Getting Down To Business

Hotels find valuable ways to profit from entertainment systems�new and old.

By Rebecca Oliva, Technology Editor -- HOTELS Magazine, 11/1/2002

As entertainment technology becomes an expected amenity in many hotels, property managers are turning these systems into profitable ventures by listening to what their guests want and then delivering it.

For Craig Turner, assistant director of information technology at Four Seasons Hotel Los Angeles at Beverly Hills, offering a state-of-the-art entertainment system in each of the 285 rooms is imperative for two reasons: the nature of the discriminating Four Seasons clientele, and the high percentage of guests from the film industry. Turner and his team chose Los Angeles-based NXTV, Inc.’s digital Broadband Intertainment System, which provides high-speed Internet access, video-on-demand and other advanced TV programming.

“Our guests are the most demanding guests that a hotel is going to see,” Turner says. “We needed a system that was going to be easy to implement and upgrade.”

The digital capabilities make it easy for the back-of-the-house as well as guests. And, because the programs can be played and stopped at any time, Turner has noticed a sharp increase in in-room entertainment revenue.

Other hotels have paid particular attention to making the most of their entertainment systems by realizing what their guests want and how much they are willing to pay. And, while the guests get what they want, hotels get bigger revenues by choosing the right system that combines advanced technology with the ability to upgrade easily and advertise hotel services.

More Than Entertainment

When Choice Hotels Scandinavia implemented Oslo, Norway-based OTRUM Interactive TV system, the hotel chain noticed a greater efficiency in its front office and housekeeping management. While the primary function of the OTRUM system is to provide guests with in-room entertainment, Choice Hotels uses it as a communication tool between housekeeping and the front desk.

“The housekeeping staff can go into the TV systems and find which rooms require certain amenities, and which are ready for check in,” says Morten Karlsen, purchasing manager, Nordic Area, Choice Hotels Scandinavia. Choice Scandinavia currently is using the OTRUM system in 40 of its hotels with about 6,000 rooms. Karlsen says that only 10 hotels are offering movies on demand, as he believes the Norwegian market isn’t ready for it.

Choice charges guests 110 Norwegian Krones (US$15) on a 24-hour basis. Guests have access to eight TV channels, four movie channels and six radio stations. Karlsen says while the entertainment system is not Choice’s core business, it makes the most of the technology by focusing on marketing hotel services and enhancing staff efficiency.

“The in-room television is an excellent way to show our guests who we are,” says Ellen Stebekk, marketing manager of Choice Hotels Scandinavia.

Choice has concentrated some of its efforts into building its brand through the TV. Choice uses the marketing channels to inform guests about its loyalty program, Choice Club, special offers, openings of other properties, seasonal campaigns and other events within the chain. Each hotel maintains the general brand “look,” but can add slides and information pertaining to the specific hotel. “It is extremely important in the brand building process to keep the same look on all channels,” Stebekk says. “Therefore, we have designed standard screen layouts that are meant to last for many years, while the actual content is updated quite often.”

Keep It Simple

But both Karlsen and Stebekk agree that content should never be too pushy or overbearing. “By not pushing the messages too much, we believe that more people will watch and take in the information,” Stebekk says.

Many hotel chains opt out of investing a lot of money in an advanced system. One such company is Paris-based Accor, whose Sofitel brand is expanding rapidly in North America, with recent openings in Washington, D.C., Chicago and Montreal. “You really have to look at what the guest wants when he checks into a Sofitel,” says Robert Moore, vice president of technical services, Accor North America. “If you look at a typical guest, is he going to spend time trying to figure out the system?”

Moore believes the answer is no, and as a result, Sofitel uses its entertainment system primarily for entertainment purposes. Sofitel is using On Command’s second generation Roommate System platform. All properties are operating the new menu system, which features guest-interface enhancements and enables properties to customize an entire menu section for their promotional purposes.

However, in addition to marketing opportunities down the road, Sofitel plans to use the system for customer feedback. For example, a customer may check out via the On Command system and submit feedback through a brief guest survey. “If something was wrong, we would like to have that survey instantly e-mailed to the general manager’s PC,” says Moore.

In the meantime, Sofitel has regular meetings with On Command to try and increase the revenue stream and most recently re-engineered the menu screen to make it more user friendly. In addition, Sofitel expanded its list of movies and television programming to attract more guests.

Advanced Technology, Higher Profits?

Even if a property isn’t exploiting the capabilities of marketing through the entertainment system, it can create a higher revenue stream. Four Seasons, Los Angeles at Beverly Hills, California, recently implemented NXTV’s digital Broadband Intertainment system, which includes DIRECTV and HP technology. Turner says by offering digital entertainment in which a guest can watch a movie of his or her choosing at any time, guests are more likely to purchase a movie.

“We have seen an increase in usage and in positive feedback since we installed the digital system,” Turner says. Since installing the NXTV system, Four Seasons also has invested in Zenith 27 in. (69 cm) and 32 in. (81 cm) plasma TVs. The system provides guests with movies-on-demand, which Turner says have true on-demand functions as they can be played, paused and saved for a later time. “Since the movie is coming off of a hard drive, there is no degradation from the first playback to the 100th playback. It is the quality guests are used to in their homes now. They expect it here.”

Along with movies-on-demand, NXTV includes high-speed TV Internet and e-mail, interactive video games, a branded hotel portal and digital satellite TV programming. Turner says more than 90% of the NXTV system is used for on-demand movies, partly because of the high quality of the movies and partly because of the ability to view them at any time.

But the technology behind the system helps hotel management work better, too. The NXTV is built to run directly off of the CAT 5 cabling through the video server. Turner says that Four Seasons had to refine its CAT 5 infrastructure to handle the system.

In addition, the IT staff uses the Web management tool, which allows them to view activity on the system via a Web site. Turner says he can get inside the system and pinpoint which movies are selling. “We can look at how certain movies are selling, and we can really go in and diagnose what movie is doing well and what movie is doing poorly,” he says. Based on that information, Four Seasons is able to increase the price of the most popular movie titles.

“From a management standpoint, it is necessary to be able to upgrade the software easily,” Turner says. “The ability to do this ‘on the fly’ is what makes a digital system worth the investment.”