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As Long As Guests Make Calls… Companies Will Provide Call Accounting

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March 01, 2003
Telephony Solutions
Dan Phillips - dphillips@its-services.com

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© 2003 Hospitality Upgrade. No reproduction without written permission.

As a consultant I get my hands on quite a bit of data. From the data I have seen, it does not take a rocket scientist to determine that the volume and type of guest calling traffic has changed dramatically over the last 10 years. Before calling cards and cell phones, guests made about 0.9 local calls (average duration of 4 minutes) and 0.7 long-distance calls (average duration of 5 minutes) per occupied room. Now, after data ports and high-speed Internet access, guests are making about 1.1 local and toll-free calls (average duration of almost 9 minutes) and 0.1 longdistance calls (average duration of 6 minutes) per occupied room. What this all means is hotels that have been charging the traditional calling fees in their call accounting systems are finding that the telephone department is now a cost center instead of a profit center.

Since guests are making fewer and fewer billable phone calls, one might draw the conclusion that a hotel just doesn’t need a call accounting system anymore. The bottom line: “People don’t make phone calls from hotels because they cost too much,” said Ron Tarro, president and CEO of SDD, Inc. “[There is] no question that hotel guests are using cell phones instead of room phones causing properties to lose significant revenue,” said Charles Ruykhaver, the executive VP, sales and marketing for ISI, Inc.

Metropolis Technologies’s President John Brissenden said, “Until the cost of long distance access falls to less than one-quarter cent per minute, it will remain more expensive on a minute-by-minute basis than electricity, one of the largest expenses in all hotels. We don’t foresee commercial long distance rates falling to this rate any time soon so most hotel owners will require call accounting systems, and will continue to rely on them to track revenue for many years to come.”

Brissenden continued, “While guest call volume has certainly fallen in recent years, hotel guests expect to receive a dial tone as a basic hospitality commodity and continue to make occasional phone calls. Therefore, hotel operators have no choice but to continue to provide basic telephone service.”

Joe Boeckel, VP, PBX business for Hitachi Ltd., agreed. “Decreased guestroom calling does not eliminate the need for call accounting, but it does add importance to guest-centric features. It also forces the question of whether the phone system can support additional revenue-generating functions,” Boeckel said.

Take It to the Bank
SDD’s Tarro said, “If you want to solve the problem [of falling call volumes] then price competitively for phone services. And consider that the loss of phone revenue is in part because of the weakness of current call accounting systems and your inability to flexibly charge for telephone services.”

Tarro said that competitive guest phone pricing means that you actually need a more sophisticated call accounting system, not a less sophisticated, low-end one. Tarro explained that most hospitality call accounting has been guided by establishing a low price to implement their system at the expense of high-priced functional capability.

“One can reasonably argue that hoteliers are a low-cost provider of telephone services.” He continued, “Something you can take to the bank: ‘You can make more money with a cheap PBX and an expensive call accounting system than you can with an expensive PBX and a cheap call accounting system.’”

So, will hotels continue to purchase high-priced call accounting systems and maintenance contracts as telecom profits trend downward and guests make fewer and fewer calls?

Ruykhaver of ISI said, “On the expense side properties have to invest in additional PBX trunks to handle increasing dial-up service for laptops. Call accounting is an important factor to account for administrative calls, local calls and trunk and facility utilization reporting.”

Here to Stay
It appears that call accounting is here to stay, for the foreseeable future anyway. Perhaps the decision should be on how this function should be provided. The answer to this question is as varied as the companies providing call accounting systems.

Metropolis Technologies is emphasizing selling its system, ProfitWatch, as a stand-alone, single system. Although they are able to provide enterprise-wide call accounting (CAS) from a single server, it appears that their customers are asking for more traditional solutions. “The ASP model has received significant coverage in the industry press and hospitality vendors continue to sell the vision at tradeshows, but successful implementations are still rare,” said Brissenden. “Call accounting is not finished; however, the playing field is about to drastically change. [We] are expecting a severe shakeout in the call accounting industry as hotels tighten up on their budgets and on the amount they are willing to spend for call accounting systems and support.”

Hitachi has always had their call accounting system, WelCOMM, as an internal system to their PBX. MAXimillian offers a suite of functionality that can either be internal or external to PBX sales. Though stand-alone in nature, they have brought forward a list of value-add services such as a housekeeping and engineering (work tickets) functionality and a DID manager. Boeckel said, “Functions that are performed by the PBX, CAS, VMS and PMS are, and will remain, vital to the guest service, communications and management of any property. We see a continuation of a trend we started in the 1980s toward a consolidation or partnering of vendors in these areas.”

