Hotel Online Special Report


Hello, Front Desk?
I Think I've Been Robbed!
This article is from the Spring 2007 issue of Hospitality Upgrade magazine.To view more articles covering technology for the hospitality industry please visit the Hospitality Upgrade Web site or to request a free publication please call (678) 802-5307 or e-mail.
By Nick Price

If memory serves it was during the late summer of 1980 that I experienced the first of what has now become many altercations with hotel staff over the cost of telephone calls. I was in Stockholm, Sweden in a hotel where I had stayed a number of times before. Struggling to make ends meet as a student, I was paying my way through the university by delivering art around the world for a specialist courier company. 

Upon entering the hotel guestroom, it was immediately apparent that this time something was different from my last visit. On the desk, by the bed, and in the bathroom no less were three brand new executive-looking telephones. I was impressed. Instead of being a poor, struggling, and I have to say, somewhat scruffy student, I had now joined the business elite. I was rubbing shoulders with the rich and famous and I was going to prove it to myself by making a few phone calls. So I did. 

Not for long, and perhaps for only an hour in total, I called my family and a few friends in U.K. and chatted away confident of my new-found status, and equally unaware of the consequences that increased with every minute that passed. I slept soundly that night reflecting on my newly discovered capability to make phone calls around the world from the comfort of a hotel room. But it was not until the next morning at checkout that I discovered the true cost of joining the executive elite–a huge bill, from memory at least $600, and from painful memory just about every penny that I had in my bank account at the time.

So that was then, a time of telephone monopolies and high call charges. Where I lived you had to wait six months or more to get a telephone installed in your house. Of course telephones were expensive. Me? I was just young and stupid.

So what of now? We live in a world where mobile phones dominate our lives. The Internet has undermined fixed line telephony to such an extent that many of us no longer even bother to install a home telephone relying instead on our mobile phones. Free long distance calls, hundreds of talk-time minutes for a few dollars and the new world of Skype and the other new VoIP services. How have things changed?

From the hotelier’s perspective the answer sadly is not much. Recently I was staying at a good hotel on the U.S. East Coast. My tasks that day required me to attend a conference call which was to last about an hour dialing to a 641 area code. As I was required to run the call, and requiring high call quality, I chose to use the hotel supplied desk phone rather than my mobile phone. Some 54 minutes later when the call ended I reviewed the folio on my television, expecting the call to have cost between $10 to $20 which would have been a significant mark up, but worth it to me for the convenience of using the desk phone, and certainly not out of line in a hotel where a gin and tonic costs $16 plus tips and you don’t get much change from $50 for room service breakfast. I was, however, not prepared to see a charge of slightly more than $194, a massive mark up and to me then and now, simply outrageous. 

I looked around the room to see if there was any information detailing telephone call charges. There wasn’t. So, as I have become accustomed to, I headed off down to the front desk to debate the charge. “We charge twice the AT&T operator assisted rate” the front desk agent chirped parrot fashion when asked to explain the charge, and as she presumably had done many times before. She wasn’t however, as well prepared for my next questions, “Ok, so explain that to me, what does twice the AT&T operator assisted rate mean? How much is the AT&T operator assisted rate to my called destination?” 

She developed a nervous stammer and admitted she didn’t know but would ask her supervisor. Not surprisingly, he didn’t know either and suggested that he would ask the finance department for an explanation if I was prepared to wait. I was, and suggested that he could take a few hours to obtain an accurate answer, oh, and could he please also ask the telephone department for the call detail record so that I could see the actual call cost. 

A few hours later, I received a call from a rather embarrassed front desk supervisor. Neither he, nor anyone else could provide the AT&T operator assisted rates to my called destination, and, in a voice amounting to little more than a whisper he said, “The actual cost to the hotel was $1.03 for the total 54 minutes of your call. Can we offer you a refund?” 

