants being next in line.Many sectors of hospitality are already making the move to incorporate NFC into theirbusiness model, and it is set to have a deep impact. Early forms of NFC, such as QR codes, havealready left a lasting impact on business in general. It has opened up new ways of marketingnew products by giving consumers a new and fun way of interacting with companies to learn ofnew and upcoming products or services. NFC has the potential to do way more than thatthough.The main task NFC is used and marketed towards is mobile payments. The earliest andmost mainstream form of this right now is “virtual wallets.” Apple’s Passbook is probably thebest example of this. It is one place where you can have all of your digital coupons, gift cards,and credit cards. This is quite convenient to the consumer because it gives them one last thingto carry around. The only problem with this is that you have to scan it into a computer. This canbe troublesome as some phone screens are not as good as others and can take multiple tries toregister. NFC will do essentially the same thing, only it will simplify the process and make it lesscumbersome. As said in an article on AskIdentive.com, Arti(Clark S. , 2011)e Beavis states that“NFC transactions will allow for speedy payment of items at hotels, gaming establishments, andairports.”NFC will also change the way marketing works. Currently customers are able todownload special offers and coupons to their phone for later use. Once again, as mentionedearlier, this can be somewhat cumbersome as the coupon must be scanned from the phone’sscreen. NFC will streamline this and make coupons easier to use. Of course NFC isn’t only usedfor payments. It can also be used with “NFC Tags.” These chips can be put into “smart-posters”to help get the customer to information about new products. This will function in the same wayas QR codes currently work, however there is no picture taking this time around. All one wouldneed to do is touch their phone to the poster and they will be immediately taken to the websiteor app. Once again, this is about simplifying and streamlining the process to make it easier forboth parties.NFC will not necessarily “revolutionize” the hospitality industry, but will instead refinehow things currently work. Marketing and mobile payments will become a more personalizedexperience in nearly every aspect of the industry. Payments can be made at the restaurantquick and simple, and “smart-posters” will get information to the customer faster than before.NFC will turn the hospitality industry into a well-oiled and efficient machine to deliver not onlybetter quality service, but faster service as well.Near field communication systems can be considered a sector in the MarketingInformation Systems, which we learned about in class. As the textbook describes, “MIS consistsof people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed,timely, and accurate information to marketing decision makers”. NFC collects the user’spersonal information to keep track of their purchasing records. When hotels or restaurants useNFC is it easier for them to track the customers previous purchases in order to know a head of
  • 7. time, what that customer might want. NFC is a new and upcoming trend that will make MISsystems even easier.Another topic that came up in class was consumer behavior. It is important that thebusinesses who use NFC technology, know what type of consumers want to use their product.Knowing the background, social class, or cultural class of the people who are looking to use/buyyour products is important; some of these consumers may not know how to use any NFC basedtechnology. If a business is in a place where the consumer’s pattern of living such as activities,social events, interests, political and social issues don’t match up with how you’re trying to useNFC, it could be a failure.If a product is not accessible, it has no value. To connect this to class and to the NFCtrend, if customers don’t have an NFC based piece of technology, they can’t use it or it has novalue to them.Smart posters are an important part of NFC’s Promotion Mix. Using smart posters, abusiness can create an advertising plan and use direct marketing. Customers see the posterand use their NFC device to scan and bring up even more information on the product.It is important that businesses that use NFC create a solid communication process. Theyneed to know a target market, probably the people who have NFC compatible devices, andthen determine a communication objective. After they determine their objective, they willdesign a message and select a communication channel. This all relates to NFC because it can beused a communication devise that enables people to share photos, videos, or anything elsebetween two devices.In order for this technology to stay ahead of its competitors, it is important forbusinesses to start using it as soon as possible. The faster those businesses grasp the concept ofNFC, the more popular it will become and its competitors will be less of an interest. Becausethis technology can do almost everything possible, including becoming a digital wallet, a masterkey for your house or car, keeping all identification secure, etc. it will be extremely hard tosurpass these characteristics. As Nathan Chandler explains, “Armed with these tiny chips,smartphones are about to graduate from smart to downright brainiac status”.
  • 8. Works CitedBeavis, A. (2012, Janurary 5). How Will NFC Impact the Hospitality Industry. Retrieved April 2013, fromAsk Identive: http://www.askidentive.com/nfc-technology/nfc-impact-hospitality-industryChandler, N. (2013). 5 Ways NFC Technology Could Rock Your World. Retrieved April 28, 2013, from HowStuff Works: http://www.howstuffworks.com/5-ways-nfc-tech-could-rock-your-world.htm#page=5Clark, M. (2013, March 12). Disney MyMagic+ sets a new bar for mobile wallet design. Retrieved April22, 2013, from NFC World: http://www.nfcworld.com/2013/03/12/323001/disney-mymagic-sets-a-new-bar-for-mobile-wallet-design/Clark, S. (2011, June 28). VingCard Launches NFC Room KEy System for Hotels. Retrieved April 2013, fromNFC World: http://www.nfcworld.com/2011/06/28/38366/vingcard-launches-nfc-room-key-system-for-hotels/Dyer, K. (2013, March 6). GSMA Reports on NFC Experience at MWC. Retrieved April 2013, from NFCWorld: http://www.nfcworld.com/2013/03/06/322921/gsma-reports-on-nfc-experience-at-mwc/NearFieldCommunication.org. (2013). History of Near Field Communication. Retrieved April 28, 2013,from NFC: http://www.nearfieldcommunication.org/history-nfc.htmlSabella, R. P. (2013, February 5). NFC, Next on the Menu for Restaurants. Retrieved April 2013, from NFCBootcamp: https://www.nfcbootcamp.com/nfc-next-on-the-menu/Smith, L. (2013, April 24). Bar Manager. (N. Weisenbeck, Interviewer)Smrcka, K. (2013, March 22). Turning Smartphones into Versatile Keys. Retrieved April 2013, fromEngineering News: http://www.engineeringnews.co.za/print-version/turning-smartphones-into-versatile-keys-2013-03-22Staggs, T. (2013, January 7). Taking the Disney Guest Experience to the Next Level. Retrieved April 22,2013, from Disney Parks Blog: http://disneyparks.disney.go.com/blog/2013/01/taking-the-disney-guest-experience-to-the-next-level/?CMP=KNC-WDW13_NGE_MDX_DOM_Exact|G|4131321.NG.AM.01.01U4STrichur, R. (2013, March 20). Rogers Boosts Smartphone Offerings in Mobile-Payment Push. RetrievedApril 2013, from The Globe and Mail: http://www.theglobeandmail.com/globe-investor/rogers-boosts-smartphone-offerings-in-mobile-payment-push/article9982047/