All about Pokémon GO and how hoteliers can monetize it

PokemonGoPokémon GO, the recent sensation among teenagers and adults alike, is a free-to-play location based augmented reality (AR) mobile game. The game primarily uses the GPS and camera of the user’s phone, which augments the user’s reality and surroundings into the game.

It virtually places the (user) in the present location (GPS) on map; all the while mirroring the google maps with roads and locales on the user’s phone. The character in the game moves whenever the gamer/user moves (tracking the phone’s GPS) in the real world.

Different Pokemon species reside in different areas of the world, for eg: water-type Pokemons are generally found near bodies of water in the real world, which generates an authentic touch and a more interactive feeling in real time among users.

When a player encounters a Pokemon, they may view it either in augmented reality (AR) mode or with a live rendered, generic background (using the phone’s camera). AR mode uses the camera and gyroscope on the player’s mobile device to display an image of a Pokemon as though it were right there in the real world. Players can take screen shots of the Pokemon they encounter either with or without the AR mode activated. The ultimate goal of the game is to complete all the entries in the Pokedex, a rather comprehensive Pokemon encyclopedia, by capturing and evolving to obtain all the original 151 Pokemons, mentioned in the series.

Gym

Gym

A gym is a battling arena where users train their Pokemon during battles. For the moment these are the only spaces to train the Pokemon. However, a user can only access the gym when he/she reaches level 5 or above in the game.

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Pokémon GO is different from many other mobile games, since it involves physical activity by the user. To get to the Pokemon, Pokestop or a Gym the user needs to actually travel. An interesting feature is that is mandatory that the gamer travels a distance (2.5 or 10 kms) in the real world to be able to use the game’s bonuses such as Eggs for powerup’s, etc.

The game was initally released in Australia, New Zealand and U.S.A. in first week of July 2016. To date, 33 more countries have been added to where the game can be played.

Businesses have benefited from the nearby presence of Poke-stops (or their being the Poke-stops themselves). On July 15, Yelp added a filter that only shows businesses which have a Poke-Stop nearby. National parks across the United States saw an influx of visitors due to the game, with “hundreds or thousands” of people visiting the National Mall and Memorial Parks in Washington, D.C. on the weekend following Pokemon Go’s release in the country. Small museums with Poke-Stops placed at exhibits also reported increased attendance, such as the McNay Art Museum in San Antonio, Texas, and the Morikami Museum and Japanese Gardens in Boca Raton, Florida.

So how can hoteliers monetize the Pokémon GO craze?

Pokestop

Image Credit: McLean County Chamber of Commerce

Drive traffic

Pokemon Go successfully drives two of the 4P’s of Marketing principle, i.e. : Place and Promotion.

The augmented reality dynamics of the game is such that it induces gamers to move and find places where they could capture their potential Pokemon, reach Poke-stops (to get the game’s bonus such as coins, eggs, etc.), find a Gym (to battle Pokemons). These places can be facilities such as restaurants, amusement parks, bars, hotels, concerts, events, fairs and symposiums. Find out if there is a Pokestop near your location, and get to work promoting your proximity.

Build an ecosystem supporting Pokémon GO

The hospitality industry could go a step further to reach out to this largely millennial target market by declaring their facilities as “Pokemon friendly”. The game requires high speed Wi-Fi and is a heavy drain on the gaming device (phone) battery. A hotel that hosted phone charging stations and Wi-Fi would be an attraction for gamers. The game would bring traffic to your property, where gamers could use those services and also pay to partake of your food and beverage services and other amenities. This is somewhat similar to a casino’s concept where the players are provided with food and wine while they play at the tables.

Strategic alliances with Nintendo

In the present model, players’/facility owners can pay up and select “LURE” to attract the Pokemons to a specific location. Each LURE is active for 30 mins and costs about 0.60$. This area could be your hotel. An American pizzeria reported a spike of staggering 75% to their sales during a weekend after using $10 to buy LURE modules.

Going further, it is projected that Nintendo will also open its doors for purchase of Poke Stops and Gym’s, which would be a boon for facility owners. McDonalds Japan has tied up with Nintendo to host Poke-Stops and Gyms at their 10,000 restaurants. After this news, McDonald Japan’s share price saw an increase of 9.8%.

Target new segments, encourage social sharing

PokemonGo brings potential new market segments to hotels such as millennials, children, teenagers.

Gamers are starting to use TripAdvisor to acknowledge the ease of finding a Pokemon at a property. A traveler rated the hotel Villa Royale in Paris highly on TripAdvisor e talking about the hotel’s great facilities and surroundings along with the Pokemons found in the hotel. The hotel general manager replied back acknowledging this and further goes on to mention that travelers could find greater number of Pokemons during breakfast in the breakfast room (increased footfalls during the breakfast period).

