U.S. Hotel Telephone Revenues Declined 16 Percent Since 2000

| November 01, 2006

PricewaterhouseCoopers research, supplemented by Smith Travel Research (STR) and Cellular Telecommunications and Internet Association (CTIA) data, indicates that telecommunications revenue in hotels has declined an average of 16 percent since its peak in 2000. During the same period wireless subscription in the U.S. has continued to increase at a dramatic pace.

Over the last six years, as many hotels have continued to levy or increased various fees including telephone call surcharges, the telecommunication revenues per occupied room have declined at a compounded annual rate of 14.5 percent and 17.8 percent respectively in full-service and limited service hotels, compared to a compounded annual growth of 13.7 percent in the number of wireless subscribers in the U.S. based on STR data. Between 2000 and 2005, the telecom revenue per occupied room declined from $4.96 in 2000 to $2.26 in 2005 for full-service hotels and $1.52 in 2000 to $0.57 in 2005 for limited-service hotels.

The factors that have contributed to the decline in telecom revenue in the U.S. lodging industry include the increasing trend of hotels levying fees and surcharges for calls, faxes and Internet access; declining cellular phone call charges; increasing convergence of data and voice into a wireless device; and increasing use of e-mail for communications.

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