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Free Wi-Fi or Bust - It's Free at McDonalds, Why Pay for it at a Hotel? 
Telecom Revenue Drops to Record Lows for Myrtle Beach Hoteliers

By Jake Spring, The Sun News, Myrtle Beach, S.C.McClatchy-Tribune Regional News

Oct. 31, 2010--Tonya McPherson of Fayetteville, N.C., travels everywhere with her laptop, using it to work on her marketing information website. Only once has she paid for Internet at a hotel, and she didn't stay long.

"It's ridiculous," said McPherson, who on Thursday was staying at The Breakers Resort, 2006 N. Ocean Blvd., which has free Internet. "These days you can get free Wi-Fi at McDonalds. Why pay for it at a hotel?"

McPherson is one of a growing legion of tech-savvy travelers -- those who expect Internet to be free and always use a cell phone -- that have caused hotel telecommunications revenue to plummet.

Nationwide, revenue from hotel phone calls, fax and Internet charges has dropped from a peak of $1,274 per available room in 2000 to $178 in 2009, according to the most recent data available from consultancy Colliers PKF Hospitality Research.

Revenue from in-room movies has also taken a hit, falling from about $171 in 2008 to $126 in 2009, the most recent data analysis available from Colliers PKF.

Grand Strand hoteliers have said that service never earned much here and hotels would take a loss when people denied they watched a movie, in many cases an adult film.

Hotels that previously made money from phone calls had to make local calls free since guests now expect the service, said Paul Garcia, general manager at the Dayton House Resort, 2400 N. Ocean Blvd. In Myrtle Beach.

A few mid-market and chain hotels first introduced free Internet, forcing their competitors to offer it as well or risk losing business, said Garcia, who formerly worked for an international hotel chain. Hotels along highways are especially expected to have free Internet for travelers. Guests are still charged for Internet only in closed markets such as New York City, where there is not room to build more hotels and existing properties have cornered the market.

Revenue from phones and the Internet won't be coming back, he said.

"It is gone forever and it is the cost now of doing business for hotels," Garcia said.

Phone calls cost hotelier Mayur Jeram's properties about $400 a month, an expense that used to be offset in part by charging guests for calls, said Jeram, owner of a Quality Inn on Ocean Boulevard and a Super 8 near the back gate on U.S. 17.

Most hotels on the Grand Strand made local phone calls free five to seven years ago, said John Daniels, general manager at The Breakers Resort. Breakers has seen phone revenue decline from about $50,000 five years ago to about $3,000 this year, Daniels said.

That made up a relatively small percentage of revenue and the hotel is not doing anything to specifically make up for its loss, he said.

"We focus on where our profits are: clean rooms; great guest service; and food and beverage," Daniels said.

The 34-room Sea Hawk Motel has never made much from phones and the Internet, owner Fred Smith said. Smith previously charged for phone service but has made local and long distance calls free, he said.

"I did try that and it was more of a hassle than what revenue got in," Smith said.

Internet has been free since he first introduced it, he said.

In-room movies have always had thin profit margins, hoteliers said. Dayton House does not offer in-room movies, but some of the previous hotels Garcia has worked at did, he said. Those properties only earned about a 10 percent markup on the movies, with the rest going to a service provider, such as LodgeNet, he said.

"I might get a couple of hundred dollars on a good day, but the reality of it is this ... in the real world, the adult movies is what sells," Garcia said.

For that reason, the Breakers eliminated the service, Daniels said. Those who didn't want to see adult movies might accidentally view them, he said, and it didn't fit with their family friendly environment.

Guests might watch a movie and later deny that they did so, in which case the hotel has to pick up the cost, wiping out whatever small profit they might have made, Jeram said.

"People just complaining 'we don't buy the movie' or 'my son did it by accident,'" Jeram said.

Jeram's properties are in the process of removing the in-room movie service, he said.

Free Internet service could remain a deciding factor for many travelers, especially business travelers. Jonathan Tompkins and Chris Denny, both associate pastors at churches in Myrtle Beach, talked at the Starbucks operated by Breakers on Thursday while using the free Internet.

Tompkins, who uses a netbook laptop, and Denny, who owns an Apple iPad, say they bring the devices when they travel for work a few times each year and look for places with free Internet.

"I just last week was traveling with this," Tompkins said, referring to his laptop, "and I specifically looked online to see if a hotel had Wi-Fi and [I] got that,"

Contact JAKE SPRING at 626-0310.


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