Hilton's Hotel Key App Opens Doors for Mobile Wallets

Hilton's updated mobile app, which lets guests use their phones as room keys, has almost nothing to do with payments. But it may be the catalyst the payments industry has long needed to get consumers to warm to mobile wallets.

From the earliest days of mobile payment technology, it has been clear that consumers don't care about apps that enable payments and nothing else. They need other features to draw them back to the app. Even Starbucks, which now handles 15% of its U.S. in-store payments through its mobile app, attributes this success to the strength of its loyalty program.

The new Hilton app will turn hotel check-ins into a completely self-service experience. Starting next year, the company promises that guests will be able to select a room, check in, purchase upgrades and unlock their doors using a mobile app.

The door unlocking is—if you'll forgive the pun—a key feature. This is best illustrated by the success of a wristband-based payment system at Disney World in Florida, while a similar initiative failed at Hersheypark in Pennsylvania.

Hersheypark's bands could be used for admittance, rides, locker access, shows and concessions. Disney's version supports many of the same features, plus its MagicBand doubles as a key to rooms at Disney-owned hotels.

It may seem like a small difference, but Hershey's program shut down within months of its formal launch, citing "very low" demand, while Disney's program has rapidly expanded.

In Disney's program, consumers are introduced to the payment function much later in the process of obtaining a MagicBand. Guests choose a MagicBand design when they book their tickets, and can receive them ahead of flying to Disney World. The payment function is supported throughout Disney's properties, but it's an optional perk. Most parkgoers will likely use their MagicBands as hotel keys before trying them out for any other purpose.

In this way, Disney warmed its customers to the idea of the new technology through non-payment functions. The same philosophy drives the development of CU Wallet, the credit union-driven mobile wallet project. CU Wallet's early tests are focused on non-payment functions such as ATM access, with the hope that users will decide for themselves to also use the mobile wallet at the point of sale.

Hilton's program is set to expand aggressively. The company promises a full U.S. rollout of the door-unlocking feature throughout the U.S. across all four of its brands by the end of 2015, with most rooms worldwide supported by the end of 2016.

The app's purchasing capabilities, as outlined in Hilton's press release, are limited to adding upgrades. Of course, many hotels already support "walletless" payments by letting guests charge purchases to their rooms, so payments are not a pain point for Hilton.

Hilton's project stands to benefit the payments industry by introducing a new habit without forcing it. Just like Disney's MagicBands, Hilton's app encourages guests to open their doors through a phone instead of swiping a keycard.

In this way, Hilton and Disney are both planting the idea in consumers' minds that any card swipe can be replaced with a mobile device.

Daniel Wolfe is Editor-in-Chief of PaymentsSource.