Beacons – Top or Flop for the Hospitality Industry?

By Michael Toedt - Managing Director at Dailypoint Gmbh

Visit us at HITEC booth 2246
16 December 2015

There has been quite a hype lately around beacons, in particular since HRS has invested 10m in this technology, which is supposed to improve the customer experience in the hotels. But what is behind all this?

The beacon technology allows hotels to identify their guests via an app, e.g. a receptionist can see the guest's profile on a tablet when he enters the lobby. This enables a personalized welcome experience and service. Sounds great in theory, but what about reality? Is the beacon technology the ultimate solution for the hospitality industry? And what actually is a beacon?

A beacon is the natural progression of the QR (Quick Response) Code, which never had a real break-through despite its intelligent potential uses. A beacon is a small Bluetooth transmitter, which can be installed e.g. in the lobby, that sends signals to mobile end devices such as Smartphones. The technology enables automatic communication between various devices. If more than one transmitter is installed in a room the user can be localized, which is quite interesting for location-based services. So far, tracking has been difficult especially in closed rooms. The localization allows a hotel to get in touch with its guests, send vouchers, provide additional information, etc.

Sound amazing, but where is the catch? There are two fundamental challenges: Firstly, Bluetooth needs to be activated on the recipient's mobile device. Currently, about 70% of all Smartphone users deactivate Bluetooth in order to maximize battery life. Secondly, the user has to download and activate a special app on his Smartphone. The usage of apps is increasing, but is limited to only a few such as Facebook, Youtube, or news apps. In general, customers are getting tired of apps. Hotel apps have a low spread and there are only a few successful ones, as consumers refuse to download a hotel app, if there is no added value.

Considering these challenges, the beacon technology should be critically assessed. But why is a smart company like HRS investing huge amounts in this technology? HRS is losing market share and in my opinion the management is looking for new paths. Only the apps of the big OTAs are somehow accepted and used. If HRS integrates the beacon technology in its app and a beacon sender is installed in the hotel lobby, HRS guests could be offered a better service than guests who came via other channels. This would mean that a guest who comes through an expensive OTA would get a better service than the more valuable guest, who booked directly at the hotel.

On top, the collected data would remain with the app provider and not with the hotel. Nowadays, data is more precious than stones. The stock prices of Priceline versus Marriott or Hilton reflect this clearly. The investment could indeed be interesting for HRS, depending on how many hotels are installing beacons. But what is in for the hotelier? It remains interesting to see who will actually make the connection.

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Michael Toedt

Operating at the intersection of business and technology, Dr. Michael Toedt helps hoteliers with the software dailypoint™ to use the tremendous increase of data in order to become data-centric. Dr. Michael Toedt has over 25 years of experience in operations, technology and marketing. He is the author of several books – among others the German version “Big Data – Herausforderung und Chance für die Hotellerie (ISBN: 978-3-8751-5305-7) and “Data Revolution – How Big Data Will Change the Way of Doing Business” (ISBN:978-3–7375-1688-4) and his articles are published by journals on a regular basis. Dr. Toedt holds a doctoral degree in management science. He is lecturer at several universities and assistant lecturer at the University of Applied Sciences of Munich for the subject “Customer Relationship Management in Tourism”. Apart from this he speaks at various hospitality events and fairs such as ITB, HITEC, Internorga, Austrian Hotel Society ÖHV or Cornell Hotel Society.

Michael Toedt

Managing Partner, CEO