Ringing Up Revenues
New innovations put the profits back in telecom.
By Joan Marsan, Technology Editor -- HOTELS Magazine, 9/1/1999
While telecommunications services remain the third largest revenue stream for hotels, income from this source has declined over the past decade. This is a sobering reality, as system installation and equipment costs can easily reach and surpass US$1 million.
A decade ago, guests had few telecommunications options. They paid high rates for long distance calls directly to hotels, as outside providers charged equally steep rates. But the scene has changed. Increasingly, customers use 800 numbers to access long distance and Internet services. Lines clog with calls that offer little to the hotelier in the way of cash.
Offering in-room Internet service appeared to be a possible source of ancillary telecom income. And this scenario may yet prove to be a reality. But at present, few hotels receive handsome returns from Internet systems. Many properties report uptake of the service at levels of about two guests per day--usage rates that at a price of US$8 to US$20 per day fail to support the expense of a full-scale rewiring.
In spite of high costs and declining revenues, hoteliers steadfastly support telecom's value, and they aggressively seek new means for generating profits through these essential systems. Their methods are simple: use the best technology available to give guests what they need. Their solutions benefit customers and the bottom line.
Buying More For Less
Each guestroom at the 427-room Seaport Hotel and Conference Center, Boston, Massachusetts, is outfitted with a business phone set--a digital, 16-line phone with caller identification and speaker phone. Analog ports supplement LAN access. The high-capacity devices get a regular workout.
Steve Bearden, vice president of information technology at Fidelity Investments, owners of the property, monitors use of the Nortel system. He found that much of the traffic is toll-free, most of it data rather than voice traffic. Of the toll-free calls placed by guests, 20% have a duration of more than one-and-a-half hours. And Bearden has seen calls longer than eight days in duration. "Guests are so shell-shocked from not being able to get a line out at other hotels that they just stay on," Bearden says.
To handle the load, Bearden installed a system with twice the capacity of the average hotel. Typically, hotels have been configured with 10% to 15% trunks to hotel rooms. The Seaport operates with 25%. The hotel employs 45 trunks to handle telephone traffic. The system generally runs at 30% capacity.
The Seaport's guests occupy the phone lines free of additional telecom charges from the hotel. Toll-free calls are truly toll-free. In order to make such a policy work for the hotel, artfully dealing with equipment and installation providers is paramount, Bearden says. "The key is negotiating. We may have a system with more than we need right now, but if we negotiate, we can get it at a good price." Bearden uses T1 providers as an example. Installation costs for the high-speed amenity range wildly. "Two T1s at $800 are better than one T1 at $1400," Bearden says. And buying new helps, he adds. "If you're buying new, you have more negotiating power for line cards."
Bridging The Gap
A new telecommunications revenue source for Bearden's Seaport is the conference bridge, which allows outside clients to phone into an 800 number for conference calls with hotel guests. Bridging capabilities are built into every Seaport phone and are available to guests for a fee of US$100 per hour. The service is a natural extension of the property's convention facilities, Bearden says. Groups using the adjacent 150,000 square foot meeting room space at the hotel find the service particularly appealing.
Bridging capabilities enabled the innovation of a translation service to be released late this year by Travelers Telecom. Guests will be able to dial a pre-set number from their hotel room phone, or even their cell phone if it is linked with the hotel through the Travelers Telecom Wireless Connect service, and connect with an individual fluent in the guest's native tongue and the local language. "This will be hot in gateway cities," says Steve Forte, co-CEO. "Imagine you're in a foreign country in a cab and you want to get back to the hotel--but you don't speak the language. What a relief to be able to press a button on your cell phone and get a person on the line who can tell the cab driver to take you to your hotel. That's a service guests will pay for."
Selling Something New
Integrated wireless services, such as those offered by Comdial, Homisco and Travelers Telecom, offer hotels new ways to serve guests while securing greater profits. The average guest spends no more than four waking hours at a property. Providing cellular services gives the hotelier an opportunity to serve--and charge-- guests even while they are off the property.
"I don't know whether we were fortunate or unfortunate," says William Mackay, general manager, Four Seasons Hotel at Beverly Hills, of the 1994 earthquake that shook loose the original phone cabling tie-wrapped around the building's joists. The damage made rewiring of the hotel imperative. Now two category 3 and two category 5 cables reach each of the hotel's 285 rooms ("one for Web TV, if it takes off," Mackay says). Each room contains two phone lines and two fax/modem ports. In addition to the sophisticated in-room phones, guests at the Four Seasons now have access to round-the-clock cellular service. And 20% of them are using it, at an average of 18 calls per guest.
Four Seasons guests may borrow a phone or use their personal cell phone. Calls made to the guest's room number ring both in the room and on the cell phone. Guests are informed upon answering that the call has been routed through the hotel, and they may press a key to accept the call at a charge of US$.95 per minute, billed directly on the folio. "Guests never have to miss a message," Mackay says.
The service clearly benefits guests, and it affords the hotel a new revenue source at minimal cost. While Four Seasons markets the cellular service, Travelers Telecom installed and maintains it in exchange for a healthy share of revenues.
