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Travelers' Increasing Use of Cell Phones Pinches Hotels' Profit

By April Taylor, Daily Press, Newport News, Va.
Knight Ridder/Tribune Business News

Mar. 9--WILLIAMSBURG, Va. -- To keep expenses down, Shawn Biery of Newport News rarely reaches for the telephone in his hotel room when he travels.

"I only touch the phone to call the front desk," said Biery, a skydiver who likes to take road trips to Pennsylvania and Ohio several times a year. "I find it's cheaper to use my cell phone."

So does business traveler Marvin Dickerson of Germantown, Md.

"Look at the rates," said Dickerson, head of a marketing and consulting firm. "It's cost-prohibitive for any business person to call on the hotel phone."

Six in 10 people own a cell phone, and with companies offering plans that include free roaming and free long distance, budget-conscious travelers like Biery and Dickerson are forgoing their room phones and picking up their cell phones to make calls when traveling.

As a result, hotel profits from room phones are fading fast.

"Phone revenue for hotels has almost become a thing of the past," said Chris Canavos, owner of the Howard Johnson Hotel and Suites on Pocahontas Trail in Williamsburg.

Todd Wellbrock, general manager of Courtyard by Marriott in Hampton, agrees, estimating "a good 50 percent drop" in phone call revenues at his property in the last five years.

"It's a national phenomenon that's feeding right down to the local level," he said.

Last year, the nation's hotels made an average of $532 per available room on calls, down about 20 percent from 2002, based on an annual report by PKF Consulting, headquartered in San Francisco.

In 2002, full-service hotels in Virginia and other South Atlantic states were down 21.3 percent from 2001 in telephone revenues, taking in an average of $598 per available room.

While hotels are losing telephone revenue, leisure and business travelers alike are expecting more amenities and free services such as high-speed Internet.

Business travelers in particular want high-speed Internet to avoid dial-up charges.

"A year ago, we'd barely get a comment or two about high-speed Internet," said Hugh Stephens, general manager at the Williamsburg Marriott. "But now it's a standard amenity, like an ironing board or anything else."

With the rise in cell phones and calling cards, hotels have begun to offer a flat rate for room calls. Companies, such as Marriott, are offering package incentives.

Marriott has a program called "Wired for Business." For $9.95, guests can get high-speed Internet and domestic and long distance calls for a 24-hour period, said Angelo DePeri, general manager of the Norfolk Waterside Marriott.

Stephens said demands for amenities plus the industry's rising labor and insurance costs may put pressure on many hoteliers to increase room prices.

Though telephone revenue is not as significant a part of its total sales as food and beverage, "Any loss of revenue is a tough loss," Wellbrock said.

And James Wulfekuhle of the Hampton Convention and Visitor Bureau said hoteliers would continue to see telephone revenue decline.

"It is only natural hotels will lose money to cell phones and will lose money to Internet wireless systems in the future," he said.

-----To see more of the Daily Press, or to subscribe to the newspaper, go to

(c) 2004, Daily Press, Newport News, Va. Distributed by Knight Ridder/Tribune Business News. MAR, CD,

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