High-Speed Access Becoming An Extended-Stay Staple

<B> High-Speed Access Becoming An Extended-Stay Staple</B>

By Lynn Woods

High-speed Internet access lines, enabling business travelers to connect at speeds 50 times faster than conventional dataports, currently are being tested at a handful of extended-stay and all-suite properties. By mid-next year, the amenity should be available in a portion of the properties bearing major extended-stay brand names, including AmeriSuites, Country Inns & Suites, Embassy Suites, Mainstay Suites, Residential Inns and Villager Lodge.

"It's a competitive necessity," said John Lee, senior director of brand marketing at Embassy Suites, which currently is testing a high-speed Internet access system in four properties. "You've got to do it if the customer demands it"--and customers are doing just that, added John Leavitt, senior vice president of sales and marketing at Prime Hospitality Corp., whose brands include AmeriSuites and Wellesley Inn and Suites.

Interest in the new high-tech amenity has peaked in the hotel industry as a whole, with major brands--including Marriott, Radisson, Hilton and Wingate Inns--recently announcing partnerships with vendors who either are, or soon will, provide the advanced access (<I>BTN</I>, April 26). Within a few years, the amenity is expected to be standard in hotel rooms. Jupiter Communications, an Internet research firm based in New York, predicts that half of the 8 million hotel rooms in the United States will be equipped with high-speed Internet access by 2002. In 1997, the system was being tested in just 4,000 rooms worldwide.

Embassy Suites plans to have high-speed Internet access available in all of its hotels next year, according to Lee. Prime Hospitality Corp. currently is considering two proposals and plans to have a system up and running in every suite within eight months.

A third hotel company, Choice Hotels International, whose numerous brands include Quality Suites and Mainstay Suites, has formed an exclusive agreement with GuesTech (<I>BTN</I>, Sept. 6), which provides in-room Internet access through a customized portal, called SuiteLink. Guests don't have to bring their laptops to gain access: The portal automatically will be displayed on a monitor, mounted on the wall, of an in-room Pentium 3. The system currently is being tested at the Quality Suites Shady Grove hotel in Rockville, Md., along with three other non-suite Choice hotels, and a year-end beta test is planned for the Mainstay Suites in Annapolis, Md.

Yogi Rawal, brand director for Mainstay Suites, said that the access is particularly essential for corporate travelers in the extended-stay segment: In many cases, it's more critical for business travelers staying 18 to 20 days to keep in touch with the office than those who are on the road for two or three days.

Villager Lodge is testing systems in 15 properties, with plans to decide on a supplier by year-end. The two new hotels slated for the amenity are located in Lexington, Ky., where 50 percent of the rooms are scheduled for the upgrade, and Thomson, Ill.

High-speed Internet access will be standard in every suite at Staybridge Suites, the new all-suites brand introduced by Bass Hotels and Resorts, which expects to have 11 properties open by year-end. The brand, which features all new-built properties, is heavily emphasizing business amenities, including two-line speaker phones in each suite, according to brand director of sales and marketing Bill Linehan.

Vendor CAIS Internet is installing an Ethernet LAN in each property, which will be accessible to each suite through in-room jacks compatible with guests' Ethernet cards. Guests also can access the high-speed lines for free using the two PCs in each property's "library." Two Staybridge Suites, located outside Atlanta and in San Antonio, Texas, have opened so far.

Marriott plans to install the Suite Technology Systems Network (STSN) system, which it has adapted for all of its brands (<I>BTN</I>, Sept. 20), in a few Residence Inns within the next three months. The system uses in-room high-speed modems, which connect into the hotel's existing wires. One advantage of the system over its competitors, said STSN president Will West, is that the modem will offer the option of a USB port, complete with connecting cable, as an alternative connection for guests who left their Ethernet cards in the docking station at work by accident.

Virtually all of these brands plan to charge a fee--generally $9.95 for 24 hours' worth of access--for guests using the service. The exception is Staybridge Suites, which is charging the $9.99 access fee only once per visit, a significant savings for extended-stay guests.

Candlewood Hotel Co., which plans to introduce high-speed Internet access by year-end in Boston, Chicago, Dallas and Los Angeles, also will charge much less than the norm, said vice president of franchising services Gina-Lynne Scharoun. "At $9.95, the hotel companies are making profits," she said. "We want to offer it at a value price"--in line with Candlewood's practice of charging only 25 cents for a soda.

