Hotel Guests Turn Away From TV and Toward Streaming Media

Mr. Markidan, who spends 40 percent of his time traveling on business and is an elite participant in the Hilton and Hyatt loyalty programs, takes his MacBook Pro and iPad with him on the road and watches all television programs by streaming them on his laptop, using a portable router to extend the Wi-Fi signal in his hotel room.

“For a lot of people my age and a lot of people in general, the way we consume entertainment at home is changing,” he said. “I no longer have a cable subscription — the way I watch entertainment at home is the same way I watch it on the road. I have a Hulu subscription, Amazon Prime and Netflix.”

Guest-room entertainment “is not an amenity that will drive my decision to stay at a hotel,” he said, adding, “I’m a lot more concerned with loyalty program perks.”

James Lingle of Highlands Ranch, Colo., a consultant to hotel companies and guest-room entertainment service providers like LodgeNet’s competitor iBahn, observed: “If you look back, typically the first thing a guest would do when they walked into the door of a hotel room would be to turn on the TV. Now people bring their entertainment with them, tablet-based devices like an iPad, accounts and memberships like Netflix, Amazon Prime and Hulu Plus, and they want to be able to use them.”

LodgeNet’s decline directly reflects these changes. According to its bankruptcy filing, the number of hotel rooms it served globally dropped to 1.5 million in 2011 from 2 million in 2009. It provided guest-room entertainment services to most major hotel chains, usually by installing and maintaining free televisions and offering video-on-demand entertainment, for which it and the hotels received fees. LodgeNet’s sales in 2011 were $421.3 million, a 21 percent drop from a high of $533.9 million in 2008.

Colony Capital, a real estate and hotel investment firm in Los Angeles, led a group that invested $70 million in a controlling interest in LodgeNet, based in Sioux Falls, S.D., and brought in a management team of former Starwood, Fairmont and Hilton executives. LodgeNet, which emerged from bankruptcy in late March, also signed an agreement with DirecTV to jointly offer entertainment to hotels and hospitals.

The revamped LodgeNet faces strong competition from companies including Swisscom Hospitality Services, based in Geneva; iBahn, based in Salt Lake City; Guest-Tek, of Calgary, Alberta; and Roomlinx, based in Broomfield, Colo. All are developing systems that let travelers consume entertainment the way Mr. Markidan does — via the Internet, frequently through subscriptions they already have and use at home, either through Wi-Fi or a direct cable connection between their laptop or tablet and the guest-room television set.

Different types of hotels have different policies regarding Internet access. Many less expensive hotels offer it free, while more expensive ones often charge for it. What’s expected to happen next, speaking broadly, is that using the Internet for e-mail will be free, while many hotels will charge for uses requiring a lot of bandwidth, like  downloading or streaming videos, with the cost tied to the amount of bandwidth required.

“We will give customers more short-form content at very attractive prices, affinity packages of sports channels, just-missed TV, video games, as well as movies currently in theaters,” said Michael Ribero, Lodgenet’s new chief executive. “We want to give them the opportunity to watch what they want, even if it’s through Netflix and Amazon Prime.” He said LodgeNet will no longer provide television equipment in hotel guest rooms in exchange for video-on-demand fees. Instead, DirecTV will offer hotel owners lease financing for TVs, freeing capital that LodgeNet can invest in product and service improvements.

Article source: http://www.nytimes.com/2013/05/01/business/hotel-guests-turn-away-from-tv-and-toward-streaming-media.html?partner=rss&emc=rss