Hotels: Slip Sliding Away
October 01, 2002
Is 802.11 losing its place as the technology of choice for hotel high-speed Internet services?
When Wyndham International announced recently that it was partnering with Sprint to provide high-speed Internet services in 35 Wyndham hotel and resort properties, it was no big surprise to hear that the initiative involved 802.11b wireless access.
What might have come as a tiny shock, if it was even noted, is that, Sprint will be installing wired Ethernet, not wireless, access to guest rooms in the Wyndham hotels. Wi-Fi will only be used for common areas and meeting rooms -- and in the latter, wired connections will also be used in many cases.
That's not all. Wyndham senior vice president and chief technology officer Mark Hedley believes that within three to five years, high-speed wireless Internet access in hotels will be provided not over local 802.11 networks but via nationwide 3G networks.
Is Wi-Fi losing its grip on the hospitality industry? Or did it ever really have a grip?
Wyndham, based in Dallas, is the fourth largest hospitality and lodging company in the U.S. The company mostly owns, but also leases, manages or franchises about 180 mid-level and high-end hotels and resorts in North America, the Caribbean and Europe.
Wyndham was a high-speed Internet and wireless pioneer. It's first foray was with Austin, TX-based WayPort. By late last year, Wayport had installed wired/wireless infrastructure and systems in 144 Wyndham properties. WayPort owns the infrastructure -- except for the Ethernet wiring installed in most hotels to provide in-room service -- and shares revenues with Wyndham.
That deal is, of course, now kaput. Wyndham will in most cases lease to own the Cisco wired Ethernet and Wi-Fi equipment Sprint is to install in the 35 remaining properties. Wyndham will pay Sprint to manage the technology and the service.
The timetable for the program with Sprint is uncertain. Hedley's hope is that all properties will be up and running by the end of the first quarter 2003. Since some are only managed, not owned, by Wyndham, it's not clear if such an aggressive schedule is feasible given the tightness of capital in today's market. Property owners have been told, though, that the company wants Internet services to be "brand-wide" by the end of 2003, Hedley says.
Given the post-dotcom boom economics for struggling hotels, it's a little surprising that Wyndham decided to forge ahead with these remaining properties at all. The utilization rate for the high-speed Internet service across the WayPort hotels -- the percentage of room nights for which guests order the service -- remains low: only about 2 to 3 percent, Hedley says.
This is, in fact, fairly typical for the North American market and it's not quite as bad as it sounds. In some sections of the country, especially the northwest and northeast, utilization is much higher, Hedley says. In some cases it's as high as 30 percent.
Utilization will also likely go up in the Wyndham chain with the announcement in June of changes to the company's no-fee ByRequest loyalty program -- though revenues from the service will go down. ByRequest guests always received high-speed Internet access for free. Now they will also get long distance calling, fax and copying services for free.
Given that there is no charge to join ByRequest, the new freebies should be an incentive for more business travelers to join. Why wouldn't they? More guest will presumably use the Internet service for free instead of paying $9.95 a day. For Wyndham it's clear: high-speed Internet access is part of a long-term strategy for grabbing a competitive advantage.
Meanwhile, the decision to go wired rather than wireless for in-room access is predicated on some persuasive logic. When Wyndham started with WayPort in 2000, Hedley points out, it was the early days for wireless in many ways. Security was an issue. Business travelers didn't have wireless access cards then. Most however, had Ethernet network interface cards in their laptops which they used at the office."We could provide guests the capability of using our service without any configuration changes to their network cards," Hedley explains. So wired access in guest rooms made a lot of sense for more than one reason.
In the WayPort days, Wyndham usually had to pull cable to the rooms -- at obviously great expense -- but didn't see any reasonable alternative. The situation has changed somewhat now, but wired still ends up looking like the better option.
True, Wi-Fi is being built into more laptops. Add-in cards are cheaper and more prevalent. VPNs and other security measures have reduced paranoia about Wi-Fi security -- both from the hotel's and guest's points of view. However, Hedley explains, there have also been advances in wired Ethernet technology. It's now feasible to run Ethernet over existing telephone cabling.
"The Cisco equipment will run on just about anything," he says. "You can run long-range Ethernet over barbed wire now. And a lot of these hotels have the equivalent in quality of barbed wire."
Sprint always recommends wired for in-room access, says Thomas Patchin, the company's Las Vegas-based national director of hospitality sales.
"The challenge for wireless deployments in hotels is deciding what is the most cost-effective option -- at what point does return on investment in equipment switch from wireless to wireline?"
Because of the way many hotel and resort properties are built, especially older properties, getting Wi-Fi signals through walls is often more difficult than anticipated -- or than other pure-wireless service providers suggest is the case, it's worth noting. Sometimes, to ensure a high-quality connection, it would almost be necessary to have an access point for every room, Patchin suggests.
"The thing about the hospitality industry is that it's all about service," he says. "People stay at a Wyndham property because of the level and consistency of service, including the Internet service. And the most cost-effective way of ensuring that level of service is usually not through wireless."
That will change, Patchin believes. The wireless technology will get better. More business travelers -- perhaps eventually all -- will carry wireless-equipped laptops, PDAs or smart phones. New hotels will be designed and built in ways and with materials that will help optimize wireless penetration.
It's not at all clear that it will be Wi-Fi-based wireless, though. Hedley believes that within three to five years, when 3G networks offering reliable 128-Kbps data connectivity are ubiquitous, it will make more sense for hospitality companies like his to get out of the Internet access business and leave it to the national carriers.
"We would want to make sure that as customers entered our properties, especially as they moved into the lower levels, that they'd still have access to those services," Hedley says. "That may mean deployment of [3G] transceivers [in our properties]. But we would do that in partnership with a carrier."
Patchin, ironically, seems less certain of this kind of 3G-centric wireless access scenario than Hedley. He suggests -- as other cellular carriers have been suggesting -- that what we could see is hybrid networks of 3G and 802.11 cells, with users carrying dual-mode network access devices capable of smooth hand-offs between cells.
As he says, "There are a lot of questions around that, a lot of speculation."
It's interesting, then, that a hospitality industry CTO sees 3G technology and cellular carriers playing an even more dominant role than the cellular carriers do themselves.
Does your business have a public venue that uses Wi-Fi? Join us at the 802.11 Planet Conference & Expo, Dec. 3-5 in Santa Clara, CA. One of our sessions will cover Integrating Smaller WISPs into Larger Networks.