Guests who object to the fee still will have the option at many properties to use the conventional dataport. However, hotel executives said that as high-speed Internet access becomes standard in the corporate workplace, allowing employees with Ethernet cards to download even lengthy documents or retrieve e-mail in a fraction of the time it takes with 56K modems, business travelers increasingly will become impatient with the slowness of this option and increasingly value the faster access.

The new connections also have the advantage of enabling guests to talk on the phone while online--not possible with most standard hotel dataports. It also frees up clogged hotel phone lines, which has become a problem in many properties as more and more laptop-toting guests log on for half an hour or more at a time. Standard hotel phone lines are designed to accommodate only a certain limited volume of calls.

Not all executives at extended-stay brands, however, are absolutely convinced that the substantial investment required for such a service is worth it. "We've got a team investigating high-speed Internet access lines," specifically tying into cable TV, said Doug McCorkle, vice president of brand management at Homewood Suites. However, "the challenge is this technology changes every nine weeks." McCorkle noted that half of the properties in the brand have in-room two-way dataports, and said that in the meantime he's trying to create more awareness that Homewood is the only upscale extended-stay brand with a business center at every hotel.

<B>Cost Sensitivity</B>

Mike Wilson, vice president of marketing at Extended Stay America Inc., said his brand was close to testing high-speed Internet access service--more than a third of guests carry laptops--but he too suggested that it might be content with its current in-room dataports. "We don't have a lot of requests for high-speed access," he said. "We're doing research to see if guests want to pay for it. Our guests are extremely sensitive to cost. A differential of $5 to $10 a week is a big change. We've looked at adding more cable channels, for example, and decided not to."

To provide broadband Internet access, hotels have to install T-1 network services. Some systems use the TV set as the access device, but more commonly they give access to guests with personal laptops, either through the installation of a server in the hotel basement or by using existing wiring enhanced by the addition of in-room modems. Either way, installation is expensive, costing between $250 to $300 per room for hotels with cable infrastructure.

Then there's the maintenance costs, ranging from $1,200 to $1,700 per month, according to Jupiter. The research firm predicted that hotels eventually will attempt to charge customers even higher fees to help recoup their costs.

To avoid prohibitive installation costs, many chains are forming partnerships with vendors, including LodgeNet Entertainment Corp., On Command, CAIS Internet and VirtualINC (<I>BTN</I>, Sept. 20), which install systems for free in exchange for a contract that entitles them to revenue sharing from customer fees.

<B>Demand Vs. Risk</B>

Yet hotel chains locked into multiyear contracts with vendors risk wasting money should a better, cheaper solution come along--say, high-speed Internet access bundled into services offered inexpensively by telecommunications providers. "All operators are weighing out the demand from consumers versus the change risk," noted Paul Kirwin, president of Carlson Cos.-owned Country Inns & Suites.

Carlson recently has picked a vendor to offer the amenity to franchisees as an option. However, Kirwin said one problem with installation is that many Country Inns & Suites are smaller than 100 rooms. Since the cost for installation is generally the same for larger properties as it is for smaller ones, the vendor might not consider the return on investment sufficient at these properties.

Lee at Embassy Suites said his brand had reached a compromise by settling for deals lasting more than a year, but less than five. He acknowledged the probable obsolescence of the technology even as his company introduces it: "In two years you'll be plugging in an antenna, shaped like a cigar, into your laptop," he said. "Wireless will come in, and all the cable stuff will be out the window."

Another obstacle is that while most systems require the guest to use an Ethernet card to make the connection, they can't access their company e-mail--consumers' top choice of online activities delivered in hotel rooms, according to a recent survey conducted by Jupiter. (Eighty percent of 2,100 households surveyed in July rated e-mail as their preferred choice, followed by 64 percent for Web surfing.)

The reason: Companies configure their employees' laptops so that they only can function within company firewalls, which typically don't accommodate high-speed Internet access hotel services. However, that's expected to change as corporations recognize the value of the services and reconfigure their company computers accordingly.

Yet another concern among hoteliers is that with high-speed Internet access, guests could be spending more time online, resulting in fewer in-room movie rentals. "The Internet will take away our traditional entertainment revenues," said Ken Rogers, president and CEO of Villager Franchise Systems Inc. and one of the pioneers of the extended-stay concept.

Nonetheless, Rogers added that competitive pressures in the industry meant that Villager Lodge was moving ahead. Choice, parent company of Quality Suites and Mainstay Suites, has come up with a compromise: While online business services will carry a fee of $9.95, there also will be an online adult site, with a $6 access fee.

But ultimately, once critical mass is attained, the amenity will become as common--and relatively cheap--as in-room phone service, said some observers. "Within five years it will be free," predicted Kirwin.