I inquired how the call charges were established in the first place. “We survey our competitors from time to time, and make sure that our charges are the same,” he said with conviction sure that if his competitors charged the same rates he was justified in charging me at rates off the scale. I, not surprisingly, have a different view. The excessive gauging of hotel guests who are foolish enough to use the hotel telephone has driven them away to their mobile phones by the millions. Very few guests would now pick up the telephone to make a paid call. The trust is gone and we may never earn it back.

For obvious reasons, guestroom voice revenue is disappearing fast and, equally obvious, as a consequence hotels are increasingly reluctant to invest in new PABXs as revenues to justify the acquisition are not there. Today the hotel industry stands at a voice-telecom crossroad. Hotels need to do something different, but they don’t know what to do. The only responses so far are either to give everything away–wrong–or try and maintain revenues by charging fewer guests more–equally wrong. The traditional PABX manufacturers also have no idea what to do. Today’s IP PABXs offer little additional functionality beyond a dial tone although they could do much more, and more importantly, they cost the same or more than the previous generation analogue model. 

Doing Nothing Is Not an Option
We need to think differently, and importantly, from the guest point of view. I have listed here a few things that are top of mind to me as I attempt to address the problem. Your list may well be different, but at the very least you need to do something. Doing nothing is no longer an option.

On this page are some examples of next generation thinking. There is nothing futuristic or radical here. All of these capabilities exist today, except perhaps the open minds needed to implement them in a hotel. 

One thing is sure: if we continue to do nothing new, seek to maintain revenues by charging fewer and fewer guests more and more, then our guests will increasing distrust us and they will take their distrust with them every time they visit the bar or restaurant or call our reservations call centers. Equally certain in this view of the future are that hotels will come to realize that you don’t need carrier grade equipment for guests to order room service, or have their clothes laundered. If guests are not going to use the telephone to make revenue generating telephone calls then don’t be surprised to wake up in a hotel room one day and see a big red button on the wall with a sign by it that reads “push for service.”

There is nothing futuristic or radical here. All these capabilities exist today, except perhaps the open minds needed to implement them in a hotel. 

Stabilize revenue by addressing the shortcomings of current systems and practices.
Ask why guests do not choose to use the hotel phone for anything other than internal calls.  As stated before, it is a question of trust, or better put, the lack of it. Guests simply do not trust hotels to charge them a fair rate, and when they are forced to use the phone, they feel exposed and exploited. Guests have no idea how much a call will cost, and invariably cannot find out how much they have been charged until they check out– and by then it is too late. So first on the list would be actions to address this.

  • Price transparency. Use technology to inform the guest: How much will this call cost? How much is this call costing? How much did this call cost?
  • Charge a flat rate per minute appropriate for the hotel. Five-star hotels could charge more than three-star hotels, and both could charge a significant increment over actual costs, but flat rate charging makes it easy for the guest to understand how much a call will cost, and it reduces the need for complex and costly call accounting systems, and the people to operate them.
  • Choice of carriers. Today’s guests are forced to use the hotel’s carrier of choice, and this service is usually charged by the minute. Next generation systems will have to provide choice of carrier/product options. Examples of next generation carriers are Skype, Yahoo! and MSN. A guest’s own mobile account might also be used with a flat rate usage charge.
Reduce installed cost to better align with revenue.
If we earn half of what we used to from voice calls, then the PABX has to cost half as much as it did, or provide twice the value in other areas.
  • How many handsets are really needed in a hotel room?
  • What is the opportunity for cordless/mobile?
  • Do we need telephone operators in hotels?
  • What functions and services could be outsourced?
Evaluate hosted and metro models and explore opex versus capex acquisition options.

Create a new telecom value proposition based around new applications and uses.

Groups. Link people together while in a hotel both formal meeting groups and informal family and friend groups. Help them to contact and connect with each other. Dial by name and personal directories are two examples of how we might do this. Imagine that you have just checked into a hotel with a group of five friends. After getting to your room, you decide you want to buy your friends a drink at the bar. How do you contact them?

