History Lessons – HSIA

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October 01, 2011
Connectivity Trends
Dan Phillips - dphillips@dare2i.com

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I’m showing my age, or perhaps my experience, by stating that I was consulting back when hotel telephone departments made money.  In fact, I made a pretty good living for a time performing audits at hotels with quickly dwindling profits.  Hoteliers just couldn’t believe that guest calling cards, and then cellphone usage, could eradicate 3 percent of their total annual revenues in a span of less than two years.


What bothered me a lot in those days was the lack of raw data to prove the trends that we were unsure that we were actually experiencing.  On a hotel by hotel basis, I would be able to show management the drop in usage, the change from direct dial calls to toll-free numbers, the abuse on local dial up calls, and so on.  I would speak to them about lowering their rates, consider new billing platforms like threshold billing and bundled packages.  But what was missing was industrywide data.  I spoke with many call accounting vendors, who had millions and millions of call records from hotels around the world, about crunching that data and providing white papers detailing guest usage trends before it was too late.  Sadly, very little happened and we all accepted the loss in the vast majority of telephone related revenues.

Today, HSIA is the dominant communication method used by guests in our hotels.  Today, hoteliers want to know answers to questions like:

  • How much bandwidth into my hotel is enough?
  • How much bandwidth into my guestrooms is enough?
  • Should we invest more into my wired or wireless infrastructure?
  • How do I get ROI?
  • What does the crystal ball show for five years from now?

I have sent a survey out to several of the HSIA vendors in the United States.  I am pleased to say that several of them participated in this effort, and please, please, see their contact information below.  I am dismayed to say that less than half of the vendors asked opted to participate.  Again, I find that vendors hold the key data that will enable hoteliers to make sound business decisions moving forward.  I urge them to find ways to educate their clients on best business practices.  That being said, I’d like to share what was learned from this effort to date.

The survey questions were designed to:

  • Find industrywide average usage statistics.
  • Uncover some of the trends and changes in guest usage.
  • Provide data so that hoteliers looking to upgrade current solutions can make informed decisions.
  • Provide data so that hoteliers building new hotels can have appropriate solutions designed and installed.

Not all of the survey questions were answered, and many times the answers were listed as proprietary.  Of the questions not answered, often it was due to too much digging and crunching of the data to provide accurate information.

I was fortunate to receive answers from iBAHN, Guest-Tek, CLC Networks, PSAV Presentation Services and EthoStream.  Some of the answers provided are presented below.

iBAHN
iBAHN has installed and supported 900 hotels in the Americas, representing 175,102 rooms; and, 2,193 hotels globally, representing 313,867 rooms.

Forty-three of its hotels provide wired access only, while 55 percent provide both wired and wireless access.

iBAHN averages about 12 rooms per wireless access point (AP).

Guest-Tek
Guest-Tek has installed and support 2,500 hotels representing 430,000 rooms.

Across its portfolio, ISP bandwidth ranges from 384 Kbps to 200 Mbps, with the average pipe into each hotel being 3 Mbps.  The average bandwidth (dividing the ISP circuit speed by the number of rooms) to each room is 30 Kbps.  Hundreds of its hotels have aggregated bandwidth from multiple ISPs, which is a new trend and has become a standard for many hotel brands with hotels looking for a cost-effective solution for adding additional bandwidth.

Most hotels have a cap of 512 Kbps to each room.  Guest-Tek's average number of rooms per access point is five; and, for wireless, the average number of devices connected per user is 1.5.  The average usage for their portfolio, wired and wireless combined is 19 Kbps up and 72 Kbps down.  Ninety-five of its portfolio uses bandwidth shaping.

Guest-Tek offers hotel guests multiple tiers to choose from, both on duration and speed.  Typical options include pricing for one, three or five days with bandwidth selections of either 512 Kbps or 1.5 Mbps.

On average, guest calls to their support number breakdown as follows:

  • 172/month are about guests getting connected to wired services.
  • 644/month are about guests getting connected to wireless services.
  • 1,165/month are about slow connection speeds.

CLC Networks
CLC Networks has installed HSIA into 862 hotels representing over 150,000 rooms.  For the purposes of this survey, 14 hotels representing 1,785 rooms have been tallied.  Just one of them has wireless only, while the remaining 13 provide both wired and wireless access to their guests.

Of these hotels:

  • Average bandwidth into hotel, 1.5Mbps.
  • Nine of 14 hotels have tiered pricing, 384 Kbps for free, 1Mbps charged for.
  • Five of 14 hotels have aggregated bandwidth from multiple ISPs.
  • 10 rooms per AP is the average.
  • Two devices per wireless user is the average.
  • 11 of 14 hotels use bandwidth shaping.

