Monday, 4 August 2014

Hilton Hotels to install 650,000 Digital Keys by 2016

Last week on July 28th 2014, Hilton Hotels announced a $550 million dollar investment to begin rolling out a ‘digital key system’ in all 650,000 of its rooms by 2016 – see Wall Street Journal article here.

This is an unprecedented and exciting event in the history of the hotel industry. It was back in the late eighties and early nineties when we last had a large technology roll-out in the hotel industry - the mag-stripe keycard system roll-out. This roll-out, however, was done in dribs and drabs. Over the last 30 years or so global hotel Chains have been upgrading their metal keys to keycard systems in hotels here and there, mostly one at a time, and it’s still going on now.

But this Hilton announcement is about rolling out in all rooms in one fowl swoop, and rapidly - according to the Wall Street Journal article it will be done by the end of next year. So the question that has to be asked is 'why have we suddenly now got this ‘revolutionary’ announcement from Hilton?'

Many people, especially those in the industry, think this is revolutionary. In the past, decisions for new technology/systems/upgrades for hotels were made at a regional and/or local level, and usually one hotel at a time.

So let’s break down the Hilton decision with a break down! - the mag-stripe keycard system breakdown. We’ve all known for a long time that the mag-stripes systems have been breaking down and require an upgrade - so perhaps the Hilton have finally reacted to the failure of mag-stripe keycard systems?

Everyone knows about keycards failing. Hotels, lock manufacturers, anyone that has ever stayed in a hotel has probably had the keycard fail at one time or another – the science shows that mobile phones, when held against the magnetic stripe of a keycard, can cause it to demagnetise.  The science also shows that when a mag-stripe is scratched it can also demagnetise. So although some are surprised by the Hilton announcement, others will say, ‘why on earth has it taken so long if we've known all along that the keycards have been failing for so long?’

The short explanation is that the hotel industry (and all the supporting industries such as lock manufacturing, the software to run the keycard systems and so on) had invested so heavily in the mag-stripe system rollout and they weren't just willing to simply rip it up after it had just been installed. Maybe if those things called mobile/cell phones didn't come out just after the keycard systems were first installed, the problems would never had happened. 

Perhaps a good analogy here between the mag-stripe system rollout in the hotel industry is like a City installing a light rail system. Can you imagine that you are a City Council that has invested billions over many years in building a light rail system, laying all the tracks and installing all the electric poles and wiring, causing disruption to your local population during the installation, only to learn months after it was installed, that cars that run on unleaded petrol instead of the old petrol were driving over the tracks and causing the trams to break down and you had to rip it up and get a new one? What would you do - leave the light rail system and put up with it breaking down every now and then, or would you rip it up and build a new one.

Lets say you were the Mayor of the council that had installed the light rail system and you were advised by the contractors that installed it that the problem wasn't that bad, and that the tram worked sometimes, and and you could still run the tram system, would you keep it? And lets say you were told by the contractors that you had no choice really, but to stick with it, as there was no replacement ready anyway.

So although mag-stripes systems, like a defective light rail system, was not working all the time, the hotels kept using it. Until now that is. Hilton have finally realized that there is a better system out there now to replace mag-stripe keycards and that is digital keys systems.

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