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Changing the Channels

Changing the Channels

The race to take LodgeNet’s place
“If you think that because of the LodgeNet situation in-room television is dead, you’re missing the big picture,” Wagener says. “Blockbuster did not adapt either, but companies like Netflix and Redbox are doing well.” Robert Crellin, president of the Americas for iBAHN, which also installs Internet-based media systems for hotels, agrees. “LodgeNet had a great business model; they gave the hotel a TV set and then shared pay-per-view movie revenue with the hotel,” he says. “But the world has moved on to streaming movies and TV shows so the business model had to change.”

Roomlinx and iBAHN are among the cluster of competitors that have emerged to supplant LodgeNet’s entertainment platforms in hotels. Many use the same approach of building their own networks within properties that LodgeNet uses, since this allows guests to access their content via WiFi or through a television. “Now it’s more important for people to have a good Internet connection than good television content,” Roomlinx’s Wagener says. “That’s why we install full Internet capability into the television, which is operated by a keyboard, so guests can use the TV the way they would their own computer.”

The iBAHN approach is to install a television system that can deliver content via the Internet rather than broadcast, cable, or satellite. The onscreen menu makes it easy for guests to connect to services like Hulu, Pandora, or Netflix. While iBHAN still offers films from platforms like Starz, Crellin says they have the lowest use.

“On the occasion guests have two hours of downtime they might watch a movie, but it’s not the way most are behaving, especially younger people,” Crellin says. “I have a 26-year-old son who is on his laptop, speaking on the phone, and watching TV at the same time. A hotel needs to have a stable network that can allow the guest to pull down what he wants. That’s our mantle.”

The biggest issues, Crellin adds, come from balancing the quality of the network against guests’ insatiable demand for access. “It’s like the brunch buffet. How much food do you want to put out so that guests are satisfied, but you’re not wasting money on unnecessary food? At the end of the day, guest satisfaction is more important than a couple of bucks for a movie rental.” Guests are willing to pay for a value statement, says Wagener. “They don’t want to get nickel and dimed but will pay for what they consider a product above and beyond expectations. The goal is to monetize guest habits.”

When it comes to habits, the dirty little secret is that adult movies always constituted a high percentage of in-room movie rentals—so much so that the proliferation of that option online added to the demise of LodgeNet. Ironically, Omni, which made a splash by eliminating adult movies at all its hotels a number of years ago, is feeling the loss of declining revenue less as a result, according to Ed Netzhammer, senior vice president for Omni Hotels and Resorts.

There will be differences in what hotels in different price categories will be able to offer. Systems like those offered by Roomlinx and iBAHN are expensive to install. Keith Pierce, executive vice president of brand operations for the Wyndham Hotel Group, says each of the company’s 15 brands has its own standards in terms of the content that must be available. Pay-per-view remains a standard for the business travel-oriented brand Wingate. “The use of the TV really does depend on the category,” Pierce says. “At a Wingate you will find a fair amount of pay-per-view rentals; guests at a midscale hotel without food and beverage will tend to rent movies. At a Super 8 you might have a premium cable channel like HBO or Showtime.

“My guess is that many guests with iPads will not take the trouble to connect to the television,” Pierce adds. “It all depends on the level of sophistication of the guestroom equipment and on the level of sophistication of the guest. If we have a guest in our extended Hawthorn brand who is staying two weeks and is technologically oriented they might connect their device to the TV because they will be there for two weeks.”

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