Geofencing in the Hospitality Industry

Geofencing in the Hospitality Industry

University of Wisconsin - Stout

Hospitality and Tourism Marketing and Sales

Fall 2012

William Judge, Rachel Larson, and Claire Zelenka

Geofencing in the Industry

Section: 1 Geofencing, what it is.

The practice of geofencing in the hospitality industry has become a very popular and rewarding trend for both customers and hospitality businesses. Geofencing offers great incentives which are likely going to increase sales that would not have been originally made. In addition, by establishing a positive relationship with a customer, that customer is much more likely to return again due to their pleasant experience. In the hospitality industry, especially in hotels geofencing is a very popular trend that will continue to grow.

According to the proximus mobility website, this technology can be used in hundreds of different ways within a single hotel anywhere from alerting guests of lunch specials to providing coupons 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 says geofencing encourages the customer to keep making return visits. It all begins when a customer opts in on their initial visit. Once they have done so a customer profile can be built so that their return visits are on a more personalized level. Hotels can even capture information for their loyalty program or have guests interact with the hotel loyalty app. Imagine a hotel guest returns to the hotel to see a “Welcome Back” followed by their name sent to their mobile phone. Its 5PM (Happy Hour) 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 with their customers to the best of their ability. Not only will it make a guest feel special and more valued, but it will also make the customer happy to purchase more things so the hotel gets an extra profit as well.

Geofencing can also be a way for an employer to watch an employee’s where about who travels throughout the day by using technology with a GPS. In such cases this can cause a negative impact on employees. Historically there have always been employees that have abused their employers trust and expectations. We have all worked some place where people take advantage when the boss is not looking. Employers who attempt to police the behaviors of these people are typically not successful. I believe it is better to create a work environment that inspires and motivates employees to meet their expectations.

Some employers feel that geofencing with a GPS is not fair because they feel like they should be trusted. Incentives, compensation, and a wonderful place to work make it less likely to be taken advantage of as an employer. Often the other workers in a great environment will not tolerate employees who do not abide by rules and thus are not team players. Such organizations often have wonderful internal information where employees’ voices are heard and things are improved. 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 be upset because they want their voice to be heard.

Overall there are many different kinds of geofencing that can be applied to the hospitality industry in all kinds of scenarios. Whether it may be in a hotel industry that is marketing them to increase revenue through this technique, or a way for employers to watch every move of their employee when he or she is on the road, geofencing is always a reliable source. As long as all the technology components are working accurately, then geofencing is a prime example of a trend that is the midst of becoming exceptionally popular.

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Section 2: Geofencing, Who is using it

Geofencing is not just another mobile phone application, or another site to “Check-in” at. It is a specific system through the use of GPS capable phones used to attract guests and passersby into 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 promotions when they enter a specific geographic location. Geofencing creates a virtual “fence” that targets specific types of consumers within that “fenced in area”.

This could mean big things for business and consumers alike. Businesses can not only attract new 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 to attract middle class families with moderate income to their establishment. Geofencing allows the business to market directly to middle class neighborhoods, thereby increasing customers and sales for their specific business. Consumers are likely to enjoy this new technology because they will be able 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 JetBlue Airways. According to the article entitled, “Where Are You Going and Where Have You Been?” by Tim Peterson, “To encourage customers to participate, the airline’s agency Mullen executed a campaign 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 receive incentives and promotions just by walking into the airport. JetBlue Airways has been successful in gaining customer loyalty and greater customer satisfaction by using geofencing; however, they have put 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 technology could have a huge impact on future customers. If JetBlue Airways sent information and texts to every person in the airport, instead of just pre-existing customers, they could create many new customers 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 a particular area of the country. In Las Vegas, the Wynn Las Vegas hotel installed Samsung Galaxy tablets in 1,000 Las Vegas taxi cabs. Using GPS technology and geofencing, these tablets are updated with information about attractions, the Wynn Las Vegas hotel, and shopping and nightlife hot spots around the city. As the taxi enters certain geographical areas, the advertisements and information are sent to the tablet so that customers can see what the city has to offer. In the article entitled, “Wynn Las Vegas taps Mobile for Geo-Targeted Ads in Taxis”, Chantal Tode states “The campaign gives Wynn an opportunity to communicate directly with visitors based on their location in Las Vegas while offering a fun, interactive way for travelers to plan their activities. The goal is to entertain and engage passengers while also showcasing the hotel.” By using the geofencing technology, the Wynn Las Vegas has been able to market their hotel, as well as Las Vegas as a whole. The Wynn Las Vegas does an exceptional job at marketing their hotel through this tool, but it might work better if the information was more widespread. Instead of just offering the tablets and information to the taxi cab customers, they could send it directly to GPS capable phones within the Las Vegas area. This could increase customer volume and potentially help the already existing businesses in the area.

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Geofencing is definitely shaping the hospitality industry. By allowing hotels to market in specific geographical locations and providing incentives and promotions for hospitality businesses, the industry can grow and continue to change with the ever-changing technological world. Other industries that can be affected by geofencing include the clothing retail industry and the grocery industry. The clothing chain Maurice’s has recently started using geofencing, “The women's clothing chain last month started sending promotions to the phones of people who come within a few hundred yards of its stores. Consumers who opt in to the service are sent messages about in-store sales.” (Bustillo & Mattioli). Geofencing allows the clothing store to send sales promotions to every person that passes by without a mobile application or subscription. This can encourage new customers as well as entice existing customers to spend more money.

