When RFID is Absolutely the Wrong Choice

Posted by on Dec 12, 2016 3:13:02 PM

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The drive to innovate and adapt to new technologies is rampant more than ever among companies today. Brick and mortar's are trying to figure out how to stay competitive in a digital world, warehouse are becoming futuristic experiments, and grocery shopping now requires no human interaction. Think what you might about these changes personally, it is a fact that businesses must evolve to meet the changing needs of consumers.

So it makes sense that the hospitality industry should follow suit. RFID might not be the first technology you would think of in connection to hotels. Yet hotels utilized RFID before many other industries in keyless entry cards. Therefore it would make sense for the industry to look for other problems to solve with RFID technology, since keyless entry cards were a particularly intelligent move.

RFID is often used for asset tracking and asset management, whether it be important legal files, expensive technology, or library books. This technology works very well in keeping track of multiple assets, especially ones that are important or hard to keep track of.

RFID for Asset Tracking Makes Sense

That's why at first thought it makes sense that an enterprising linen provider would use RFID to keep track of all hotel linens including towels, robes and bed sheets.

Linen Technology Tracking, a Miami based company used washable RFID chips that were sewed into various hotel linens in order to prevent theft and loss of these items.

If guests or hotel workers were to attempt to take the linens off the hotel premises the sewed in chip would trigger an alarm. According to the New York Times three hotels in New York City, Honolulu, and Miami utilized this system via Linen Technology Tracking.

According to William Serbin, CEO of Linen Technology Tracking the soaring cotton prices led to many hotels switching to his RFID based linen tracking system. He also considers the technology to have a dual purpose in catching thieves.

RFID In Linen Saves Money

Shortly after the system's implementation the Honolulu hotel reported a savings of nearly $15,000 in the span of less than a year. One might think after seeing those numbers everyone lived happily ever after reaping the benefits of the ROI of RFID.

Without the people of Reddit that may have been the end of the story, but recently Redditors found that Linen Technology Tracking is in fact filed for bankruptcy and it is unknown if the hotels even continue to use this technology.

Where it all Went Wrong

In short, this RFID implementation turned out the be a major failure.

Here's why.

1. The price of cotton

When Linen Technology Tracking first established their business and sold the RFID linen tracking systems to the hotels in major cities cotton prices were at an all time high.

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As you can see from the graph from Nasdaq the price for cotton spiked in 2011 and then plummeted shortly after.

This spike was in fact and anomaly and the current price of cotton is actually the normal price in the last decade. Except for the spike in 2011 the price of cotton has not changed that much.

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The 2011 spike in cotton prices was mostly due to heavy rains in cotton growing regions reducing the yearly supply of cotton available for purchase.

2011 was the same year Linen Tracking Technology rolled out their RFID linen tracking systems. At the time it must have made sense to track items that were continuously becoming more and more expensive to replace.

The high cotton prices allowed hotels to understand the need for tracking linens because the ROI would be substantial. Yet when cotton prices plummeted and replacing linens became cheap again, all those RFID tags made less sense.

2. The price of customer satisfaction

Now this might be an even more important contributor to the failure of linen RFID enabled tracking. The fact that hotels are first and foremost in the hospitality industry and in this industry the customer experience always comes first.

Imagine paying for a hotel in Honolulu, finally taking that expensive vacation. You decide to unwind by the pool so you grab a towel from your room and head down. All of a sudden as you exit the hotels alarms start beeping. The receptionist rushes over and you have to explain your attempted towel theft to her.

Although we would hope that hotels considered the fact that patrons would want to take towels to the pool and account for that in their RFID sensor installation this scenario could still play out if a patron accidentally had a towel stuck to his luggage.

Whatever scenario comes to play, the fact is that most hotels which have towels that are pricey enough to steal do not want their patrons to feel like thieves. These hotels can range from $150-$300 a night, in many cases much more.

If a hotel patron is "caught" accidentally stealing a towel he will never stay at that hotel again. He will talk to all his friends and tell them not to stay. In the long run this will end up costing the hotel much more than $15,000 a year.

If only hotels took the time to read the comments about this article they would see that customers would react badly to this asset tracking system:

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Also reading this comment might have been useful, it's essentially free user experience testing:

linen-rfid-comment-2.pngChoose Wisely When it Comes to RFID Implementation

The most important thing to learn for this implementation is to choose your RFID consultant wisely. If a consultant only just set up shop betting everything on high cotton prices, they may not be the most stable partner. It's obvious in retrospect, but in the moment linen tracking probably seemed like a great idea.

Choose an RFID consultant that is experienced in a broad range of implementations, and can advise your solutions based on experience with working with well respected companies.

If you have RFID implementation question we are always here to chat, drop us a line. Also, take a look at our 21 Questions to Ask Yourself Before Implementing RFID, we wish the Honolulu hotel had this in 2011. 

20 questions to ask yourself before implementing RFID 

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Topics: RFID

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