Conference calling. This is a revenue opportunity. Besides the obvious “what time to meet at the bar” internal hotel conference call, conference services present an opportunity to demonstrate the superiority of the hotel handset versus a mobile phone. Hotel PABX systems should provide simple mechanisms to originate conference calls and to bridge multiple participants, both within and external to the hotel. Hotels could also offer a managed conference call service. Opportunities around this might extend to IDD revenue, room-service revenue, translation and secretarial service revenues and conference management fees.

Personal video calling and waving goodnight to the kids is an emotional value add with a tremendous dollar value. Opportunities exist to leverage the huge installed base of video-enabled IM endpoints (Skype, Yahoo, MSN, AOL) to bring personal video, presence and chat onto the hotel TV or IP phone. This is a powerful rationale for triple play IP-enabled guestroom services. Years of watching guilty parents try to talk to their children before bed time from the rental car shuttle bus or while boarding a plane leaves no doubt that a hotel provided, video-enabled option would be a hit. Who wouldn’t pay $5 to $10 a night to wave goodnight to their kids?

VoIP roaming onto hotel HSIA Wi-Fi network next generation 3/4G handsets will provide call handoff to Wi-Fi hotspots. Could this be an opportunity to boost hotel HSIA revenues?

Free IP incoming lines. Use services such as Skype-In to provide a free-to-call telephone number in the guests’ home country for use by family, friends and business colleagues.

Staff rapid response. Staff represents the largest operational cost to a hotel, yet are the hardest resource to optimize. Key to optimization is the ability to identify, locate and communicate with a mobile staff and to send and confirm work orders in an efficient manner. Integration of voice telecoms with hotel internal networks is a key requirement, but so too is the need for simple rugged, message-enabled handsets with long battery life.

Nick Price is the group CIO/CTO for Mandarin Oriental Hotel Group.

© Hospitality Upgrade, 2007. No reproduction or transmission without written permission.



Geneva Rinehart 
Managing Editor 
Hospitality Upgrade magazine 
and the Hospitality website


