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Wi-Fi in the Hospitality Industry

Wi-Fi in the Hospitality Industry

With high-speed Internet access being one of the most sought after amenities by travelers, many hotel operators are in the process of determining the best strategy for broadband deployment. Having the ultimate goal of improved profitability, operators must balance increasing guest satisfaction with maximizing the ROI on their broadband investment. Dual use of Wi-Fi for both guests and staff is key.

Increasing worker reliance on broadband connectivity has led to a need for ubiquitous broadband that is largely supported by Wi-Fi. When traveling, the pressure to get instant information and make last-minute changes to presentations and documents only increases. Therefore, the need for broadband away from the office is more acute.

The hospitality industry has found that employing Wi-Fi is a cost-effective means to satiate the broadband needs of the business traveler, and thereby increase revenue. At the same time, 802.11 enabled devices offer a range of applications for both staff use and leisure travelers. By both generating more revenue and cutting labor costs, property owners can realize a substantial ROI on their Wi-Fi investment.

Hospitality Wi-Fi Evolution
Always seeking to capture more revenue, hotel owners see broadband as an appealing amenity that increases both traffic and revenue per guest. Initially, Wi-Fi was deployed to the hospitality market in common areas very inexpensively under revenue-sharing agreements. It then moved to whole property installations as a cost-effective alternative to wired broadband installations.

Specialized solution providers, like StayOnline, Inc., of Atlanta, Georgia (www.stayonline.net), provide both infrastructure and end-user support to fulfill the demand. StayOnline president and CEO, Antonio DiMilia, gives his opinion, "In regard to the hospitality market, the next level of wireless high-speed Internet access in public areas will be pervasive coverage of the entire property. By this we mean wireless access will no longer be limited to just the lobby or common areas...but throughout every guest room in the hotel."

With the advent of Wi-Fi enabled handheld devices, the opportunity for staff applications using the wireless network makes it even more appealing to hotel owners. In fact, some hotel operators are retrofitting existing broadband wired properties with wireless to reap these gains.

Road Warriors and the Need for Broadband
Broadband has been somewhat slow to reach the hospitality market. With guest-room access at about 15% penetration, it's closer to home broadband penetration than that of businesses. With the growing presence of Wi-Fi in public places, travelers expect and rely upon broadband availability. When choosing accommodations, savvy travelers can check the hotel locators on providers of hospitality broadband as well as the hotel brand Web sites to see which hotels have broadband.

With some of the first hotspots being placed in airports, Wi-Fi has been inexorably linked with travel. Given T-Mobile's rollout to Starbucks, Borders, and now Kinko's, travelers will begin to take broadband availability for granted.

Dialup modem connections offer numerous headaches for both the user and the hotel. Because it is often not clear if a local ISP dialup number is available, users can get stuck with large phone bills. Front desk staff are left to deal with the ire of these travelers. Lengthy dialup connections also pose the problem of dramatically increasing the load on the phone system.

The rise in broadband-centric applications such as media-rich e-Learning and VPNs, will further increase broadband dependency. Bandwidth-intensive applications such as virtual reality, offered by vendors like Industrial Virtual Reality Inc., in Chicago (www.ivri.com) can supplant the traditional learning and presentation environments. The risk here is that they can supplant travel itself as the need for face-to-face contact is minimized. Clearly, the hospitality industry must respond to such developments by increasing the ROI of business travel itself by making road warriors more productive.

Broadband Progress
Several large vendors have entered the fray by primarily offering wired solutions through existing phone lines. For properties being built, owners often seek the assistance of a local telecommunications firm to handle networking tasks. Some of the larger, established hotels have been slow to react due to the expense of retrofitting those properties. In fact, many marquee properties may not have broadband due to the expense or fear of disruption caused by large wiring projects.

Pressure to offer broadband is coming from major consumers such as large corporations and event planners. Often, RFPs from conference holders include a guest-room broadband requirement. In response, major hotel brands are mandating that their franchisees provide broadband.

Wired or Wireless
The broadband alternatives for hotel operators typically fall into three categories: providing a CAT5e solution, using the existing phone lines with CAT3 wiring, or using Wi-Fi. CAT5e can be either the least or most expensive solution. Running individual CAT5e cables to each room is both labor intensive and extremely disruptive, thereby making it prohibitively expensive in most cases. However, recently built hotels with CAT5e wiring already installed can provide guest-room access relatively inexpensively.

