Net gains

Friday 27th October 2000 00:00

"Recent technological advances have created a new frontier in our business," declares Dennis Koci, senior vice-president of brand management and hotel support for Hilton.

"Probably at no time in history has the potential risk and reward been greater - how we respond will decide the future winners and losers of customer loyalty. And the battleground is the in-room experience."

Overdramatic though this may sound, Koci's principle is simple: guests know what they want and will be disappointed when they don't see it in their hotel room, so they may not come back.

At home, the television is fast moving away from being just a focus for entertainment and is now being used for Internet access, e-mail, and as an information source. That will soon be no different in hotel rooms, as interactive TVs become more common.

In-room technology provider Quadriga recently commissioned an independent survey, called GuestLife, among business travellers to find out whether they actually used these kind of interactive TVs. The company estimates that European hotels invest more than £150m a year on guest room technology. It also suggests that, by not capitalising on guests' IT interest, the average 150-bedroom hotel is missing out on at least £50,000 of revenue a year from pay-per-view movies or metered Internet access.

Nearly 500 people were surveyed in the UK, France and Italy and 90% said they were actively interested in these services, 30% said they would use an Internet connection and 20% said it would influence their choice of hotel. However, just 3% said they currently used the checkout facility on the in-room TV, so it appears that promotion of such services is still in its infancy.

While the Internet is already an essential part of a hotel room for business guests, what do they actually use it for?

"It's mostly access to e-mails," says William Brown, director of e-commerce for Interval International and lecturer at the University of Miami. "High-speed access is desirable only when it comes to uploading or downloading file attachments.

"E-commerce and Web-browsing are not yet in high demand by themselves. I think it's a nice convenience if it's there, but the primary motivation is for e-mail access back to the office."

The fact that most business travellers already expect to see an Internet connection in their room hints at future developments. After all, many offices now have a permanent connection to the Net to receive and send e-mails, and business travellers are so used to using it that they can't do without it when they're on the road.

But non-business guests are looking for something different. Home Internet access still tends to be restricted to the PC, so it has not encroached on domestic life anywhere near as much as it has on office life.

That will change over the next few years, as more and more households embrace digital television. The domestic TV will be permanently attached to the Internet, e-mails and on-line chat will be easily exchanged while watching programmes, and Web sites will be reconfigured to fit and be read on a normal TV. And, inevitably, guests will want to see this in their hotel room.

On Command is one of today's biggest suppliers of in-room Internet TV access, connecting more than 960,000 rooms in about 3,355 hotels in 22 countries with partners such as Bass, Marriott, Hilton, Hyatt and Starwood.

Its prime offering is the OCX platform, essentially a set-top box that runs through the standard TV, facilitating services such as pay-per-view movies, Web access, video games and guest services. This system is now in at least 52,000 hotel rooms worldwide and the company reported first-quarter 2000 revenues of $65m (£45.06m).

OCX, like many other systems, allows pay-per-view movies, games and Internet all on demand through the TV - all in theory adding to hotel revenue. In addition, guests can review their bill, check out, order room service and use other facilities.

But what does the hotel get out of it? Along with being able to keep tabs on a guest's bill, the housekeeper can use the system to send information to the hotel property management system about the room's status. It also allows for on-screen customer satisfaction surveys, which can be changed as often as required.

The OCX system is by no means unique but it is certainly one of the most successful, albeit with, as far as the guest is concerned, an unknown and unfamiliar interface.

Well-known domestic names such as Microsoft and AOL are likely to launch in-room platforms in the near future. A partnership with such a company would be something to consider when contemplating interactive TV in a hotel, says Brown.

"Although it would only appeal to larger hotels, perhaps," he explains, "it would have advantages. AOL, for instance, is a natural extension of a powerful, consumer-friendly brand, and that would help spur use when somebody's in a guest room."

Corporate intranets

At the moment, however, AOL would have real difficulties interfacing with the corporate intranets that are essential for the business traveller, and its e-mail system would struggle with large file attachments.

With problems like these, Brown is still wary of rushing headlong into expensive in-room technology. "In my opinion, there's still too much hype and not enough substance when it comes to a lot of these products," he says. "There's not a lot of research about but many technology vendors over-promise and under-deliver. Take your time - in-room technology is very expensive."

Koci at Hilton, however, is a convert. He concludes that the costs will balance themselves out.

"There is a new business model," he says. "What we should or will be looking at, if we want to survive, are new revenue sources. Of course, the equipment and infrastructure are more expensive but the technology enables other features that can increase revenue.

"Our strategy on the Internet is that we want to provide it in any way the guest wants to access it, but we have to keep in mind that technology in itself is meaningless unless we find a way to drive business because of it."

THE GUESTLIFE SURVEY

This independent survey commissioned by in-room technology provider Quadriga was conducted among 488 business travellers from the UK, Italy and France. Here are some of its findings:

  • European hotels invest more than £150m a year on interactive guest room technology.
  • Almost 90% of respondents said they were actively interested in this type of facility.
  • An average European hotel of 150 bedrooms is missing out on at least £50,000 a year of revenues from not capitalising on this interest.
  • The main barrier to use is lack of marketing - 41% of guests switch on their TV within the first half-hour of arriving in a hotel room, 17% switch between channels in that time, yet only 6% look at hotel service via the TV.
  • Connection to the Internet is an increasingly important motivator - 30% said they would use it and 20% said it would influence their choice of hotel.
  • More facilities are needed. Just 3% stated they currently used the checkout facility via the TV, but 23% said they would use it if they could print a receipt in the room.

Suppliers

www.oncommand.com

www.quadriga-ww.com

Source: Caterer & Hotelkeeper magazine, 26 October - 1 November 2000


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