Sophisticated platforms support such enhanced services, and it is these platforms that enable telecommunications innovations. While the PBX chugs away, connecting calls and lines, new boxes act as servers, switches and telephony gateways. They connect to everything--the PBX, LAN, each room, the PMS. They tie it all together, simplifying billing, enhancing efficiency, and supporting new applications that allow hoteliers to offer better, once-again profitable, telecommunications services.
Fraser Hickox Talks Technology
Fraser Hickox is group general manager, research and technology, for The Hong Kong and Shanghai Hotels, Limited, Hong Kong.
Q: What technological innovations impacting in-room entertainment do you see looming on the horizon?
A: I have always felt that the movie-on-demand people were technology-challenged in that they have been reluctant to take a giant leap and address the new and emerging technologies that are largely driven by the consumer.
Our guest now sits beside a high-resolution computer monitor, buying home entertainment on DVDs and is about to witness a revolution in television broadcast technology offering a quality that in short time will relegate analogue television services to the same repository as short wave radio.
I find it quite interesting to observe the emergence of AT&T and GTE into this arena. They will hopefully start offering quality services that will far exceed those currently on offer. Apart from offering high-quality on-demand video, we see them bundling a number of services that will require less investment but higher returns for the property with the bonus of greater guest satisfaction.
In the near future there will be a greater emphasis on time-shifting enabling our guests to determine when they wish to see a broadcast or segment rather than having to comply with a broadcast schedule. Enhanced Internet style services will be faster, better and more useful at less cost to the guest. Guest room telephony will compete with the credit card and cellular phone revenue by offering a range of additional features not currently available on competitive services.
The entry of the large carriers will have a significant impact on any property.
Q: What inventions will affect guest comfort?
A: On the comfort issues, having returned from the grand opening of our new Bangkok Peninsula, which is employing our latest technology, we have assembled a few new ideas to challenge our R&D team both for future upgrades and for properties currently under planning. Certainly our guests are responding favorably to our lighting systems, and we now have an opportunity to further enhance these.
We do not, however, see the immanent introduction of voice-activated functions in a luxury environment, although we have had a test bed for some time, which proved to function well until we switched on the television receiver.
Q: How do you assess the value of a particular in-room system at your hotels?
A: Our first test is often in mock-up rooms or test beds with which we seek opinions. Then we have people representing the technically adept and challenged of a large age range stay in mock-up rooms. We are about to commence a technology survey in all properties over two one-month intervals sampling 1,000 guests per property per interval. We are interested in hearing about the use of equipment and needs for the future.
Tech Briefs
Partnering Produces Profits
With the launch of its free-to-members property management system (PMS) software, innSynch, Inntopia.com proves itself a fierce competitor in the alternative-GDS arena. Inntopia currently lists 20,000 hotels through its own site, 6,000 affiliate Web sites, CenRes, the company's free central reservation system (CRS) and coming soon, the GDSs. Affiliates include destination, e-commerce, regional and chamber of commerce Web sites that use Inntopia to book hotels.
Following a unique business model, Inntopia charges a maximum of 10% on the rooms portion of a sell, and it splits that commission with affiliates. Affiliates that bring in additional hotels get a cut of those hotels' sales. "Affiliates are all out there supporting us now because of the potential for revenue generations," says CEO Karl Schroll. And commission revenues from Inntopia are increasing at a rate of 50% per month, Schroll reports.
While overseas ventures aren't a primary focus for Inntopia, the company has pushed into the international market, with affiliates and hotels spanning Turkey, Ireland, Italy, Israel, Greece, Thailand and South Africa.
Dolce Launches Prototype Tech Resource Center
Hamilton Park, Florham, New Jersey, a Dolce conference hotel, completed construction of a technology resources center with laptop stations, PCs, and laser and color printers available to clients at no charge, 24 hours a day. High-speed Internet access now graces every meeting and guest room. Trained technology professionals are on hand to assist customers with equipment, interfacing or presentation problems. Hamilton Park already offered a mobile videoconferencing unit, LCDs, extra meeting-room cabling and a full-service business center with administrative services.
Supplyline
- MICROS Systems, Inc., Beltsville, Maryland, will provide hotelBANK services to Hotel Nikko Hongkong. MICROS partnered with Saflok, Troy, Michigan, to offer point-of-purchase capabilities to a hotel key card...
- Ilco Unican installed the Millenium 9000 security system at the Peninsula Bangkok...
- Elastic Networks, Alpharetta, Georgia, and Telematrix, Colorado Springs, allied to provide high-speed Internet access...
- AremisSoft will be installed in Rank Hotels, U.K...
- Pegasus Systems, Inc., Dallas, will process commissions for SatoTravel, Arlington, Virginia...
- All hotels represented by Lexington Services, Irving, Texas, will appear on the Leisureplanet site...
- Wayport, Austin, Texas, installed high-speed Internet access at the Omni Interlocken Resort, Broomfield, Colorado...
- Six more U.S. states joined the WorldRes, Inc., San Mateo, California, online reservations program...
- Unique Hotels & Resorts, New York, selected the Norwalk, Connecticut-based Xenon CRS.
View All Blogs
