Don’t cry for the owners … but when was the last time you used a hotel’s room phone? It used to be a significant source of revenue that’s essentially dried up with the advent of cell phones and laptop computers.
Before the electronic revolution, travelers expected to see phone and business center charges at the bottom of bills when they checked out. Some tried to fight being ripped off (you mean, that one-minute-long phone call cost THAT much?) by accumulating coins and using pay phones.
Unless you were among the super rich, most people who were staying in hotels would call someone and ask for him or her to call them back so they weren’t playing beat the clock. Who wants to make a hotel’s coffers richer by running up tabs for speaking by the minute? And don’t forget the surcharges plus the taxes, thank you.
The hotel industry, already struggling to pull out of its worst slump in decades, is being forced to deal with a loss of income because of the booming popularity of cellphones and laptop computers. Not only can clients use computers to initiate phone calls, but they’re also entertainment centers. Laptops can be loaded with games, movies, music and if there’s free Internet connect, au revoir to some additional bottom line easy income that hotel owners previously factored into their P&L statements.
So what’s a hotel owner to do? Even though the proceeds from phone calls and movies represented a relatively small share of a hotel’s overall cash flow, they made a difference. Coupled with the lowest occupancy and room rates in decades, this loss has the hospitality industry rethinking its strategy as to how to compensate and generate additional income.
When it’s tough, the tough get going. Bring on the Sunday morning brunches, Saturday night movies at the pool, spa treatments, enticing cocktail hours with “signature” drinks and let’s learn the tango on the dance floor in the bar after dinner.
Times are hard. The hotel industry’s recovery has been slow, even though leisure travelers began to spend some money on summer travel. Analysts with Smith Travel Research forecast a modest 4.4% increase in occupancy rates for 2010; they predict daily room rates will remain flat.
“Occupancy is starting to inch up,” said Jeff Higley, a spokesman for Smith Travel Research. Still, he said analysts believe room rates won’t return to pre-recession levels for at least two or three years. “Hotel managers are reluctant to charge too much and rates have really taken a beating.”
The industry has a long way to go to overcome a slump that pushed down the average hotel occupancy rate in the U.S. to about 56% in 2009; the lowest it’s been in more than 20 years. Revenue per room dropped so sharply that hotel foreclosures in California quadrupled last year.
According to Colliers PKF Hospitality Research, annual revenue collected by U.S. hotels from phone calls dropped to an average of $178 per room in 2009 from $1,252 in 1999 which is a decline of 86%. Income from in-room movies and games dropped to $126 per room from $171, a decline of 26%, according to the research firm.
Hotel operators are realistic and know they’re not going to recapture that revenue and have to find alternative income sources.
If you were advising industry specialists how to generate revenue, what ideas would entice you to part with your money? We know there are ways. List some of your ideas. After all, we’re signing the credit card bill when it’s time to leave the hotel. Let your imagination flow.
Karen Fawcett is president of Bonjour Paris
