The HD Effect

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March 01, 2010
Television Technology
Trevor Warner - trevor@warnerconsulting.com

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HD doesn’t sell rooms, but it may be one of many amenities that retains rooms.

When did tube TVs become the equivalent of the payphone?  You still see them but it is a rare sighting and when you do see one, you point it out to your kids and remember the days when you had to get up and walk to the TV to change the channel.  I have memories of the fights with my brothers about those five steps.  With the acceleration of flat-screen TVs has come the necessity to make the decision on HD. 

At home we have plenty of options but when we move to the hotel space, our options are not always as transparent.  To date, satellite through DirecTV or Dish Network have been the two primary sources of HD for three primary reasons.  First, video-on-demand companies include the satellite offering into their packages so the transition to HD is made simple.  Second, hotels have gone direct to the satellite companies when no video on demand was chosen because of the package, short-term contract, the flexibility in choosing HD channels and the use of current technology.  And the third reason is content delivery. “Satellite providers have done the best at delivering premium HD content end to end,” said Jason Shane, vice president of IT for Hersha Hospitality.  

However, satellite can come with upfront costs of $20,000 - $50,000 depending on the channel line up or a higher per month cost if you lease the system.  The good news financially is the delivery technologies in the head end for satellite are continuing to bring down the upfront cost.  At the time of this article we expect a 30 percent drop in capital costs.  These changes will occur rapidly and we expect new technology deployment every six months for the foreseeable future.  In a year from now we’ll read this article and think whoever paid $50,000, but as we all know, that’s the cost model when dealing with emerging and changing technology. 
Cable companies have made a push in the industry by investing in technology to deliver  HD all the way to the room without facilities (cable boxes or head end) in the rooms.  Cox is the first company to provide PriDiom integration with no head end to the room.  It currently offers this unique technology in Northern Virginia, but are progressing forward to roll it out in other markets.  Perhaps the greatest benefit to this technology development is the ability to deliver 37 HD channels or more with no upfront cost to the hotel using current technology.  The monthly cost is also the approximate cost of their standard definition cost per room.  Hotels can now purchase the TVs that are technology forward while giving the guests a robust channel line up with no capital cost.  Of course, like any good cable company, they require a longer term (often five years or more). 

The danger is clearly the margin of error.  Cable companies are not customer service friendly and don’t have the hotel expertise or commitment to overcome smaller issues.   For example, a recently opened Cambria Suites struggled to provide HD in certain rooms given that every coaxial wire in the hotel was not a home run.  The cable company struggled to find a solution since something as simple as amplifying a signal was not an option. 
“RF design and delivery is the key component in providing HD within a hotel property,” said Allen Sheff of DSS Installations.  The technology and requirements change so fast that the lack of expertise from end to end leads to trial and error. 

Charter, Time Warner, Comcast and others have started down this road to varying degrees.  The primary issue for all of these companies is their current, very expensive Quam technology deployment.  In each market, the cable provider must modify the delivery method to the hotel and that comes with an expense to which many have not been willing to commit.  However, as the technology pace continues to threaten their market segment, cable companies have and will continue to bring these technologies to market giving hotels more options than they have had in the past. 

While cable companies are slowly rolling out HD to the rooms, third-party companies who provide head-end solutions have been able to use similar technology for distributing cable HD content.  This now means that even if the cable provider in the area has HD but can’t deliver it to the rooms, the head-end distribution system can do it on their behalf and overcome many of the issues that a local cable company can not.  More importantly, RG6, RG11 and home runs are no longer the absolute for providing HD content.  With a head end in between the TV and the cable provider, hotels can overcome the disadvantages to the infrastructure and the cable company’s technology to provide a crisp, clear picture to each TV. 

Ethernet has long been proclaimed as the next HD deliver method to the hotel and within the hotel.  Several hotel franchise brands require CAT6 to the TV, even though the wire is not currently used.  There is no doubt Ethernet will eventually be the first option but current video technologies that are hotel friendly still find the coaxial to be a more robust delivery method.  Based on the industry preference for coaxial and the bandwidth available in a coaxial wire, it will be a very slow migration to Ethernet since the technologies that delivery via Ethernet will not find a marketable home in the hospitality industry.  There are always exceptions to this given the many niches within the hotel industry itself, but so far there are no industry changing breakthroughs that would change the financial and operational decision of a hotel to move to Ethernet. 