Homisco is now providing a Web-based ASP model for call accounting called the AspManager. Ron Contrado, president of Homisco, said, “Being Web-based eliminates the need to manage and support onsite call accounting systems while streaming access to useful information. Our unique push management approach allows our users to select information on employee productivity, network utilization, potential toll fraud and overall system utilization.

This information is evaluated on a real-time basis and our customers are alerted to any variance to their predetermined guidelines.” Homisco’s AspManager creates the appearance of a stand-alone, multi-user telemanagement system at the site level while allowing access to the same data at higher levels, ultimately allowing central access to information for all locations.

SDD recently introduced JAZZ Enterprise. JAZZ Enterprise provides an enterprise-wide solution from a single server with small, inexpensive boxes onsite. “The most likely possibility is that call accounting systems will be removed from properties but that functionality will be provided by centralized call accounting systems,” Tarro said. “The centralized systems provide high degrees of functionality at low incremental costs to the properties (both in capital and operating overhead). More importantly, these systems consolidate data and allow the hotelier to manage carrier costs centrally and to establish pricing programs consistently across their properties. The ability to work with centralized data from multiple properties in real time makes analysis productive.”

Gemini Telemanagement Systems, run by its President Richard Alter, sells the wellknown Summa Four call accounting system. “There will always be priced telephone calls from hotels,” Alter said. “We thought in 1981 the window for CAS in hotels would be short. I have a friend who still has a rotary phone in use.”

The Window Is Big
There are two distinct types of systems in use in hotels: the low end is predominately box-type systems with limited capabilities; the high end is PC-based systems with many capabilities. “I think in the future there will be box-type systems capable of doing everything the PC-based systems can do for less money,” Alter said. One of the functions ISI plans to add to its system is an analytical tool. Ruykhaver said, “A trend in the computer industry is to provide what is known as decision support systems. These systems take large amounts of data and provide an analysis, which lets companies act on the data.”

By gathering data from one or more properties, managers may run a large number of reports that let users analyze and detect calling patterns. “For example,” Ruykhaver said, “One key area of reporting is an analysis and comparison of revenue per occupied and available room. By running comparisons, a manager can detect which properties are maximizing revenues and which properties are falling short. By analyzing the types of calls at various properties, managers can design costing methodologies and promotions, which can further increase revenue.”

In order to stay alive in these trying times, vendors are forced to provide new services. In addition to those mentioned above, some of these new features are listed below.

Please understand that this list is incomplete at best and that you are encouraged to contact these vendors directly for more information.
• Homisco can monitor the ACD overflow positions in your ACD groups, monitor fax activity, check modem ports for maximum use and keep track of the usage on your voicemail ports.
• ISI’s Infortel plans to be there as IP telephony gains momentum in the lodging industry. This will require special reporting on quality of service and gateway analysis for IP systems like the Cisco call manager.
• MAXimillian from Hitachi can provide alarms for immediate notification of E-911 events, missed wake-up calls and system alarms. It can provide reporting information on housekeeping/maid productivity; housekeeping and front desk personnel can create work orders from any phone or a PC interface.
• Metropolis has always provided a map indicating where all outbound calls are terminating. Now, they provide a map that shows where all inbound calls originate, which is great for marketing efforts.
• SDD is working with groups like Wyndham to implement programs tailored to their loyalty programs and subscribers. They are also providing carrier contract accounting that will allow a group of hotels to verify their billing from their long-distance providers against the actual traffic generated over their portfolio of hotels.

“The CAS function will not disappear, regardless of the proliferation of cell phones or IP telephony, as long as there are phones in the rooms. However, for hospitality, the exact metamorphism of the vehicles that provide that functionality, although enabled by technology, will eventually be driven by REVPAR and bottom line cost considerations,” Hitachi’s Boeckel said. “In 1985, everyone said the call accounting industry only had a five-year window,” said Contrado of Homisco. I guess we all have seen that the window is a little bigger than that.

The author would like to thank the vendors who participated in this article.

Dan Phillips is COO of ITS, Inc., a consulting firm located in Alpharetta, Ga., specializing in hotel technology. For questions or comments you may reach him at dphillips@its-services.com.

ACD – Automatic Call Distributor, generally used in the reservations department, places callers on hold until an agent is available
Bubble pricing – a call pricing strategy that determines the duration range where the majority of calls fall under and prices those calls higher than both shorter and longer duration calls
DID – Direct Inward Dialing, a specific number ringing to a specific phone behind a PBX
Guest-centric – a call pricing strategy that prices calls based on the status of the caller and not necessarily the number that was dialed
Rate tables – multiple databases within a call accounting system that are used to price calls
Threshold billing – the determination of a specific duration a call must exceed before billing takes place

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