If at first you don’t succeed… give it away for free.
Over the past few years, a number of hotels have tried to provide in-room,
high-speed Internet access for a fee, sometimes as much as $10 a night. They
have had little success, with industry statistics suggesting that fewer than
5 percent of guests have been willing to fork over the cash.
In a recently announced move, Omni Hotels is taking a new approach. It
will use 802.11 connectivity to get high-speed connections into all its rooms
by the end of the year, and will give guests free access. "From a business
standpoint, we want to be able to offer additional services to our customers,"
said Paul Dietzler, senior vice president of finance and technology for Omni
Hotels. "When we have an Internet solution that is free to guests, that
is the way of the future in the hospitality industry."
Omni has turned to Core Communications Corp. of Dulles, VA, to deliver
that solution.
Founded four years ago, Core has made a name for itself by providing data communications
for group meetings and function spaces in hotels and convention centers. Turning
to the guest-room market a year ago, president and CEO David Giannini and COO
Rick Sternitzke realized quickly that none of the existing revenue models made
sense. Nor would a service-intensive, revenue-sharing business model apply to
a guest room situation.
"We had to come up with a way to deliver this as a commoditized amenity,"
said Sternitzke. It had to be cheap and plentiful, something hotels could give
away the same way they give away that morning cup of in-room coffee.
With wireless prices as low as they are, the partners saw a way to make it
happen. "We speak of this as a commodity in a positive sense," said
Giannini. "When 80211 stopped being a novelty, when it stopped being a
toy for the techno-geeks, it became a commodity. Now you have widespread corporate
adoption, and so we started looking at it much more seriously."
Core began installing Wi-Fi networks in Omni properties this summer. Service
is currently available at a handful of properties, including the Omni Los Angeles
Hotel at California Plaza, the Omni Mandalay Hotel at Las Colinas, the Dallas
metroplex, the Omni Chicago Hotel and the Omni Berkshire in New York City.
Guests can log on through their Wi-Fi-compliant network interface card (NIC).
Those traveling without the card can rent a USB wireless adapter at the front
desk for a small fee.
What makes it all possible is the relatively low cost of installing the wireless
network. Even with a "fairly sophisticated site survey," said Sternitzke,
it still is possible to do a wireless installation for about 70 percent less
than the cost of a wired in-room solutions. On average, Core can roll out wireless
in a hotel for about $70 a room.
Analysts like the idea, but they raise some practical concerns.
"It is still going to require an IT support network at the end of the
day," said JupiterResearch senior analyst Julie
Ask. "When someone says, ‘This is not working,’ they are going to need
someone to call."
Core says it will solve this problem by acting as an outsourced network administrator.
Part of its deal with Omni includes not just the cost of installation, but also
an ongoing fee that Omni will pay for Core to operate a help line for network
users.
With that hurdle taken care of, analysts say there could be a strong business
case for making in-room wireless available to business travelers, especially
given the rapidly-expanding base of Wi-Fi-enabled computers on the street today.
"As of now, less than 10 percent of notebooks out there have wireless
LAN capability, but soon all the new ones will have it. By 2005 we expect most
of the laptops to be wireless-LAN enabled," said John Chang, a senior analyst
at Allied Business Intelligence. "The
market is going that way."
That kind of ubiquity will be needed if Omni’s new amenity is to have any real
value. At the same time, the executives at Core are quick to point out the 802.11
in this case remains merely a means to an end.
"It isn’t even about 802.11 or about the technology," said Giannini.
"We do think wireless has come of age, we think it is an incredibly attractive
and compelling tool for deploying these networks. But we don’t think wireless
is the be-all and end-all by any means. This is about connectivity. Every hotelier
wants and feels that they must have some sort of connectivity solution. The
question is just how much they are going to have to pay for it."
