Staying Connected at Timeshares
November 01, 2006
5G Wireless is going from the campus to upscale vacation units.
As Wi-Fi providers seek new ways to conquer the travel and hospitality markets, one area remains relatively untapped. According to the American Resort Development Association, fewer than 25% of American timeshare locations have installed Wi-Fi networks. The ARDA estimates that this market represents roughly $75 million in potential Wi-Fi services revenue annually.
"The timeshare market is an affluent market, and most affluent travelers carry a device to communicate electronically," says Jerry Dix, CEO of 5G. "Most timeshare owners are businesspeople on vacation with their families, so they will need use of the Internet."
"We dont want to just sell equipment," says Dix. "I want to own that equipment. We put the product in, and we receive the revenues on an ongoing basis -- a minimum three-year contract."
Visitors to timeshare properties where 5G (or IVADO) has been contracted to provide Wi-Fi can log onto a welcome page when they arrive. They can then choose to purchase one-day, three-day, or seven-day access packages using their credit cards.
"We put up a few sites through IVADO, which peaked my interest in this whole business model," says Dix. "We watched what happened on Saturday, Sunday, and Monday as check-ins rolled in. There was a tremendous surge in Internet use. It was repeated week after week after week. They werent buying hourly use: they were going for three-day and seven-day packages."
5G differentiates itself from most competitors by deploying Wi-Fi on towers rather than mesh networks.
"We started with the base station outside and went in," says Dix. "We followed the deployment strategy of the cellular phone carriers. Had they believed mesh was the right solution, they would have installed mesh networks, but theyve installed big stick networks, which is what we do. We put in the big sticks to get the most coverage area, then we fill in the blind spots. We maximize coverage and minimize equipment. We're using this same strategy in the timeshares."
While the "big stick" model is 5G's signature method of deployment, in the case of many timeshares, the equipment will be primarily indoor microcells, which Dix says have a range of up to 800 meters.
The ARDA estimates that 3.9 million U.S. households collectively own 5.8 million weeks of U.S. timeshares. 5G plans to roll out deployments at 2,000-3,000 units per month to complete its initial 22,000-unit contract.
"The plan right now is to re-establish some of the better-paying properties to get better revenue out of them," says Dix. "We'll replace existing equipment and build out the networks. We want to own everything and control it completely."
IVADO was acquired from its parent company Global Connect.
"We own the IVADO brand and the timeshare contracts and everything that goes with it," says Dix. "They will continue to develop new contracts and handle the business side of it. It's time for the convergence of services and equipment. Its been overdue. Its an integrated process right now."
The IVADO acquisition, which became official on October 3rd, may be the first of many.
"We are certainly aggressively pursuing the right model," says Dix. "We are focusing on specific WISPs who operate effectively in our space -- timeshares and upscale resorts -- primarily to start. Well entertain other types of WISPs with a customer base that they are looking to expand. I am not looking for the traditional one-on-one WISP where they converted dial-up. That's not the business model Im interested in."
"The threshold of paying and the cost of equipment was the barrier to success [for WISPs like IVADO]," says Dix. "Ive had several calls from other WISPs who have said, 'hey, were interested in doing what youre doing with IVADO.' They can grow, but they cant afford to grow. We take away the pain of the cost of the equipment so growth is that much easier for them and for us. Then we dont just sell the equipment and get a one-time sale. We all benefit. We become one big company."
Dix sees 5G's timeshare deployments as a natural extension of his company's campus networks.
"We started targeting the university market, which is still our primary goal," says Dix. "Through input from IT directors at major universities, weve refined it so that its a robust product that works perfectly. A timeshare is a campus model. The transition was absolutely perfect."