Meijer, the successful Midwest grocery store, has also started using geofencing. “Meijer Inc.,… now uses sensors in its stores to offer customized information and virtual coupons via mobile phone.” (Bustillo & Mattioli). Meijer has been able to send coupons and promotions to the customers that enter their store. Just like Maurice’s, the coupons are sent without a mobile application or subscription. This technology can greatly increase customers and overall satisfaction with 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 the technology has not yet been decided, but as more and more businesses begin to use it, it looks to be positive. As the technology becomes more sophisticated, we will be able to see a greater demand and use for geofencing.

Section 3: Geofencing, Expert opinion

Evelyn Nyberg is the Operations/Programming Director at Faiths Lodge. Faiths Lodge is a facility that allows families with terminally ill children or has lost a child a place to stay and bond with other families experiencing the same things. Evelyn handles all applications and confirms them, she sets up programs for her guests, handles all guest stays, makes sure the grounds and the building is taken care of, and hires all staff. Evelyn is also a Stout Alumni and a very close family friend. Evelyn was also the General Manager at The Lodge at Crooked Lake in Siren Wisconsin for around 10 years. Evelyn has been in the industry for a very long time. Although Faiths Lodge does not use this type of marketing, she was willing to share her educated and professional opinion on geofencing.

When I asked Evelyn what she thought of geofencing she was excited about it. A woman of her age with a smartphone, who still doesn’t know how to use all of the features on it, was very excited about the possibilities that geofencing can bring to any business. Evelyn was also thrilled to hear about the gamification and geotargeting , she said that is a struggle to capture the consumer’s attention and attract the kind of consumer that will receive the most enjoyment from the product or service that a business is selling. She thinks this will definitely capture the attention of the younger markets. When I asked Evelyn what she thought the future of geofencing would look like she replied with “it could be anything, the pace of change with this technology is so fast that it could be incredibly different in 10 years. I asked Evelyn what she thought the business landscape would look like; she replied with, we will probably see businesses spending more time and money on mobile advertising as more people start using smartphones. She explained that with a mobile oriented world approaching that geofencing will become one of the most important advertising

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tools for businesses to use. When I asked Evelyn what she thought businesses would need to do to stay competitive, she said that businesses were going to need to stay knowledgeable and up to date about geofencing and the technology, because it is so powerful and to continue to learn about their customers wants and needs. Listening to what the customers are wanting is critical in selling a service or product. Overall Evelyn felt that geofencing is a great technology and play a huge role in the hospitality industry.

Geofencing will drastically change the business landscape. With a mobile only world on the way, 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 more about the information that people can access than to identify their location and let the rest of the world know where they are at that very moment. According to Michael Kasavanas article titled My Location is Highly Desirable, Reaching Your Guest Where They Are, Forrester Research has prediction that by 2015 over 82 million people will rely on mobile devices as a primary reference tool. Their research also showed that through their mobile devices people will be able to receive announcements, alerts, promotions, discounts, and location- relevant offerings, and access their purchasing history, and loyalty rewards status. Research found by Gartner suggests that the total revenue attributed from LBS and geofencing was around 486 million and in 2014 receiving revenue around 13 billion from LBS applications. The article also suggested that geofencing will benefit not only the consumers but the businesses as well. Not only will geofencing help the guest find a place to eat or stay, but the business will be able to see where all of their guests are hanging out and what interests them. This knowledge will help business make repeat guests.(Kasavana, 2012) The business landscape will look different because the consumer will find themselves in the middle of an advertising wars everywhere they go with their smartphones. Questions about people’s personal and private information being safe with this type of technology will arise. Not only will the businesses need to answer those questions and make their guests feel safe and protected, but the cellphone companies will have to answer as well.

Geofencing will change many times as it becomes more popular. Geofencing which used to be called geolocation during its infancy has already changed once before. Geofencing is currently under development right now, working towards a better technology that will make it easier for businesses to reach their target markets. Geotargeting, will ensure that a business’s message is sent to their target markets and are not bothering consumers who have no interest in that businesses product. Gamification as Kasavanas calls it is also something under development and is being added to geofencing idea. Gamification is using game like tactics or strategies to enhance the customers experience, loyalty, and repeat business. Kasavanas articled suggests that there are a few software design firms focused on adding gamification features into products and services offered in the hospitality industry. A game like cooking mama or something along those lines, so that when a consumer plays they win a free meal at a restaurant or a free drink at a bar, is a perfect example of what gamification does. It could also be as simple as a word search or Sudoku, anything that will engage the customers, and reward them. It is safe to conclude with these two examples that geofencing will go through many changes and that it will look and be used very differently in the coming years.

In order to stay competitive business are going to need to continue to listen to their customers wants. Businesses want to be sure that they do not put their consumers in the middle of

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an advertising war every time they walk down Main Street. Receiving a message from a business every time they walk by it will become annoying and might ruin how the customer feels about that business. Remembering that geofencing is not about the check ins, and that it is about reaching the customer at the right time and place will be key to staying competitive. Realizing that peoples security is important to them and being sensitive to that will be key, once geofencing becomes better known. (Kasavana,2012) Continuing to update technology and keeping up with what the consumer is doing is going to be the best way for a business to stay ahead and keep their competitive edge.

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BibliographyBustillo, 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.asp

Ksavana, 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.asp

Nyberg, 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=2

Shneider, 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.html

Tode, 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.

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Geofencing in the Hospitality Industry