A CAT3 installation using existing phone lines typically requires installers to place equipment in each room. The expense is about 50% more than the $150-$250 per room a Wi-Fi solution costs. Having equipment in each room also means that there are maintenance and inventory control issues to address.

Wi-Fi installations eliminate most of these headaches as no equipment is installed in the guestrooms. Room access during installation is required only for signal testing purposes. For installations in known quantities such as recently built properties from common brands, testing is minimal because building materials and layout are well understood in advance.

Nuances of Wireless
While the cost savings of Wi-Fi are clear in a hotel setting, there are major end user advantages. These include having the ability to work throughout the facility or having multiple individuals connected in a single room. In fact, StayOnline's MeetOnline Conference Connection Kit allows for users to quickly set up a remote network with a wireless uplink that affords wired connectivity to six (or more) users, which is especially useful for ad hoc meetings or tradeshow booths.

In a hotel with conference facilities, Wi-Fi offers a compelling value proposition. Wi-Fi access can be provided to attendees in large open spaces without having to worry about wires. Also, attendees may or may not be staying at the hotel, making controlled access easier logistically while adding the possibility of additional revenue streams.

From a device perspective, more laptop manufacturers are including integrated Wi-Fi. For those carrying PDAs, Wi-Fi connectivity may be the only choice available.

Wireless Equipment
A typical Wi-Fi installation consists of access points strategically located throughout the property, CAT5e wiring to the access points, and a server to control billing and access issues. In many cases, as few as two access points per floor are required. Also, depending on the presence of broadband equipment, a switch or router may have to be installed.

Unlike the typical Wi-Fi hotspot, hotels need hardware to handle access and, possibly, billing issues. Hotels can manually bill the guest, have the infrastructure provider handle credit card billing via a portal, or have the access server connected to their PMS (property management system) to automatically add charges to the guest's bill.

Guests who do not have a wireless NIC card or integrated Wi-Fi can elect to use an adapter provided at the front desk. This allows connectivity through the Ethernet jack without any software installation.

Back Office
Like other verticals, the hospitality industry is eager to squeeze every ounce of productivity from its employees. Palm-HT, Inc., of Quebec City, Quebec (www.palm-ht.com), which makes JiHi (Just in-time Housekeeping integrated), allows hotels to manage housekeeping tasks and mini-bar restocking wirelessly, which reduces communications and unnecessary trips.

The system employs Wi-Fi enabled PDAs that are given to housekeeping staff. As routine tasks are completed, they are checked off by the users. The communication is fully bidirectional as the availability of and need for cleaning specific rooms is displayed to the appropriate personnel. Likewise, interrupted tasks such as guest requests can be efficiently dispatched to staff.

While the wage scale for housekeepers is typically at the lower end of the spectrum, housekeeping is a major expense at large properties or high-wage areas such as Manhattan. Communication with phones or radios can be problematic due to the prevalence of multilingual staff and poor reception. JiHi allows for personalized displays in over 250 languages so tasks can be listed in the user's native language. The solution effectively closes the loop as real-time task status is known by both supervisors and individual workers.

Business Models
Unlike café or airport hotspots, the business model for hotel wireless is based on daily charges or as a gratis amenity to generate traffic. Monthly subscriptions are usually not employed because most of the control rests with the individual property owners, not the infrastructure provider. Hourly or per minute charges have not gotten much traction, perhaps as such arrangements don't mirror the patterns of business travel.

For the property owner, there are typically three costs involved: connectivity (either a T1 or DSL), equipment costs, and support costs. Because wireless equipment can be leased, the total expense can translate into a fixed monthly cost, making ROI calculations clear cut.

The question for many properties is whether to charge or roll the cost into the room rate. The Internet itself has dramatically lowered search costs by allowing travelers to quickly find the best deals. The bundling of services such as broadband would help fight price transparency. Also, Wi-Fi will likely become a commodity item, with the availability of low-cost Wi-Fi hotspot subscription models. Ultimately, hotel guests may question paying the typical $9.95 per day.

With travel down in many markets, broadband can be used to obtain a larger piece of the shrinking pie. Properties that employ a third party for their broadband needs benefit from additional marketing, courtesy of hotel locators on the provider's Web site. On the franchisor side, many brands indicate which properties have broadband.

Some properties have even gone as far as to display large banners on properties indicating "High Speed Internet!". In-room tents and window stickers are also employed to lure travelers. With the prevalence of Wi-Fi hotspots, properties also have the motivation to use broadband to keep travelers on the property. Instead of buying a Frappuccino at Starbucks, guests will grab a drink from the mini-bar or order room service.

