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Mobiles pull the plug on phone profits

15 September 2005

A few years ago there was quite an outcry over high telephone charges in hotels. After a Government inquiry and the involvement of the British Hospitality Association, a code of conduct was agreed and put in place in 2001. It all seems so long ago.

Nowadays, virtually all hotel customers are empowered to avoid these charges - they carry their own mobile phones with them. And not just phones - they have Blackberries, wi-fi enabled laptops and PDAs, and a variety of other technological paraphernalia.

Hotel phone charges are still high, as hoteliers seek to cover ever-higher staffing and equipment costs (a five-star hotel now typically provides three phones and two lines per room, as well as an internet connection), but customers are using hotel phones even less.

Profits are down, and many hotels probably aren't making money from phones any more, taking account of the capital or leasing costs as well. In my estimation, hotels are making at least 20% less profit from phones than just 10 years ago ignoring the additional impact of inflation. The internet and e-mail do provide some additional revenue streams, but this does not come close to compensating for the shortfall.

Recently, I was reading an article in Hotels, Caterer‘s sister magazine in the USA, in which the general manager of a new Caribbean resort hotel revealed that the resort had not been wired for phones. Instead, it gave a mobile phone to each guest on check-in. This is clearly not going to happen in every hotel, but it does have some interesting implications.

Then there are the hotels that use a national number and gain a revenue share from incoming calls to the hotel.

Finally, there are some of the budget chains - Premier Travel Inn, most notably - which do not offer an in-room phone. This means no revenue, but no cost either - and guests still flock through their doors.

I am sure there are some great creative ideas out there, and I for one would love to hear them.

Over to you

Have phones become obsolete in hotel bedrooms?

Huw O'Conner, managing director, City Inn Hotels

No, although their role and the revenue they generate is definitely changing. Maybe in the past, hotels took advantage of phone charges. We've reduced chardges and cover our costs but are not trying to make a huge profit. They'll always be useful - it wouldn't be a hotel room without one. It boils down to giving customers the service they want.

Gill Baker, sales and marketing director, Premier Travel Inn

Telephones are becoming obsolete, and they've never been one of our revenue streams. Most guests only want a line for downloading e-mails, and we've been introducing wireless high-speed internet services. Many of our hotels don't offer phones in rooms, and we predict customers won't expect them or want to pay for them in the future.

Richard Power, managing director UK, Rocco Forte Hotels

Conventional landline revenue has been in decline across the world, but hoteliers have always been resourceful and we offer broadband and wi-fi, which also provide a service and generate revenue. The trend at the top end of the market will be to charge a premium price for the stay and the phone will become part of that package.

Beverly King, chief operating officer, Thistle Hotels

I don't think the costs outweigh the turnover yet. We still make a profit, although there has been a decrease in revenue since mobile phones arrived. However, once voiceover IP is readily available over the internet, I forsee that phones will still be provided, but only as a service.

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