Omni Gives Away Wireless

By Adam Stone

February 18, 2003

Omni luxury hotels will be providing free 802.11b connections in guest rooms, courtesy of Core Communications. Is Wi-Fi a commodity we should all expect?

If at first you don't succeed... give it away for free.

Over the past few years, a number of hotels have tried to provide in-room, high-speed Internet access for a fee, sometimes as much as $10 a night. They have had little success, with industry statistics suggesting that fewer than 5 percent of guests have been willing to fork over the cash.

In a recently announced move, Omni Hotels is taking a new approach. It will use 802.11 connectivity to get high-speed connections into all its rooms by the end of the year, and will give guests free access. "From a business standpoint, we want to be able to offer additional services to our customers," said Paul Dietzler, senior vice president of finance and technology for Omni Hotels. "When we have an Internet solution that is free to guests, that is the way of the future in the hospitality industry."

Omni has turned to Core Communications Corp. of Dulles, VA, to deliver that solution.

Founded four years ago, Core has made a name for itself by providing data communications for group meetings and function spaces in hotels and convention centers. Turning to the guest-room market a year ago, president and CEO David Giannini and COO Rick Sternitzke realized quickly that none of the existing revenue models made sense. Nor would a service-intensive, revenue-sharing business model apply to a guest room situation.

"We had to come up with a way to deliver this as a commoditized amenity," said Sternitzke. It had to be cheap and plentiful, something hotels could give away the same way they give away that morning cup of in-room coffee.

With wireless prices as low as they are, the partners saw a way to make it happen. "We speak of this as a commodity in a positive sense," said Giannini. "When 80211 stopped being a novelty, when it stopped being a toy for the techno-geeks, it became a commodity. Now you have widespread corporate adoption, and so we started looking at it much more seriously."

Core began installing Wi-Fi networks in Omni properties this summer. Service is currently available at a handful of properties, including the Omni Los Angeles Hotel at California Plaza, the Omni Mandalay Hotel at Las Colinas, the Dallas metroplex, the Omni Chicago Hotel and the Omni Berkshire in New York City.

Guests can log on through their Wi-Fi-compliant network interface card (NIC). Those traveling without the card can rent a USB wireless adapter at the front desk for a small fee.

What makes it all possible is the relatively low cost of installing the wireless network. Even with a "fairly sophisticated site survey," said Sternitzke, it still is possible to do a wireless installation for about 70 percent less than the cost of a wired in-room solutions. On average, Core can roll out wireless in a hotel for about $70 a room.

Analysts like the idea, but they raise some practical concerns.

"It is still going to require an IT support network at the end of the day," said JupiterResearch senior analyst Julie Ask. "When someone says, 'This is not working,' they are going to need someone to call."

Core says it will solve this problem by acting as an outsourced network administrator. Part of its deal with Omni includes not just the cost of installation, but also an ongoing fee that Omni will pay for Core to operate a help line for network users.

With that hurdle taken care of, analysts say there could be a strong business case for making in-room wireless available to business travelers, especially given the rapidly-expanding base of Wi-Fi-enabled computers on the street today.

"As of now, less than 10 percent of notebooks out there have wireless LAN capability, but soon all the new ones will have it. By 2005 we expect most of the laptops to be wireless-LAN enabled," said John Chang, a senior analyst at Allied Business Intelligence. "The market is going that way."

That kind of ubiquity will be needed if Omni's new amenity is to have any real value. At the same time, the executives at Core are quick to point out the 802.11 in this case remains merely a means to an end.

"It isn't even about 802.11 or about the technology," said Giannini. "We do think wireless has come of age, we think it is an incredibly attractive and compelling tool for deploying these networks. But we don't think wireless is the be-all and end-all by any means. This is about connectivity. Every hotelier wants and feels that they must have some sort of connectivity solution. The question is just how much they are going to have to pay for it."



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