The television is perhaps the second most important decision in HD with the first being the head end in the hotel.  Typically we chose our sets based on price and loosely based on our HD content provider (cable, satellite, VOD).  While this worked in the days of standard definition, this is one of the primary issues in HD deployment.  TV manufacturers all believe they develop the best TV on the market but as with anything, this is clearly not the case.  In a rush to drive down price and get product to market, the smartcard in the TV becomes the source of misdiagnosed HD problems and capital dollars spent to fix the problem.  The nontechnical explanation is some TVs have a good smartcard and some TVs do not.  For example, something as simple as the sensitivity of the RF signal in the smartcard can drive general managers and owners to pull their hair out while getting vendors to overcome the issues of poor signal or no signal to a TV.  The TV manufacturers will hold their ground (the TV works fine) which leads to heroic efforts on site to get the channels to work.  Unfortunately, this is not a line item or comparison hotels have the ability to consider when shopping for a TV.   For this reason consider your infrastructure and delivery method before you choose a TV.  If you shop based on price alone, you may be inviting long term operational problems. 

To create an advantage the TV manufactures are going all inclusive.  Something that has long made VOD providers so important was the expertise of an all inclusive system deployed at a hotel; one company, one throat to choke when things went wrong.  LG is in beta to launch LG PrCentric.  This technology creates smart TVs that work with the LG head end.  The simple idea is a more turn key approach to delivering free to guest content to the room.  LG PrCentric allows for a concierge of services giving the hotel products such as TV check out, digital signage and central management that in the past hotels could only have had with a VOD integrated system.  No more reprogramming individual TVs after a power failure or relying on different vendors to integrate, LG PrCentric is a one-stop package.  Look for Philips, Panasonic and Samsung to follow with their own package technologies.  While the new technology will be more expensive in theory it will be more cost effective by cutting down on man hours and capital spent to maintain free to guest in the rooms giving the hotel guest a more consistent, positive HD experience. 

Do you really need HD?  With the baseline understanding that every hotel serves a different clientele even when they are on the same side of the street, same town or same state, it’s more of a question of who is your clientele.  Guestrooms are designed to make a guest feel at home, and personalized as guests bring in their own communication and entertainment.  From a technology standpoint, the guestroom is evolving into simply giving the guest the ability to use their personal devices seamlessly. 

HD certainly fits into the equation of providing an at home experience since guests still focus in on live news, sports and local channels as viewing priorities.  However, the argument can be made that HD is not a necessity but instead a wow factor in the room.  Jeff Parker, VP of IT for Magnolia Hotels, has yet to implement HD in his hotels.  “Until (guests) are ready to make a buying decision based on HD content, we can’t justify the expense.  To date, we have only received a few guest requests or comment cards that requested HD content,” said Parker.  Of the seven industry professionals we asked, all seven stated independently that the demand for HD comes almost entirely from the brand or the hotel management, not from the guests directly. 
We could not find any report that listed HD as one of the top drivers for making a hotel purchasing decision.  In a market where our only TV purchasing option is a beautiful flat screen television we may find that HD doesn’t sell rooms, it may be one of many amenities that retains rooms.  Vice President of IT for Thayer Lodging Group Mike Uwe Dickersbach said, “We don’t specifically see requests for it, what we do see are positive comments when we do have it installed.” 

To date the adoption rate has been slowed by the capital cost for implementation and lack of stated guest demand.  However, with the new technologies both current and on the horizon limiting capital expense, HD is a viable financial option.  If the TV we must buy is built for HD, the suppliers can provide the content and the cost is the same as standard definition, who wouldn’t add this amenity for free?  Next step, 3D, and you can be sure your investment now will not be compatible for that change. 

Trevor Warner is the president of Warner Consulting Group and can be reached at trevor@warnerconsulting.com.
 

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