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Never mind plush bathrobes, price breaks or the rooms with Mount Rainier views.

What potential guests at the Sheraton Tacoma demand is bandwidth for Internet connections.

Lots of it.

Business travelers are the main clientele for the hotel near the Tacoma Convention Center. Dial-up Net connections wouldn't cut it.

"Customers just want high-speed Internet access," said general manager Mark Mathews. "You can't give them the old speed levels."

So this month, the 319-room Sheraton turned to Portland startup Eleven Wireless to set up nodes that broadcast a wireless high-speed Internet connection throughout the hotel and convention center. Eleven Wireless has also satisfied the wireless fidelity – or WiFi -- need at smaller hotels, including Portland's Mark Spencer Hotel, Hotel Lucia and Mallory Hotel.

Hotels such as these, which cater to business travelers, are becoming the first commercial adopters of WiFi, an increasingly popular way of connecting to the Internet. WiFi providers hope to expand beyond hotels and into every home and business, making the technology as common as telephone or cable-television service.

But first they need to learn how to make money from it, and hotels are teaching them valuable lessons.

The early results are promising. Customers have found the service fast, easy and affordable. And hotels and their service providers have begun to make money.

"Hotels definitely have the early adopter demographic, the captive business user," said Nigel Ballard, Eleven Wireless' chief technology officer. "Tomorrow, we hope, it will be a broader audience, but today it certainly is the business road warrior. Now we get the situation where hotel
receptionists are fielding calls for people, and the first question is, 'Do you have high-speed broadband?"

Hotels with large meeting spaces stand to benefit the most, said Steve Boone, director of Pacific University's Berglund Center for Internet Studies in Forest Grove.

"A big part of the hotel business is in presentations," said Boone, who has studied WiFi. "More and more, people would like to link into a Web site or go to different Web sites during presentations."

But most importantly for the business model, hotels can easily tack a charge onto bills for WiFi access. The Sheraton charges its guests $9.95 a day for unlimited access, including a wireless ethernet card that plugs into laptops to connect to the network.

Hotels pay a provider to build a network that connects broadcast equipment and high-speed Internet connections throughout the building. The hotels typically charge customers $10 to $15 a day and split the revenue with the service provider.

Goli Ameri , a telecommunications consultant with Portland-based eTinium, said her research has found that about 2 percent to 3 percent of customers use the service at WiFi-enabled hotels.

"To break even, you need 5 percent usage," she said. "If that usage is not there today, it will be there in six to 12 months."

Hotel Lucia, which has provided WiFi since May, reports a 5 percent usage rate.

"It's actually been very favorably received, more than we expected, partly because of the mix of business we have," said Diane Yoder, the hotel's controller and director of human resources. "Our hotel appeals to the young, professional businessmen who carry a laptop."

WiFi faces older competition. Companies such as WebTV and LodgeNet offer Internet over TV sets. And some hotels have installed cable-modem connections that plug into guests' laptops.

The Sheraton's Mathews said he's used the WebTV connection. It can be faster than dial-up access, but he doesn't think it's adequate.

"It was goofy," he said. "And people want to use their own laptop, because their files are there. They don't want to get on a television."

And installing cable-modem or digital-subscriber-line connections to every room and conference room can be expensive for hotel operators and confusing for users.

"Wireless clearly makes a ton of sense," said Eric Aebi , president of the Ethos Hospitality and Tourism consulting firm in Portland. "You don't need to add new wires into the room. And it's much easier for the customer."

But the question remains: Will commercial WiFi spread beyond hotels?

It will be difficult, because customers must be near a WiFi access point, so service providers need to figure out a way to install the nodes en masse. In hotels, a large base of customers occupies a small area, meaning fewer access points.

The answer probably lies in the plans of Intel, AT&T, IBM and other industry giants that are beginning to experiment with WiFi systems.

"Within 12 to 18 months, 90 percent of laptops will ship with integrated wireless cards," Ameri said. "It's very exciting with these big guys involved. There's a lot of unknowns right now, but I think those will be figured out."
Posted on Monday, December 16, 2002 (Archive on Tuesday, December 16, 2003)