Hotel Execs Tackle Top Network Woes

By Cihan Cobanoglu, Ph.D., CHTP | June 10, 2011

In April, I had the opportunity to moderate a panel discussion on “Connectivity and Networking Challenges” at the 2011 Hotel Technology Forum in Las Vegas. The session presented opinions from three insightful panelists that represent a variety of different hotel brands: Mike Uwe Dickersbach, CHTP, NICE, MCP, vice president, information technology, Thayer Lodging Group; Simon Eng, vice president, information technology, CTF Development Inc.; and Darrin R. Pinkham, CHTP, vice president, information technology, Benchmark Hospitality International.
 
We set out to identify possible solutions to some of the challenges that this panel and others in the hotel industry face regarding networks and connectivity. Several challenges rose to the top: choosing the right business model (free or for a fee); managing bandwidth; determining the type of access (e.g. wired, wireless); mobile phone coverage issues within the hotel; infrastructure choice (e.g. Satellite, T1, or Frame-Relay); security issues; and the general future of connectivity in a hotel room.
 
Fee vs. free debate
In terms of the fee vs. free business model, there is no one easy solution. In fact, this topic in particular stirred the audience to a lively interaction. The business models employed on the panel, like those in the audience, vary widely. Some of the panelists’ hotels offer Internet access free to guests, whereas others employ a daily charge for Internet access. One panelist operates hotels with a tiered model, whereby a basic 768K connection is provided free-of-charge and a fee is applied for a premium connection at higher speeds.
 
There was one thing all panelists agreed on -- the revenue earning potential of HSIA, with some even hinting that they wish it were possible to assign a connectivity fee at any usage level. However, they all agreed that we are going to an era where at least basic level HSIA will be “free” in that it’s built into the room rate. The solution for many will be a tiered access formula, whereby low-levels of connectivity are available at no extra charge, and a charge is incurred when guests opt for more bandwidth. The take-rate for a premium HSIA fee is significant enough to justify the additional investment needed to manage a tiered business model, the panel advised. Furthermore, a tiered model will ensure cash flow, allowing the hotel to offer high quality connectivity.
 
The panelists, and many in the audience, acknowledged that charging a fee for HSIA can generate guest complaints. The tiered model reduces these complaints significantly. The panel also suggested that separate networks be employed in hotels where guests and staff networks are physically supported by different servers.
 
Cellular struggles
In discussing cellular coverage, the panelists revealed an interesting conundrum. Poor cellular coverage in the hotel is a significant factor in guest dissatisfaction. However, good cellular coverage does not necessarily positively impact satisfaction scores. Guests assume cellular connectivity to be a basic amenity; this “must have” can carry a high price tag, so its imperative that hotels build out cellular networks with a deliberate plan in place.
 
One panelist shared a recent experience retrofitting a newly-built convention property. The price for this antenna installation project topped nearly $1 million. The lesson learned and stressed to audience members: when a new hotel is built, cellular coverage should be planned in the beginning. Retrofitting is always more expensive.
 
When it comes to the choice of connectivity, all panelists agreed that they are unsure whether hotels will even need to offer HSIA in 5 to 10 years, citing personal broadband devices (such as AT&T or Verizon’s 3G, 4G modems) and Wi-Max (city-wide high speed wireless Internet access) as potential game-changers.
 
Given the uncertainty of future technologies that will impact the use of HSIA in hotels, the panel warns against signing long-term contracts for outsourcing HSIA.

Please share with me your experiences in navigating network connectivity challenges, and any opinions that you might have.

For more insights from Cihan, click here.

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