Also See: How Fast Do You Want to Go? Understanding the risks and costs with technology implementation and getting there too fast/ Ed Klein / October 2006
 Hospitality Loyalty Programs; Strategies for Points-based, Recognition-based Programs / Mark Haley / October 2006
The Personal Data Privacy & Security Act– Is Your Hotel Ready? / Rick Warner / October 2006
What's New in the Hotel Guestroom? Digital, HD or IP Televisions / Ashok Kumar / June 2006
A Future Vision for Hotel Revenue Management / Caryl Helsel and Kathleen Cullen / June 2006
Marketing to the Next Generation of Buyers; Scoring Your Hotel Reservations System / Debra Kristopson / June 2006
Consortia-Corporate-Group Best Available Rate (BAR): Good or Bad for Hotels? / Caryl Helsel / October 2005
Check In Kiosks: Coming to a Hotel Lobby Near You? / Jerry W. Sheldon / October 2005
Moving into Compliance Mode; Realizing the Benefits, Cutting the Costs / Dorian Cougias / March 2005
What Hoteliers Need to Know About Flat Panel and HDTVs / Jake Buckstead / March 2005
10 Trends Affecting Hospitality IT in 2005 / Bradford Iverson / March 2005
Searching for Bookings? Optimize / Dr. Matthew Dunn / August 2004
Instant Messaging: Age Is Everything - Expectations of Immediacy, Productivy and the Rise of IM / Elizabeth L. Ivey / August 2004
Baby It's Cold Outside the Firewall / Michael Schubach / April 2004
High Wired: The Hotel Room of the Future / Kelly Stanford / April 2004
We're Not In Kansas Anymore; Differentiating your hotel through technology / Mark Haley / January 2004
Understanding the Power of Customer Relationship Management / Neil Holm / Hospitality Upgrade Magazine / November 2003
The Case for Self Service in Hospitality / Marvin Erdly and Amitava Chatterjee / Hospitality Upgrade Magazine / October 2003
Five Questions to Ask Online Distributors / Michelle Peluso / Hospitality Upgrade Magazine / October 2003
Surf's Up - Internet Marketing for Destination Properties / Marvin Erdly and Amitava Chatterjee / Debra Kristopson / Hospitality Upgrade Magazine / October 2003
Wireless Changes Everything; So, do ya want a latte with that or what? / Jocelyn Valley / Hospitality Upgrade Magazine / June 2003
Customer Awareness or Customer Beware? Data Security in a CRM-Obsessed Industry / Elizabeth Ivey / Hospitality Upgrade Magazine / June 2003
Your Magnificent Selling Machine Would you Prefer Your Hotel to Get: the Web Hit or the Phone Call? / Robert Camastro / Hospitality Upgrade Magazine / June 2003
Tradeshows & Economic Soldiers / Dan Phillips / Hospitality Upgrade Magazine / April 2003
Hotel Telecommunications in the 21st Century / Geoff Griswold / Hospitality Upgrade Magazine / March 2003
The ABCs of CRM  / Mark Haley & Bill Watson / Hospitality Upgrade Magazine / March 2003
Getting the Most out of Your IT Investment / By: Clay B. Dickinson / Hospitality Upgrade Magazine / Fall 2002
The Role of Paper in a Digital World / By: Bill Fitzpatrick / Hospitality Upgrade Magazine / Fall 2002
The Rotten Pineapple (international symbol of hospitality) / By: Steve D'Erasmo / Hospitality Upgrade Magazine / Fall  2002
Focusing on Labor Can Improve More Than Just Cost / Hospitality Upgrade Magazine / Summer 2002
Attention Hotels - An Ounce of Prevention is Worth a Pound of Cure / Elizabeth Lauer Ivey / Hospitality Upgrade Magazine / May 2002 
HOSTEC - EURHOTEC 2002 - Room for Improvement / Christel Dietzsch / Hospitality Upgrade Magazine / Feb 2002 
Technology and the Human Touch / Dan Phillips / Hospitality Upgrade Magazine / Spring 2002
Wireless Technology:  Where We Have Been, Where Are we Going? / Geneva Rinehart / Hospitality Upgrade Magazine / Spring 2002
Effective Customer Relationship Management (CRM) Implementations / John Schweisberger and Amitava Chatterjee, CHTP / Hospitality Upgrade Magazine / Fall 2001 
What's Up With Call Accounting Systems (CAS) / Dan Phillips / Hospitality Upgrade Magazine / Fall 2001
Technology Dilemmas: What have IT investments done for you lately? / Elizabeth Lauer / Hospitality Upgrade Magazine / Summer 2001
Full Circle from Centralized to ASP - The Resurrection of Old Themes and a Payment Solution / Gary Eng / Hospitality Upgrade Magazine / Summer 2001 
A High Roller in the Game of System Integration / Elizabeth Lauer / Hospitality Upgrade Magazine / Spring 2001 
CAVEAT EMPTOR! Simple Steps to Selecting an E-procurement Solution / Mark Haley / Hospitality Upgrade Magazine / Spring 2001 
Your Bartender is Jessie James and He Needs to Pay for College / Beverly McCay / Hospitality Upgrade Magazine / Fall 2000 
Choosing a Reservation Representation Company / John Burns / Hospitality Upgrade Magazine / Spring 2001
Understanding and Maximizing a Hotel’s Electronic Distribution Options / by John Burns / Hospitality Upgrade Magazine / Fall 2000 
The Future of Electronic Payments - From Paper to Plastic and Beyond / J. David Oder /  Hospitality Upgrade Magazine / Summer 2000
Timeshare Technology Steps Up / by Elizabeth Lauer / Hospitality Upgrade Magazine / July 2000 
Biometric Payment: The New Age of Currency / by Geneva Rinehart / Hospitality Upgrade Magazine / Mar 2000 

To search Hotel Online data base of News and Trends Go to Hotel.Online Search

Home | Welcome! | Hospitality News | Classifieds | Catalogs & Pricing | Viewpoint Forum | Ideas/Trends
Please contact Hotel.Online with your comments and suggestions.