Geofencing in the Hospitality Industry
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  • 1. Geofencing in theHospitality Industry William Judge, Rachel Larson, and Claire Zelenka University of Wisconsin - Stout Hospitality and Tourism Marketing and Sales Fall 2012
  • 2. Geofencing in the IndustrySection: 1 Geofencing, what it is. The practice of geofencing in the hospitality industry has become a very popular andrewarding trend for both customers and hospitality businesses. Geofencing offers great incentiveswhich are likely going to increase sales that would not have been originally made. In addition, byestablishing a positive relationship with a customer, that customer is much more likely to returnagain due to their pleasant experience. In the hospitality industry, especially in hotels geofencing isa very popular trend that will continue to grow. According to the proximus mobility website, this technology can be used in hundreds ofdifferent ways within a single hotel anywhere from alerting guests of lunch specials to providingcoupons to the spa. What this means for hotels is increased foot traffic, improved guest experience,and most importantly increased customer loyalty and repeat visits. This website also saysgeofencing encourages the customer to keep making return visits. It all begins when a customeropts in on their initial visit. Once they have done so a customer profile can be built so that theirreturn visits are on a more personalized level. Hotels can even capture information for their loyaltyprogram or have guests interact with the hotel loyalty app. Imagine a hotel guest returns to thehotel to see a “Welcome Back” followed by their name sent to their mobile phone. Its 5PM (HappyHour) so they are promptly sent a coupon for one free drink at the lounge (Proximusmobility.com).This source provides an excellent example of how crucial it is for hotels to utilize geofencing withtheir customers to the best of their ability. Not only will it make a guest feel special and morevalued, but it will also make the customer happy to purchase more things so the hotel gets an extraprofit as well. Geofencing can also be a way for an employer to watch an employee’s where about whotravels throughout the day by using technology with a GPS. In such cases this can cause a negativeimpact on employees. Historically there have always been employees that have abused theiremployers trust and expectations. We have all worked some place where people take advantagewhen the boss is not looking. Employers who attempt to police the behaviors of these people aretypically not successful. I believe it is better to create a work environment that inspires andmotivates employees to meet their expectations. Some employers feel that geofencing with a GPS is not fair because they feel like theyshould be trusted. Incentives, compensation, and a wonderful place to work make it less likely tobe taken advantage of as an employer. Often the other workers in a great environment will nottolerate employees who do not abide by rules and thus are not team players. Such organizationsoften have wonderful internal information where employees’ voices are heard and things areimproved. This makes an employee and any organization feel both empowered and valued.Structure can be a very positive incentive; however, when it is dictated people are more likely to beupset because they want their voice to be heard. Overall there are many different kinds of geofencing that can be applied to the hospitalityindustry in all kinds of scenarios. Whether it may be in a hotel industry that is marketing them toincrease revenue through this technique, or a way for employers to watch every move of theiremployee when he or she is on the road, geofencing is always a reliable source. As long as all thetechnology components are working accurately, then geofencing is a prime example of a trend thatis the midst of becoming exceptionally popular. 1
  • 3. Geofencing in the IndustrySection 2: Geofencing, Who is using it Geofencing is not just another mobile phone application, or another site to “Check-in” at. Itis a specific system through the use of GPS capable phones used to attract guests and passersbyinto deals, promotions, and information. Instead of a consumer “checking-in” to a specific location,such as foursquare.com, the consumer is alerted, on their phone, with information and promotionswhen they enter a specific geographic location. Geofencing creates a virtual “fence” that targetsspecific types of consumers within that “fenced in area”. This could mean big things for business and consumers alike. Businesses can not only attractnew customers through this technology, but they can also target specific customers. For instance,say that a business sells moderately priced items for home décor. This business would want toattract middle class families with moderate income to their establishment. Geofencing allows thebusiness to market directly to middle class neighborhoods, thereby increasing customers and salesfor their specific business. Consumers are likely to enjoy this new technology because they will beable to find deals and promotions based on their specific geographical and economic factors. One company in the hospitality industry that has had major success with this tool is JetBlueAirways. According to the article entitled, “Where Are You Going and Where Have You Been?” byTim Peterson, “To encourage customers to participate, the airline’s agency Mullen executed acampaign in which travelers automatically received text messages when they entered an airport,reminding them to check in—a tactic known as geofencing.” This allows customers to receiveincentives and promotions just by walking into the airport. JetBlue Airways has been successful ingaining customer loyalty and