Some data from one month of guestroom usage at just four hotels includes:

  • Hotel A, high-end, urban, 150-room hotel
  • Hotel B, very high-end, mix business/pleasure, 150-room hotel
  • Hotel C, destination 150-room resort
  • Hotel D, boutique, 160-room, tier 3 city hotel

 

 
# Connections
% Users
% Users
% Tiered
Average Download
Average Upload
HOTEL
/Occ'd Room
Wired
Wireless
Upsell
Per User
Per User
A
0.4
20%
80%
0.5%
409.6 MB
5.1 MB
B
1.9
10%
90%
16.6%
80.9 MB
13.7 MB
C
0.9
24%
76%
N/A
21.4 MB
4.0 MB
D
1.0
15%
85%
N/A
120.3 MB
37.8 MB

% Tiered Upsell = percentage of users that paid extra for a higher tier of service

 
 
PSAV
For the purposes of this survey, PSAV has provided information from 31 hotels representing about 13,000 rooms.
  • One hotel had only wired access while 21 hotels had only wireless.
  • PSAV averages eight rooms per access point for wireless coverage.
  • Its hotels offer basic and premium tiers (based on bandwidth provided); 91 percent of hotel guests use just the basic tier while 9 percent (45,494 over 6 months) upgraded to premium.
  • 85 percent of their support calls (averaging 1,127 total calls per month) are related to guests trying to access wireless services, while only 1.5 percent of calls have to do with connection speeds.

PSAV pointed out an interesting philosophical implementation guideline.  While all of its hotels do use bandwidth management, PSAV doesn’t believe that bandwidth shaping (controlling the amount of bandwidth a guest can access based upon their behavior) is fundamentally the right approach for the industry.

EthoStream
EthoStream currently supports over 2,350 hotels with 220,000 rooms.  Of those, just 20 have wired access only.  And, about 70 of them provide only wireless access in the hotel lobby.  Over 1,700 of them provide only wireless to the guestrooms, and finally, about 500 of them provide both wired and wireless to the guestrooms.

There are only about 370 of its portfolio that currently has multiple ISP feeds providing aggregated bandwidth solutions.  Only three hotels provide tiered bandwidth to guests; 256Kbps is free, 1 Mbps is charged for. Take rates for tiers services is between 2 percent and 3 percent.

 

In general, one of the questions that didn’t get answered had to do with guest behavior, which will be a significant contributing factor to designing HSIA solutions moving forward.  A question to get answered by your vendor might be:

What are the top 10 uses by guests accessing the Internet?  Information should be provided in order, covering email, web surfing, movies and other uses, and, where possible, should include access to URLs such as Facebook, Netflix, Hulu and Twitter, among others.

Some conclusions from this limited data might include:  hotels must provide robust wireless access, it appears that tiered offerings and pricing is accepted and could provide some ROI, that circuits from multiple ISPs is becoming the norm, that bandwidth shaping should be considered, and that hoteliers need to plan for many guest owned devices accessing wireless networks simultaneously.

The survey respondents were also asked for advice when building a new hotel.  A summary of their answers includes:

  • Plan for 1 Mbps of ISP bandwidth per guestroom.
  • Install CAT6 cable to each guestroom, under the desk and throughout public and meeting areas.
  • Wired and wireless to guestrooms, wireless only in public areas.
  • Use full Gbps switches, use dual radio 802.11n APs, use managed wall plate units with 802.11n in each guestroom for use in that specific room along with multiple wired connections.
  • Provide tiers based on bandwidth, with a lower amount free.
  • Use IPv6 and all machines will use public IPs.
  • By 2016, plan on providing a minimum of 10Mbps to each guestroom on the internal network.
  • By 2016, most all guestroom access should be wireless, with some wired access in meeting rooms.
  • By 2016, plan on using full Gbps switches.
  • By 2016, tiered pricing will be more prevalent.

What has history taught us?  Hotels will design and implement costly solutions for guests to use, plan on getting a ROI, and then guests will find ways to get better and more personalized service without having to pay the hotel for it.  Just like calling cards put the first nails in the coffin for telephone revenues, alternative access providers, like iPass, are doing the same for HSIA revenues.  And, just like the cellphone put the last nails in the coffin for telephone revenues, they might again do the same for profitable HSIA deployments.

Perhaps a comment from Matthew Koch, vice persident operations at EthoStrem, could sum up the trends that recent history might also teach us:

“The trend towards mobile computing is changing every aspect of high-speed Internet access. The increase in devices requires higher quality access points. The lower power antennas in smartphones and tablets will require better, more even coverage, and the move to cloud computing will continue to increase bandwidth requirements at properties.  The growth of smartphones and tablets has been explosive on our network. In the past 18 months they’ve grown from a 10 percent share of connections to a 30 percent share of connections.”


Dan Phillips is a partner at Dare to Imagine, Inc., specializing in low voltage technologies for the hospitality industry.  You can reach him at dphillips@dare2i.com.

The author would like to thank the following participants for their contributions to this article:

iBAHN:  Cynthia Carpenter, VP Marketing, ccarpenter@ibahn.com
Guest-Tek:  Josh Wookey, Project Manager, josh.wookey@guest-tek.com
CLC Networks:  Mark Probst, CEO, mark.probst@clcnetworks.com  
PSAV Presentation Services:  Matt Harvey, mharvey@psav.com  
EthoStream, LLC, Dave DeBroux, ddebroux@ethostream.com  

©2011 Hospitality Upgrade
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