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The Bandwidth Revolution

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June 01, 2007
Hotel | Telecom
David Shanks - davidshanks@warnerconsultinggroup.com

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© 2008 Hospitality Upgrade. No reproduction without written permission.

There is a quiet transformation taking place right now that will revolutionize how broadband is provisioned and distributed in hotels. New, proven technologies from the IT world as well as ISPs have emerged that will give hotels the ability to manage the bandwidth they have more efficiently, bring in broadband circuits that are much less expensive than traditional T1s, and offer revenue streams to hotels that, for the most part, have been undeveloped. Offering an improved guest-connecting experience that leads to new revenue opportunities is why your business-class hotel, conference center or resort will need to be part of this revolution or run the risk of giving away a competitive advantage.

Internet Access – a Valuable Amenity
Guest communications, through cell phones and via the Internet, continues to accelerate. More and more guests are connecting to the hotel guest network to check e-mail and perform bandwidth-dependent online business. For many, their connecting experience has become critical in their hotel room buying decision. According to a recent article1 in TechNews World, “Jupiter Research asked business travelers which items would most likely motivate their hotel purchase decisions…[free] Internet access beat out everything else–including free breakfast, room upgrades and personalized rooms.” Clearly, it is essential for hotels to offer this amenity to their guests because they expect it.

Broadband consumption rates are also projected to grow significantly in coming years–beyond just the increasing numbers of guests connecting–due to a broader array of guest applications (like Skype, Slingbox and other consumer-based products), streaming video, file sharing and other uses that will drain available bandwidth. A simple example might be something like this: Your hotel has a T1 serving your guest network that gives guests a 1.544 Mbps data pipe to share with one another. If someone is using an application that consumes 800 Kbps of that pipe, your remaining users only have 754 Kbps. This scenario is very common, although most hoteliers are not even aware of these incursions on their network’s bandwidth until guests complain or simply don’t return.

There are several options available for hoteliers to address this circumstance with new technologies: add more bandwidth in an affordable, structured manner and control or shape the amount of bandwidth a user can have. Both strategies to manage bandwidth allow hoteliers to meet guest demands, but they can also deliver something else; increased revenue opportunities.

Adding More Bandwidth
As a hotel confronts the reality of increased broadband demands and chooses to add more bandwidth, the traditional method would be to add/integrate (mux) another T1 to their primary T1 and now offer a 3 Mbps pipe for their guests. The cost increase would be about $500 per month or $6,000 annually. Some hotels have gone so far as to add multiple T1s or even moved to partial DS3/T3 circuits in expanding the pipe of their network. However, new technologies such as the link load balancer now enable hotels to buy other types of circuits, including fiber, fixed wireless, cable modem, DSL or dynamic T1–many of them much less expensive than a data T1, but due to less reliable performance than a T1, not considered as viable hotel bandwidth options. However, the link load balancer enables any of these various circuit choices to be seamlessly integrated into a hotel guest or administrative network environment. With this technology, the hotel can leverage a cheaper bandwidth such as fat DSL circuits with a 6Mbps down and 1 Mbps up to complement their T1 and give their guests a 7.5 Mbps pipe for $100 per month in added expense. Hotels are no longer constrained to a single ISP but now have numerous circuit options available to them and can more effectively manage these costs and scale efficiently as broadband needs grow revolutionizing how hotels will acquire their broadband.

A further significant benefit to the hotel in having multiple ISPs is redundancy in circuits. If your (primary) T1 goes down at 6 p.m. on a business day, typically your front desk would be inundated with guest complaints. This may even cause guests to leave the hotel due to the importance of Internet access. With a technology such as the link load balancer, your hotel has insurance and all data traffic immediately and automatically shifts to the remaining circuits that are “up” and your guests do not experience any downtime, further enhancing reliability of the network.

Controlling Bandwidth
With accelerating usage comes the need for managing the valuable commodity of bandwidth in the hotel–assuming the hotel does not have an unlimited budget for expanding available bandwidth to the guest network. There are a variety of ways to control consumption of the hotel’s bandwidth and give guests a higher probability for a positive guest experience. Managing or controlling the bandwidth offers an important complement to increasing the amount of bandwidth delivered to a guest network. All strategies should include implementing appropriate security measures, capping guest bandwidth consumption, and mitigating illegal uses like peer-to-peer file sharing. As security is addressed, the hotel can use this link load balancer technology to segment data traffic by circuit and can direct the traffic by type or by port–down to the packet, if needed.

Some HSIA servers and bandwidth shaper products enables the hotel to “tar pit” guests or create bidirectional rules that restrict the amount of bandwidth a user has access to. Bandwidth can then be controlled at the user’s IP address, MAC address or application/port. Again, through management of the amount of bandwidth consumed or restricting applications from utilizing large amounts of the data pipe, you again increase the probability of a good guest experience.

Revenue Upside to Increased Bandwidth
Many luxury and upper-tier hotels are able to charge for HSIA services. However, most business hotels reside in the mid-tier and economy segments. Many of the brands in these segments have chosen to give high-speed access away as a free amenity. So how do these additions to your broadband services make financial sense?

Guest satisfaction is paramount. Even with the best HSIA solutions, if bandwidth management and broadband circuit speed are issues for a property, then guest complaints will follow. If the hotel gives guests a poor connecting experience, then lost room revenue is the first element that needs to be included in the equation. Offering several levels of guaranteed speed for guests after the base level speed; say the first 254 Kbps is free to guests, then offering fee-based speeds of 512Kbps, 1 Mbps, etc. and having a reasonable charge for these levels, now gives hotels a basic revenue stream. There are 100-room, branded, extended-stay properties that generate $1,500 or more monthly just on this simple strategy. Other guest fees could include VPN connection fees or application usage fees (i.e., Slingbox). The key is to be reasonable and ensure the hotel is giving guests a value for what they are paying.

The Revolution Begins Now
While some will argue that leading in the hotel industry has inherent risk. In the area of improving the high-speed access experience, the risk is negligible. Hotels already feature Internet access as a key amenity in all of their marketing materials to attract business travelers. Guests must have a great connecting experience and are willing to patronize hotels that offer it. The financial numbers prove that consumers will pay for Internet services that have a value behind them. All hotels competing in this arena will have a choice. One choice is to do nothing and wait for others to venture first and gauge guests’ (and hotels’) responsiveness. However, to be successful in this revolution, leading hotels will need to have a firm strategy on how to rapidly scale to guest demands, efficiently manage bandwidth costs, and take advantage of the right technologies to give guests precisely what they demand. In doing so, these hotels will see more heads in beds, greater guest satisfaction in their stays, and improved bottom-line results. 

David Shanks is a consultant with Warner Consulting Group (WCG), an independent technology and telecommunications consulting firm.  He can be reached at davidshanks@warnerconsultinggroup.com.

1 TechNews World November 2, 2006

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