Future Applications
Hotel operators will continue to provide more services to capture a larger portion of the traveler's dollar. Competing with other venues or technological innovations that lessen the need for travel, they will have a continued motivation to provide an offering that keeps the public traveling and spending dollars on hotel property. Opportunities abound for novel applications and business models. Wi-Fi plays a crucial role in the adoption of cutting-edge services because it's a low-cost vehicle available to a large segment of the economy.

Convenience amenities, like curbside check-in via your PDA may become available. More likely, though, applications that have demonstrable revenue streams or cost savings will be employed. Movies on demand to your laptop are a likely candidate. Business services catering to time-constrained business travelers (think partnership with Kinko's) may become popular.

At some point, we can assume that hotel operators will push on-premise promotions through their portals. Wireless will play a major role in these promotional vehicles as both the nature of hotel utilization and handheld device capability will change, most likely focusing on an untethered form of connectivity.

Addressing the problem of poor cellular access can also be a revenue stream for hotel operators. Device convergence, with new cellphones acting as PDAs will have both Wi-Fi and cellular access. Using access points to act as microcells will allow for either leasing of bandwidth or revenue sharing with the cellular operators.

Technologies such as virtual reality and video conferencing can offer robust alternatives to business travel. In response, hotel operators must continue to provide value amenities such as broadband to keep businesspeople on the road, spending their travel dollars. With a wider range of Wi-Fi enabled devices available to consumers, the demand for wireless broadband at hotels will only increase in the future.

SIDEBAR

Hotel Staff Uses Wi-Fi App to
Meet 10-Minute Response Goal

Seeking to raise the customer service bar, the Pacific Terrace Hotel in San Diego decided to employ JiHi (Just in-time Housekeeping integrated), a wireless hospitality solution by Palm-HT. Prior to JiHi, there was no real-time status of housekeeping tasks. The front desk was calling housekeeping at least 25 times per day to determine the status of the rooms. Meanwhile, customer requests were not being fulfilled in the desired 10-minute window. In many cases, the frustration levels grew because a language barrier kept the housekeepers and their supervisors from communicating fluidly.

In acquiring JiHi, the Pacific Terrace sought to smooth operations, reduce manpower requirements, and enhance the guest experience. The typical housekeeping operations of a hotel rely on two fairly disconnected staffs: housekeeping and front desk. The front desk must contact the executive housekeeper to determine the status of the rooms via radio or telephone. At the same time, housekeeping has to rely on the front desk to determine which rooms are ready for cleaning. This puts a great deal of stress on staff. Irma Simental, the executive housekeeper laments, "In the past, I used to get so many calls about the status of the rooms." These iterative communications were inefficient and, in some cases, frustrated staff.

With JiHi, the status of the rooms can be communicated via the Wi-Fi network to a PC on the executive housekeeper's desk or to the front desk. This frees up customer-facing staff to enhance customer service levels. As the general manager, Bob Kingery, puts it, "JiHi leaves [the front desk staff] more time to spend with the customer." At the same time, the housekeepers have the ability to see which rooms need to be cleaned and which guests are having a late checkout. As they complete the rooms, the housekeepers check them off on their task list. The real-time status functionality also makes the job of the supervisor easier. Simental explains, "Supervisors would have to go from housekeeper to housekeeper to see which rooms were finished, now they just look at their iPAQ."

Common to many hotels, a multilingual staff runs the Pacific Terrace. Unfortunately, many employees are not bilingual. Simental says, "One of the biggest problems is the language barrier. I have one supervisor who only speaks Spanish and one supervisor who only speaks English." Of course, this can create problems when someone is off duty. Given its multilingual translation capabilities, JiHi tasks are assigned in the housekeeper's native language. According to Simental, "This improves morale."

With the streamlining capabilities of JiHi, the guest experience improves on several fronts. Responsiveness is extremely important at the high end of the hospitality industry. One benefit of JiHi is its ability to efficiently dispatch guest requests to the appropriate personnel. The Pacific Terrace's general manager notes, "Responsiveness has improved dramatically. Our rates are very high; we have to design service to match our rates. In the past, if our guests wanted something in a room, we had difficultly matching our expectations and theirs. Response time is a fraction of what it used to be. We have a 10-minute goal. We can now hit this consistently." - SP

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