greater customer satisfaction by using geofencing; however, they haveput it aside at the moment and are continuing with their JetBlue Airways Mobile Phone Application.JetBlue Airways is making a mistake in putting aside the geofencing technology. This technologycould have a huge impact on future customers. If JetBlue Airways sent information and texts toevery person in the airport, instead of just pre-existing customers, they could create many newcustomers and continue to grow as an airline company. Their use of geofencing is commendable,but could also be improved. Another way that geofencing is being used in the hospitality industry is to attract guests in aparticular area of the country. In Las Vegas, the Wynn Las Vegas hotel installed Samsung Galaxytablets in 1,000 Las Vegas taxi cabs. Using GPS technology and geofencing, these tablets areupdated with information about attractions, the Wynn Las Vegas hotel, and shopping and nightlifehot spots around the city. As the taxi enters certain geographical areas, the advertisements andinformation are sent to the tablet so that customers can see what the city has to offer. In the articleentitled, “Wynn Las Vegas taps Mobile for Geo-Targeted Ads in Taxis”, Chantal Tode states “Thecampaign gives Wynn an opportunity to communicate directly with visitors based on their locationin Las Vegas while offering a fun, interactive way for travelers to plan their activities. The goal is toentertain and engage passengers while also showcasing the hotel.” By using the geofencingtechnology, the Wynn Las Vegas has been able to market their hotel, as well as Las Vegas as awhole. The Wynn Las Vegas does an exceptional job at marketing their hotel through this tool, but itmight work better if the information was more widespread. Instead of just offering the tablets andinformation to the taxi cab customers, they could send it directly to GPS capable phones within theLas Vegas area. This could increase customer volume and potentially help the already existingbusinesses in the area. 2
  • 4. Geofencing in the Industry Geofencing is definitely shaping the hospitality industry. By allowing hotels to market inspecific geographical locations and providing incentives and promotions for hospitality businesses,the industry can grow and continue to change with the ever-changing technological world. Otherindustries that can be affected by geofencing include the clothing retail industry and the groceryindustry. The clothing chain Maurice’s has recently started using geofencing, “The womens clothingchain last month started sending promotions to the phones of people who come within a fewhundred yards of its stores. Consumers who opt in to the service are sent messages about in-storesales.” (Bustillo & Mattioli). Geofencing allows the clothing store to send sales promotions to everyperson that passes by without a mobile application or subscription. This can encourage newcustomers as well as entice existing customers to spend more money. Meijer, the successful Midwest grocery store, has also started using geofencing. “MeijerInc.,… now uses sensors in its stores to offer customized information and virtual coupons via mobilephone.” (Bustillo & Mattioli). Meijer has been able to send coupons and promotions to thecustomers that enter their store. Just like Maurice’s, the coupons are sent without a mobileapplication or subscription. This technology can greatly increase customers and overall satisfactionwith the stores, as well as loyalty and higher profit. Geofencing is a trend that is not going away any time soon. The overall benefit of thetechnology has not yet been decided, but as more and more businesses begin to use it, it looks tobe positive. As the technology becomes more sophisticated, we will be able to see a greaterdemand and use for geofencing.Section 3: Geofencing, Expert opinion Evelyn Nyberg is the Operations/Programming Director at Faiths Lodge. Faiths Lodge is afacility that allows families with terminally ill children or has lost a child a place to stay and bondwith other families experiencing the same things. Evelyn handles all applications and confirmsthem, she sets up programs for her guests, handles all guest stays, makes sure the grounds and thebuilding is taken care of, and hires all staff. Evelyn is also a Stout Alumni and a very close familyfriend. Evelyn was also the General Manager at The Lodge at Crooked Lake in Siren Wisconsin foraround 10 years. Evelyn has been in the industry for a very long time. Although Faiths Lodge doesnot use this type of marketing, she was willing to share her educated and professional opinion ongeofencing. When I asked Evelyn what she thought of geofencing she was excited about it. A woman ofher age with a smartphone, who still doesn’t know how to use all of the features on it, was veryexcited about the possibilities that geofencing can bring to any business. Evelyn was also thrilled tohear about the gamification and geotargeting , she said that is a struggle to capture the consumer’sattention and attract the kind of consumer that will receive the most enjoyment from the productor service that a business is selling. She thinks this will definitely capture the attention of theyounger markets. When I asked Evelyn what she thought the future of geofencing would look likeshe replied with “it could be anything, the pace of change with this technology is so fast that itcould be incredibly different in 10 years. I asked Evelyn what she thought the business landscapewould look like; she replied with, we will probably see businesses spending more time and moneyon mobile advertising as more people start using smartphones. She explained that with a mobileoriented world approaching that geofencing will become one of the most important advertising 3
