Hotel Broadband Comes Full Circle
As displayed on Hotelexecutive.com
By: Josh Friedman, VP Marketing of Eleven Wireless
September 30, 2005

Think back four years to 2001. As someone in the hospitality industry, you probably balked at the thought that you’d have to spend a bunch of precious capital to deploy a broadband infrastructure in your property, particularly given the state of occupancy and ADRs at the time. Now think about today. If you don’t have broadband deployed by now, it should be in your 2006 plan.

Broadband has rapidly become a necessity to drive and maintain occupancy.

The early days of Wi-Fi and broadband in hospitality were marred with failed companies, nasty bankruptcies that locked up equipment in court battles and business models remnant of the dot-com era. This led to confusion and distrust for the hotels. Despite all of this, guests demanded broadband.

After realizing guests still demanded broadband, even though these broadband companies were failing, hotels made one-off decisions to deploy networks. Many hotels used consumer-grade equipment and fly-by-night network service providers just so they could claim they had Wi-Fi or broadband. Ultimately, this was a failed strategy.

Guests couldn’t connect, or were dropped from the network. Too many users would bring the entire network down. VPN connections to guests’ corporate networks typically didn’t work. Too few wireless access points were installed, causing gaps in coverage. The deployed equipment couldn’t be managed or monitored. The technical support staff lacked experience. And on it went.

Coming back to the present, in a recent Jupiter Research study, 52% of hotel guests surveyed said they would not return to a hotel with poor broadband service. Of these, 44% blamed the hotel and not the network service provider; 25% said they would spread the [negative] word. This research emphasizes the importance of high-quality broadband in the hospitality industry. It also underscores the consequences of failure.

Pyramid research estimates more than 700 million people will have Wi-Fi in their homes by 2008. This will naturally increase the demand for broadband when these people travel and stay in hotels. Providing sub-standard access for them will simply be unacceptable.

How do you ensure the best broadband network for your guests’ needs, you might ask? Great question. There are five major points that should be considered:

1. Understand the demographic profile of your guests, as well as their expectations of a broadband network at your property.
2. Deploy enterprise-class equipment. Period.
3. Decide whether or not to charge for broadband access (hint: there are more options than you think) – see the first item in this list.
4. Be sure to use a robust software infrastructure to manage all your networks.
5. Work with a reputable network service provider who understands items 1-3.

1. Understand the demographic profile of your guests, as well as their expectations of a broadband network at your property.

Arguably, hotels understand the demographic profiles of their guests/customers better than other industries do. This being said, when it comes to broadband, the hospitality industry’s responses have been less than perfectly consistent.

Initially, broadband seemed like a passing fad. Then a hobby. After these stages passed, the question often asked was, “why Wi-Fi.” Today, hotels are better addressing guests’ broadband-oriented needs. Many properties are deploying both wired and Wi-Fi networks to address concerns from any angle. This can be a smart move, but again, the effectiveness of the investment depends on the demographics.

2. Deploy enterprise-class equipment. Period.

This point is brief: Deploy enterprise-class equipment. There are many manufacturers, and many products from each manufacturer. The equipment deployed doesn’t have to be the most expensive, but it MUST be enterprise-class. If this is not attended to, there will be problems with the network. This lesson has been learned many times over in the past few years. Stick with third-party companies that are specialists in their function – companies like Cisco, Nomadix, IP3, HP, Colubris and Tropos.

Just like you wouldn’t put a consumer-grade oven or mixer in your hotel restaurant, you cannot build your hotel broadband network with consumer-grade hardware. Non-enterprise-class equipment cannot take the load of a hotel network, nor can it be properly managed.

3. Decide whether or not to charge for broadband access (hint: there are more options than you think).

This can be a very philosophically oriented discussion among many in the hospitality industry. The discussion continues to this day. There are many, many ways to address this, but it gets back to point number one: Know your demographics. For example, hotels in the economy segment might have strong arguments in favor of offering access for free while luxury/upscale hotels might make equally strong arguments in favor of charging. In the economy hotel, while general access might be free, the bandwidth is perhaps slower. Additional services and bandwidth can warrant additional charges. The luxury/upscale hotel may decide to charge for access but include some of those additional products/services at no additional charge, albeit at a higher initial fee.

A very compelling model that works for all demographics is the following: provide a basic Internet service (for free if necessary) that has modest speeds; offer premium services (including things like a public IP address, higher bandwidth, higher quality of service, etc.), segregate meeting rooms from the rest of the network (and charge for meeting room access to groups) and charge via prepaid or credit card for non-guests.

Below are some examples of demographic-specific broadband offerings.

• Free Wi-Fi access in the lobby paired with charging in the room: This can be an effective way to address guest expectations and still monetize a portion of the offering (aside from increasing rack rates).
• Meeting room access: Even if the decision is made to offer access for free in the guest rooms, this does not mean you can’t charge for meeting room access. Even better, you can often charge handsome fees.
• VLANs (guest and administrative): In most cases you’ll want to separate the guest network from the administrative network. The great thing about deploying a VLAN is that you don’t need to physically separate networks to achieve this. Additionally, VLANs can be used to separate meeting rooms from guest rooms to achieve the previous point.
• Public IP addresses for VPN (yes, you can charge extra): Many companies require a unique IP address when accepting VPN traffic. Most hotel broadband networks are configured so that each computer has the same outbound IP address. If more than one person connects to his company network at the same property, any connection after the first will be denied. Selling (or providing for free) a public IP address solves this problem.

The main point here is that without understanding the expectations of your guests (again, see point number 1), making a categorical decision to charge or not just doesn’t work. In order to make a sensible decision, see the next point.

4. Be sure to use a robust software infrastructure to manage all your networks.

Once all of the above items are implemented, the one of the last major items to consider is how everything ties together. The importance of this increases exponentially the more properties under management. As was mentioned, managing broadband networks is complex, and much of that complexity is dealt with in software. When looking at network service providers and their complete solutions, be sure to fully understand the software infrastructure used to manage your network(s).

Some key items this software infrastructure should do are: 1) prominently display the hotel’s brand; 2) leverage the deployed network for other products and services; 3) be a platform to communicate with guests; 4) provide the ability to fully customize the end-user experience; 5) customize pricing for each property (and within each property); and finally 5) enable the division of the network for different uses and billing methods.

5. Work with a reputable network service provider who understands items 1-3.

One of the most critical factors in the hotel broadband offering is the network service provider. Some hotels attempt to do this themselves, which is not advisable. Forming a team of technical staff to man phones and support computers 24/7 takes time. Building expertise in managing networks takes dedicated effort. There are significantly more factors to consider than meet the eye. Effective providers understand and have a very positive impact on guest experience. And remember the statistics above regarding guest satisfaction – the hotel takes the blame, not the service provider. This makes the decision that much more important: Select a provider that understands and addresses all the points addressed in this article.

The bottom line is this: Broadband is a necessity, and needs to be treated as such. It cannot be an afterthought. It has to be nurtured just the same as carpet, beds and towels. More importantly, it has to be treated as a critical service highly demanded by your guests. Once this is fully understood and broadband is properly deployed and managed, there are many ways to leverage the network. Products and services delivered over broadband will bring value to your guests and an increase in RevPAR and profits.

Josh Friedman is the co-founder and VP Marketing for Eleven Wireless. Eleven has been in the hospitality broadband industry since 2001. The company provides an on-demand software solution for centrally managing broadband networks for the hospitality industry. He can be reached at 503.222.4321 or josh.friedman@elevenwireless.com.