Commodity Markets

By William Atkinson Contributing Editor | June 01, 2006

Is high-speed Internet access (HSIA) still a differentiator today for the hospitality industry, or has it become a commodity? That all depends on where the property is located and whether there is a charge for the service or not. In large metropolitan areas, where hotels that cater to business travelers, it is definitely a commodity. Resort areas, such as the rural California coast and the Bahamas, still see it as a differentiator.

Point of differentiation

"In the U.S. a lot of properties provide high-speed Internet access for free," points out Stephen Shewen, information systems manager for the British Colonial Hilton Nassau, Bahamas. "Here, we charge for it, which is the case with most of the other properties in the Bahamas. We charge $20 a day, so it is actually a pretty good profit center for us." The hotel utilizes Telkonet (telkonet.com) powerline Internet access technology. Shewen has definitely seen an increase in usage in the past year, and it is continuing to be on the upswing. One reason is voice-over IP. "We have seen our telephone revenue decrease and our HSIA revenue increase," he explains. According to Shewen, business and leisure guests are traveling with their laptops, because they don't want to be away from their email. The hotel's system is set up such that customers can plug a unit into the electrical outlets in their rooms and as such, it didn't need to install capabilities in every room. If guests want the service, they can ask for a kit at the front desk, which they can plug into their laptop and the electrical outlet in their room. "Since usage is increasing, though, we don't have enough kits to give to people," explains Shewen. "As such, we plan to install the kits in all of the rooms." The hotel is also going to increase the wireless connections in all of the public areas (restaurants, bars, lobby, and pool area). "We are also thinking about installing a centralized printer, so if guests want to print something from their rooms, they can pick it up at the front desk," he adds.

Down to business

On the other hand, brand-wide roll outs of free Internet are also helping to commoditize HSIA in many segments. Last year, for example, Doubletree Hotels completed its North American roll out and simultaneously debuted its Take Five Technology Solution, a comprehensive set of technology services for today's business traveler. "Doubletree understands how crucial it is for business travelers to have the right mix of technology services available on the road that empower them to be productive and successful," explains Dave Horton, senior vice president, brand management for Doubletree. The Take Five Solution offers travelers either a wired or wireless high speed Internet connection in guestrooms, which is backed by a 24-hour, toll-free customer support line. High-speed Internet access is also available in all meeting rooms, eliminating the time it takes to track down an elusive or non-existent Internet connection--meeting attendees can simply plug in their laptops and get down to business at hand. Wi-Fi in public areas, 24-hour remote guest printing services and MP3 connectivity to guestroom stereo speakers.

Essential amenity

Sometimes HSIA's role as a commodity or differentiator is determined not by hotel location, but whether or not there is a charge for the service, according to Robert Schneider, deputy CFO and assistant house counsel for Shilo Inns, which operates over 40 properties in the U.S. and Canada, and utilizes HSIA technology provided by New Edge Networks (newedgenetworks.com). "We feel that the service is an amenity that is essential for our provision of affordable excellence to guests," he explains. "Internet service had always been available via a connection on the guest phone. However, we felt a higher-speed wireless system was the next step." Management feels that HSIA is becoming more generic in the industry as a whole. "For us, though, it is still a differentiator, because we see it as a benefit that our guests will recognize as distinguishing us from other providers." In other words, what seems to determine whether HSIA is considered a differentiator or a commodity in certain areas is whether the property charges for it. For properties that charge, according to Schneider, HSIA is becoming a commodity. For those that offer it free, such as Shilo, it continues to be a differentiator. "We consider it an amenity," he notes. The free High-speed Internet access service seems to be driving new meeting business for Shilo. "We look at opportunities for expansion on a regular basis," he notes. "Occasionally, we find that a property needs more bandwidth because of a large convention. In these cases, we can expand bandwidth on a one-time basis."

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