  • 5. Geofencing in the Industrytools for businesses to use. When I asked Evelyn what she thought businesses would need to do tostay competitive, she said that businesses were going to need to stay knowledgeable and up to dateabout geofencing and the technology, because it is so powerful and to continue to learn about theircustomers wants and needs. Listening to what the customers are wanting is critical in selling aservice or product. Overall Evelyn felt that geofencing is a great technology and play a huge role inthe hospitality industry. Geofencing will drastically change the business landscape. With a mobile only world on theway, geofencing will become one of the most popular tools for marketing in the hospitality industry.It will go beyond the limits of Foursquare and “check-ins”. The future of geofencing will be moreabout the information that people can access than to identify their location and let the rest of theworld know where they are at that very moment. According to Michael Kasavanas article titled MyLocation is Highly Desirable, Reaching Your Guest Where They Are, Forrester Research hasprediction that by 2015 over 82 million people will rely on mobile devices as a primary referencetool. Their research also showed that through their mobile devices people will be able to receiveannouncements, alerts, promotions, discounts, and location- relevant offerings, and access theirpurchasing history, and loyalty rewards status. Research found by Gartner suggests that the totalrevenue attributed from LBS and geofencing was around 486 million and in 2014 receiving revenuearound 13 billion from LBS applications. The article also suggested that geofencing will benefit notonly the consumers but the businesses as well. Not only will geofencing help the guest find a placeto eat or stay, but the business will be able to see where all of their guests are hanging out andwhat interests them. This knowledge will help business make repeat guests.(Kasavana, 2012) Thebusiness landscape will look different because the consumer will find themselves in the middle ofan advertising wars everywhere they go with their smartphones. Questions about people’s personaland private information being safe with this type of technology will arise. Not only will thebusinesses need to answer those questions and make their guests feel safe and protected, but thecellphone companies will have to answer as well. Geofencing will change many times as it becomes more popular. Geofencing which used tobe called geolocation during its infancy has already changed once before. Geofencing is currentlyunder development right now, working towards a better technology that will make it easier forbusinesses to reach their target markets. Geotargeting, will ensure that a business’s message is sentto their target markets and are not bothering consumers who have no interest in that businessesproduct. Gamification as Kasavanas calls it is also something under development and is being addedto geofencing idea. Gamification is using game like tactics or strategies to enhance the customersexperience, loyalty, and repeat business. Kasavanas articled suggests that there are a few softwaredesign firms focused on adding gamification features into products and services offered in thehospitality industry. A game like cooking mama or something along those lines, so that when aconsumer plays they win a free meal at a restaurant or a free drink at a bar, is a perfect example ofwhat gamification does. It could also be as simple as a word search or Sudoku, anything that willengage the customers, and reward them. It is safe to conclude with these two examples thatgeofencing will go through many changes and that it will look and be used very differently in thecoming years. In order to stay competitive business are going to need to continue to listen to theircustomers wants.Businesses want to be sure that they do not put their consumers in the middle ofan advertising war every time they walk down Main Street. Receiving a message from a business 4
  • 6. Geofencing in the Industryevery time they walk by it will become annoying and might ruin how the customer feels about thatbusiness. Remembering that geofencing is not about the check ins, and that it is about reaching thecustomer at the right time and place will be key to staying competitive. Realizing that peoplessecurity is important to them and being sensitive to that will be key, once geofencing becomesbetter known. (Kasavana,2012) Continuing to update technology and keeping up with what theconsumer is doing is going to be the best way for a business to stay ahead and keep theircompetitive edge. 5
  • 7. Geofencing in the IndustryBibliographyBustillo, D. M. (2012, 3 8). Can Texting Save Stores "Geofencing Lets Retailers Offer Deals to Nearby Customers, Fight Price- Shopping. Retrieved 11 10, 2012, from The Wall Street Jounal : http://www.hospitalityupgrade.com/_magazine/magazine_Detail-ID-712.aspKsavana, M. (2012, 3 1). My Location is Highly Desirable, Reaching Your Customers Where They Are . Retrieved 11 13, 2012, from Hospitality Upgrade: http://www.hospitalityupgrade.com/_magazine/magazine_Detail-ID-712.aspNyberg, E. (2012, 11 10). Operations Manager. (R. Larson, Interviewer)Peterson, T. (2012, 2 13). Where Are You, Where Have You Been? Retrieved 11 10, 2012, from ADWEEK: http://www.adweek.com/news/technology/where-are-you-going-where-have-you-been- 138178?page=2Shneider, A. S. (n.d.). Look for the Future of Location- Based Marketing. Retrieved 11 12, 2012, from Dummies.com: http://www.dummies.com/how-to/content/look-to-the-future-of- locationbased-marketing.htmlTode, Chantal. (14 November 2012). “Wynn Las Vegas Taps Mobile for Geo-Targeted Ads in Taxis”.Mobile Marketer. Retrieved from http://www.mobilemarketer.com/cms/news/advertising/12399.html. 6