TRIPADVISOR

TripAdvisor has gone a step further and lists different properties by search filter of type of Pokemon likely being found there, (which is usually in-sync with the property’s surroundings of its flora and fauna).

Mantra is an Australian hotel chain, with over 20,000 keys to its portfolio. It has been one of the first hotel chains to monetize the PokemonGo craze by launching the world’s first Pokemon Go friendly hotels. It works on the LURE module and is also a PokeStop. Gamers could PokeStop by Mantra 2 Bond Street in Sydney from 3 pm every Friday during July to receive a free bowl of fries with any drink purchase, and Melbournian Pokemon Go catchers could also cash in on happy hour drinks at Mantra on Little Bourke from 3 pm every Friday during July. The hotel chain markets itself by showing potential areas in its hotel rooms or restaurants where in a gamer could run into a Pokemon. This has been tweeted and posted on social media by many excited travelers and hoteliers.

Mantra

Mantra

Country Inn & Suites, Portland Airport has made itself a GYM on the app, meaning Pokemon Go players can capture the digital creatures throughout the hotel, fight GYM leaders and then run the GYM site. The hotel is offering a 10 percent discount when gamers book a room there.

Conclusion

PokemonGo is clearly a crowd puller, however, hoteliers will have to decide whether the kind of crowd it pulls is (or is not) an apt target audience. If it is, you may have to consider consider putting in entry barriers such as a cover charge or a minimal spend to access areas in the hotel you want to turn into a PokeStop or a Gym.

Industry experts claim, that an average hotel would spend about 1/6th of their overall revenue on Marketing activities. With the help of PokemonGo hoteliers could increase their profits 3.5% annually, by saving around 33% on their annual marketing spend.

Hotels market their properties and facilities in various forms such as billboards, printed materials, advertisements (print, videos and voice), events and fairs, online marketing (Ads, SEO, SEM, Inbound marketing, etc.). Organizing events and fairs, sending out invites and following up on the invitees is an arduous task which requires a considerable spend of manpower and money. Of the channels used for marketing, online marketing and events account for almost 60-65% of the marketing spend.

Take an example of a 200 room city hotel having two onsite restaurants, a coffee shop and a specialty restaurant. Typically, Rooms accounts for 65% of revenue, the coffee shop 15%, the specialty restaurant 10%, and Miscellaneous Revenue adds 10% to the Gross Turnover. The hotel achieves an annual occupancy of 70% and an average ARR of US$100, so it will achieve a gross annual turnover $ 7.86 million.

The marketing spend of such hotel would be about 3% of the turnover or $2,35,846. 70% of the marketing spend is traditionally utilized for online marketing and events, or $1,65,092 annually / $41,273 quarterly. About one-third of this spend goes in local area marketing spend.

As the LURE module in PokemonGo costs about 0.60$ for 30 mins, consider that LURE is used 3 times a day for 1 hour each (during restaurant/bar or any other point of sale’s promotion hours). It will cost $9720 quarterly. This would have a minimal saving of at least 10% in the marketing spend per quarter versus spend on usual marketing techniques for areas in vicinity. This would eventually extrapolate to 33% annual savings on the local marketing spend and would increase profits by about 3.5% (about US$ 55,030) annually!

Apart from LURE module, hoteliers can have a liaison with Nintendo for hosting Pokemon Gyms (gamers congregate in large numbers at these spots for battling with each others’ Pokemon’s) at their facilities. McDonald’s Japan has signed up 10,000 of its restaurants in Japan for this.

Hoteliers should make apt use of this new trend and be there to capture the market first – it could be a differentiator not only for saving marketing costs, but also for brand recognition.

Some interesting stats about PokemonGo

  • It has about 26 million active users in U.S. which makes it 5.92% of the android users in U.S.
  • An average user spends about 43 mins daily on this game
  • Revenue generated by the game so far ( at 19/7/16) : $35 million
  • PokemonGo has the highest number of downloads from iOS app store as compared to any other app
  • Nintendo’s market value increased by $9 million within 5 days of the game release
  • 7 out of 10 people that download the app returned to it the next day
  • PokemonGo’s daily usage is twice as much on Android apps than the Facebook app

About the author

Anupam ChawlaAnupam Chawla earned a Revenue Management certification from Cornell University in Ithaca, New York. He has seven years of experience working in hospitality and consulting, with an in-depth exposure to front office operations and revenue management. He was a Cluster Revenue Head for Taj Hotels and currently is a Manager, Research Analyst for RateGain, a leading provider of cloud-based product and service around the function of rate intelligence, price optimization, seamless electronic distribution and brand engagement to the world’s leading hotels, Online Travel Agents, airlines and tour operators.

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