Wireless Wave Rolls On: June 2005

It wasn't too long ago that long distance calling cards and cell phones spelled doom for the telecom revenues of hotels, relegating in-room telephone usage for intra-property communications and wake-up calls.

Wireless high-speed access has undergone a similar evolution as operators are increasingly viewing the Internet as a free amenity for the guest and a sunk cost for the operator. The trends holds true for all hoteliers, irrespective of locale and price segment and bodes well for the traveling public.
According to Pyramid Research, a Cambridge, Massachusetts-based consulting firm, nearly 6,000 hotels currently offer Internet access in guest rooms and/or common areas, and that metric is expected to quadruple by 2007.

Most recently, economy and limited-service chains like La Quinta and the Hilton-owned Hampton Inn brand have rolled out free wireless HSIA, allowing guests to access their e-mail accounts and utilize browsers via their own laptops in their rooms and common areas.

This past spring, La Quinta Corporation inked a pact with broadband provider Guest-Tek (guest-tek.com) to install its GlobalSuite wired and wireless HSIA in about 248 properties, or 29,000 of La Quinta's 65,000 rooms with all units to be completed by June 15. Currently La Quinta owns, operates, or franchises more than 590 hotels in 39 states and Canada under its namesake brand, Baymont, Woodfield, and Budgetel brands.
The GlobalSuite solution sports many features that would appeal to operators like La Quinta that serve diverse customer bases, but at the same time, want to keep their IT support costs at bay.

For example, the service works with various Ethernet-based network configurations (wireless, DSL, Cat-3 or Cat-5 cabling, and fiber), thereby allowing guests high-speed connectivity via various devices, including phones and PDAs.

And like many Wi-Fi offerings, La Quinta's GlobalSuite establishes a branded login page, provides around-the-clock, toll-free guest support, and allows them to send and receive email from their outgoing SMTP (outgoing) and POP3 (incoming) protocols.

The free-for-all
While the fray for free Internet access was led by some of the larger hotel chains, many independents, real estate management companies and mixed used operators have boarded the free Wi-Fi bandwagon.

The European-styled, Belden Stratford, located in Chicago's upscale Lincoln Park section, is a mixed-use property that for several years explored HSIA but wasn't sure how to go about it. Part of the property's quagmire stemmed from the building itself, which was built in the 1920s and sports 18-inch concrete walls with absolutely no drop ceilings.

"That presented a lot of different obstacles. We looked at Cat-5 and other solutions earlier this year but we would have looked at very lengthy implementations," recalled David Sherman, senior vice president of Belden Stratford owner/operator IRMCO Properties. Sherman also noted that since his guests have come to expect HSIA, the time to market factor was huge, and that the entire property was "wired" for wireless HSIA within a few weeks through an agreement with RoomLinx (roomlinx.com).

"All we needed was a T-1 line and then they placed antennas in strategic hot spots on several floors," Sherman states. As for usage and feedback, Sherman maintains that 70 percent of hotel guests and one third of residents are using the wireless service.

"We're early in the process but the comments about RoomLinx's tech support have been very good to date, which is obviously a good sign." In the future, IRMCO expects to install the same wireless service to its properties that cater to faculty and students near Northwestern University and other Windy City-area colleges.

What about revenues?
Though most hoteliers now view HSIA as a complimentary guest amenity, it wasn't long ago that the Web was strictly a "pay to play" service. According to Pyramid research, about one quarter of domestic hotels charge for HSIA that can range from $9.95 to $11.95 per day. But have guests become price sensitive?

"We still view it as a profit center. Right now we're charging and have not seen that push back from guests. It may come at some point but it hasn't happened yet," proclaims Mark Goldstone, executive vice president for DL Saunders Companies, which inked a pact nine years ago with Starwood Hotels to operate the 950-room Park Plaza hotel in downtown Boston.

In addition to charging $9.95 a day, the property took a different tact with respect to HSIA, leveraging 50-year-old twisted pair copper cabling as the backbone of its wired in-room Internet offering.

"It sounds antiquated but it's lightning fast," Goldstone adds, referring to a system installed by Unisys (unisys.com) some 18 months ago. This included a T-1 line and a multi-port Cisco (cisco.com) router and Broadband Business Manager that centrally manages all IP addresses and devices associated with HSIA and in-room thermostats via infrared signals.

The operator also utilized the same broadband base for its in-room entertainment offering via KoolConnect (koolconnect.com), which runs off the property's existing coaxial cable and IP-based set-top boxes. "They combined what we had with something called CoAx Media to give us state-of-the-art in-room entertainment. Plus it increased our channel lineup from 10 to 54 overnight," Goldstone says.

This summer, the Boston Park Plaza plans to offer a fee-based, wireless HSIA service for the property's meeting room space of about 60,000 square feet. Those guests whom sign up for the in-room HSIA will be able to use the wireless version for free.

Down the road
Much like travel-size toiletries and in-room hair dryers, HSIA will continue to be an expected amenity for two simple reasons: the technologies like the 802.11x protocols have become simple for hotels to implement and easy for the traveling public to understand.

And while some properties still charge daily rates for in-room HSIA, the majority are also offering free Internet access in common areas and business centers. Over time, the entire traveling public, not just road warriors, will expect their hotel stays to come with free HSIA.