The Takeoff Episode 02: How Startups Can Adapt and Pivot Sponsored This content is created collaboratively with one of our sponsors.
The big ancillary revenue for airlines, Wi-Fi-on-planes, isn’t necessarily going to be the savior here for hotels, as people are increasingly expecting free Wi-Fi on the ground all around, including hotels.
According to PKF Hospitality Research, telecom revenue at the average U.S. hotel has declined from a peak of $1,274 per available room (PAR) in 2000 to $269 PAR in 2011. The represents a 79 percent decline. During the 1990s, telecom revenues used to account for three percent of total hotel sales. In 2011, that number declined to just 0.6 percent of sales.
It now “costs” most hotels to provide telephone service to its guests. In 2011, for every dollar of telecom revenue earned, the average hotel spent $1.46 to pay for the cost of the calls, switchboard operators, and other telecom department expenses.
But, guest spending on phone service and the internet has increased from $0.77 POR in 2009 to $1.07 POR in 2011. In other words, the guests that are staying in the nation’s hotels are beginning to spend more on Internet services now.