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Starwood plans to begin rolling out keyless check-ins next month at additional Aloft Hotels and at W hotels around the world, and in addition to the improvements in the guest experience, Starwood is banking on getting plenty of marketing buzz and increased room occupancies and rates from the initiative.
The mobile check-ins for Starwood Preferred Guest members through the SPG app will be costly for Starwood, and was the key factor behind the hotel chain raising its full-year 2014 guidance 5% to 7% for selling, general and administrative expenses (SG&A), according to CFO Thomas Mangas.
Speaking during Starwood’s third quarter earnings call October 28, Mangas said the mobile check-ins will be implemented at both at properties Starwood owns and at properties that the chain merely manages, and Starwood doesn’t have a fee in place to charge owners for the necessary equipment.
Starwood will be absorbing that cost — for now, at least.
Costly Mobile Check-Ins
“Certainly, we are launching several initiatives under the SPG banner, mobile check-in is the big one to have the significant amount of expense with it, because not to get to technical on you, but this is something we are pushing out to both owned and managed hotels,” Mangas said.
“And generally we are pushing out devices into the buildings that we don’t have a fee recovery mechanism in place right now, because we’re really trying to prove and qualify the idea,” he added. “So we’re absorbing the expense in the quarter, this quarter and next quarter as we try to roll them out.”
Yes, keyless check-in would presumably improve the guest experience, but Starwood view it as a marketing tool, and one that would increase both occupancies and rates.
Benefits Beyond the Guest Experience
“And over time I think it serves both as an effective marketing expense to drive excitement and buzz in the hotels where our guest will value it, and overall drive greater occupancies we believe, and rate in these hotels,” Mangus said. “So that’s really the main driver on this SG&A increase for the year.”
CEO Frits van Paasschen said keyless entry at the Aloft in Cupertino, California, and Aloft in Harlem “have been a great success,” an opening act to the rollout of the mobile system at additional Aloft properties and W hotels around the world.
van Paasschen intimated that keyless entry is just the beginning, citing the SPG app’s integration with Apple Watch.
“Now, the idea that your watch could open your room may seem futuristic, but it’s a future that’s not all that far off,” he said.