Business Partner Instead of Service Provider
November 17, 2003
One English company is making hotel customers pay up-front for their public WLAN infrastructure, saying that driving traffic to the location is more important to the network's success than immediate savings.
Others might be giving it away for free today, but Barry Shrier is going to charge you up front for your Wi-Fi infrastructure. And, he says, you are going to thank him for it.
Shrier heads up Liberty Europe, a public hotspot service provider with offices in northern and southern England. While some such firms worry about expanding their footprint -- rolling out hotspots wherever they are welcome, in exchange for some potential future revenue-sharing payoff -- Shrier is focused on the here and now.
"We are very strictly about traditional economics," he said. "If we can't sell something and make a profit then and there, we don't want to do it. So we cannot look at just an infrastructure-build play."
Instead, Liberty Europe tells potential partners that they will have to pay for the bulk of their own Wi-Fi installation. In return, though, Shrier promises that his team will devote its resources to driving usage toward those hotspots.
To see the model in action, consider the Coppid Beech Hotel in Bracknell, England, one of the first large hotel properties in the nation to offer Wi-Fi coverage in all its guest rooms. The hotel makes Wi-Fi connectivity available at #5.99 per hour or #12.99 for 24 hours of usage.
A four-star property distinguished by its faux-Alpine exterior, the 205-room hotel sits squarely in the area known as the UK's Silicon Valley. All the world's top IT firms have offices nearby and their executives are frequent guests of the hotel. Under these circumstances, "it is clear that as an independent, non-group hotel, we would have to take brave steps to protect our market share and maintain competitive edge," said General Manager Alan Blenkinsopp.
Following the latest technology trends, the hotel set its sites on Wi-Fi, although it seemed a perilous step. "We seem to have a number of companies offering a variety of products to the market which have not been tried and tested, and there are some horror stories of failed systems and huge install costs," said Blenkinsopp.Ultimately, Blenkinsopp was wooed by Liberty Europe's business model, even though that model called on the hotel to shoulder some of the undisclosed start-up costs.
The way Shrier sells it, his firm's approach is more that of a business partner than a mere service provider. "These venues will never get rich selling one-hour Internet use vouchers," he explained. The real money here is in booking rooms and selling conference space. Thus the true value of Wi-Fi lies not in the incremental revenue sharing, but in the ability of the technology to woo new clientele.
That's what Shrier does, by touting the technology both inside and outside the hotel. His firm produces posters for the lobby, and leaflets as well. Perhaps most significantly, Shrier offers marketing training for the hotel's sales staff, so that they in turn can use the Wi-Fi capability as a selling tool.
For hotel Wi-Fi to succeed, "you have to partner very intimately with the hotel to help them market the service so they can sell more of their own services," said Shrier.
Blenkinsopp had been counting on that kind of support when he opted to install 24 access points to distribute Wi-Fi through the property earlier this year. He has since worked closely with Liberty Europe to put in place an aggressive marketing effort.
"We have heavily promoted the service in the lobby, guest bedrooms, all meeting rooms and via our Web site. Liberty Europe produced all of the marketing collateral and we are responsible for the distribution throughout the building," he explained.
Both Shrier and Blenkinsopp say this intense follow-up marketing helps to account for the high usage numbers that the hotel has seen since the Wi-Fi infrastructure went live about three months ago. In terms of straight usage, more than 10 people a day are logging onto the system. Moreover, Wi-Fi availability appears to be driving sales. "We now sell meeting rooms by the hour with broadband access, and this segment of our meetings market has improved significantly," said Blenkinsopp.
Of course, the chief lesson here would hold true regardless of how much the hotel had paid toward its Wi-Fi infrastructure. Without a marketing plan to promote its use, a hotspot in this market will likely go cold before generating any revenues worth noticing.