Hoteliers Hit Hard By Lack Of In-Room Phone Usage
The revenue U.S. hotels earned last year from telephone operations per available room dropped nearly 20 percent from 2002, following a 22 percent drop in both 2002 and 2001. The findings, released this month by the Hospitality Research Group of PKF Consulting in Atlanta, confirm the extent that business travelers have abandoned guest room telephones in favor of their mobile phones and, to a lesser degree, e-mail. As a result of the shift in traveler behavior, the percentage that telephone operations contributed to hotels' total revenue in 2003 fell to 1.4 percent, less than half of the 2.9 percent contribution telephone operations made per year in the mid-1990s.
According to HRG, since it began conducting the annual poll in 1989 the revenue generated from telephone operations per available room hit its lowest point—$532—in 2003. During the peak years of 1996 through 2000, phone RevPAR topped $1,000 each year.
During the 1990s, many travel managers complained that the surcharges hotels were adding for telephone use were excessive and that hotels were inconsistent in their charges.
Data from the 2004 American Hotel & Lodging Association Services, Facilities and Trends Survey released last month, suggest hotels are trying to change this perception, though it is costing them further revenue. With 5,300 properties responding across all price points, 62 percent said they no longer charge for local calls. In a 1998 AH&LA survey, only 34 percent of respondents provided free local calls.
Similarly, 21 percent of hotels responding to the 2004 AH&LA survey said they add a service charge for dialing toll-free numbers, which is close to the 23 percent that added such charges in 1998. The poll did not ask whether hotels tack on a surcharge for long-distance calls, the most expensive type of call and the type business travelers are most likely to make.
"Hotel telephone revenues really started to fall off the face of the earth in the past three years, due to the drop in occupancy that accompanied the downturn in travel and the increasing popularity of cell phones," said Robert Mandelbaum, HRG director of research. "It's become increasingly difficult to justify charging a guest $7 for a two-minute phone call."
However, Mandelbaum said some of the criticism heaped on hotels is unwarranted. "There's some legitimacy for hotels to mark up telephone calls, maybe not to the extent they have," he said. "There's still a cost of service and cost of goods involved, and hotels are entitled to some degree of profit."
Different hotel companies have responded to the perception of overcharging by rolling out pricing programs designed to lower fees or at least provide greater value, while still generating revenue for the hotels. Marriott International, for example, last year introduced a Wired for Work initiative at its Marriott and Renaissance hotels that combines unlimited local and long-distance domestic phone calls along with high-speed Internet access for a $9.95 daily fee. Lou Paladeau, Marriott vice president for technology business development, said the bundled approach has been well received by business travelers seeking convenience at a reasonable price.
Despite the drop in usage, excessive phone charges remain such a sore point that questions about telephone pricing still figure prominently in the National Business Travel Association's electronic request for proposals standard for 2005. According to NBTA hotel committee member Peggy Lee, this year's communication and technology module contains specific pricing questions for hotels to answer about nine separate types of telephone calls, including charges for use of analog dial-up dataports in guest rooms, business centers and meeting rooms/public areas. Types of calls range from local calls to calling/credit card calls to operator-assisted, collect calls.
"Hotels are asked to describe their charges, including any base fee, access charge and surcharge per minute," said Lee, who is global travel and meeting manager for Network Appliance in Sunnyvale, Calif.