Hotel Online Special Report
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Hotel Business Centers: 
Finally a Revenue Producer
 
By Elizabeth Lauer, Summer 1999 

Improvements to a hotel’s competitiveness yielded by technology are most often of an evolutionary nature, delivering benefits in relatively small increments that are quickly absorbed by a consumer directed market.  The first hotel “business center” was homologous to the front desk.  Occasionally the hotel administrative staff could be called upon to type up documents.  Finer commercial oriented hotels offered a concierge staff to assist with professional services, either by locating a local merchant of secretarial wares or by commandeering a staff machine, and putting their own word processing skills to the test.  For this level of service, the business traveler could expect to pay a premium for supplies and labor, not to mention a hefty tip. 

Soon these exponentially increasing requests began to take a toll on hotel staff, as well as hotel owned office equipment, without returning any significant revenue.  The ever-diminishing front office labor model simply did not allow for this reallocation of minimum wage resources.  Staffed business centers offered some relief, but minimal profit.  Most hotels operated this department as a loss, but relished some marketing leverage and a perceived competitive advantage.  Associated labor costs can exceed 75 percent of a staffed business center’s revenue.  Furthermore, these staffed centers are typically operated during “business hours” and certainly not during the “eleventh hour,” when they are most sought after.  In these scenarios, the burden of mass copying and collation is once again born by the solitary night auditor.

Today, various survey findings report that up to 85 percent of business travelers require the use of some type of office equipment (copier, PC, printer and/or fax machine) while registered in a hotel.  Nearly 60 percent of these travelers indicate that a hotel’s ability to offer these services has bearing on their choice in accommodations.  Even while claiming to be on vacation, 35 percent of professionals will seek the use of hotel business services at least once during the course of their repose. 

Rapid consumer acceptance of the recently introduced Wingate Inn (a Cendant brand) bolsters these sentiments.  In addition to in-room amenities such as entertainment systems, cordless phones and high speed Internet access, every Wingate Inn hotel features a 24-hour access business center with free usage of fax, printing and copying equipment.  The Wingate strategy is a slightly higher room rate justified by an efficient working environment for the business traveler.  The fact that these niche oriented properties are gobbling up market share from hotels that lack these office product offerings should serve as a wake up call to those who have yet to consider a self-service business center.  Referring back to the “eleventh hour” phenomenon, it is important to understand that over 45 percent of business center transactions occur between the hours of 9 pm and 5 am.

Simply providing a computer workstation to your guests is a nice gesture, but requires some expertise on the part of the staff.  Maintaining the equipment, the Internet connection for the various on-line services, the supplies, not to mention upgrades to software creates an additional challenge for untrained staff.  The equipment is subjected to what can be a hostile environment and the supplies can quickly disappear into the brief cases of the less ethical. 

Urban luxury and boutique properties are trending towards the in-room services and office prducts placed in each guestroom (or a portion of the rooms).  Mid-scale and limited-service properties should look towards the increasingly popular automated, stand alone office systems to meet the needs of the traveling, working public.  There are a growing number of affordable products being developed and installed as a convenience for the guest while creating a profit center for the hotel.

One form of cashless access to state-of-the art office products is made possible by TransAct, USA Technologies’ patented credit card authorization technology.  In a joint venture with Mail Boxes Etc., USA Technologies created MBE Business Express, an unattended, credit card activated business center, which allows a hotel to meet the copying, faxing and computing needs of its business travelers 24 hours a day.  Each MBE Business Express unit also features a dial-through telephone to a nearby Mail Boxes Etc. center for additional business, communications and postal services such as color copying projects, binding, packing and shipping. 

MBE Business Express has become the brand standard for Choice International Hotels and is widely utilized in Marriott Hotels and Resorts.  Prime Hospitality, one of the largest hotel management companies in the nation, recently selected MBE Business Express to be installed at nearly 100 AmeriSuites properties.  AmeriSuites is an all-suite hotel product that targets a budget minded business traveler.

Operating statements from comparable properties reveal that net revenue from these stand alone business centers contributes between one percent and two percent of the total property revenue. In some cases, this revenue per available room equals more than one half of that contributed by telephone revenue.  Trends also show that the gap between these revenue streams is narrowing.  Business center usage is clearly on the rise.

Chief Operations Officer for USA Technologies, Steve Herbert, believes one of the most appealing aspects of the product is the ease of installing and maintaining the center.  He said that “from a property perspective, they are hassle-free.”  Through a partnership agreement, IBM configures, tests, ships, installs and supports each unit.  Remote capabilities include troubleshooting and monitoring usage levels.  Service and supplies can be dispatched from the same call center.  Pricing for usage and output can be set remotely and increases consistency among properties of the same brand.  The property pays a monthly service fee for the above and partakes in a percentage of the profits.

The leading provider of in-room facsimile machines, AlphaNet Hospitality Systems, recently introduced The Office.  In addition to “best-of-breed” hardware, popular business software and email access via major on-line providers, The Office also features turn-key Business Traveler Services.  Travel information, world news, financial information, sporting event and ticketing services are up front and convenient.  Electronic concierge services will help eliminate the need for some hotel collateral material and calls placed to staff for local information.  Direct marketing of other hotel services can be incorporated into the electronic display.

Mark Holzberg, President of AlphaNet Hospitality Systems is particularly excited by the SmartCard capabilities of the credit card readers employed by his company’s product.  As more hotel companies launch sophisticated loyalty programs, value pre-stored on membership cards can be used to obtain business services, as well as rewards for frequent users. 

With increased awareness of these capabilities comes increased need for secure card transactions.  DJ Vallauri, VP of Marketing and Development, assures all users of The Office equipment’s real time processing that reduces the risk of fraud and unauthorized use.  The Office has a built-in remote monitoring system that proactively alerts AlphaNet’s Customer Care Support Center of any potential malfunctions including paper jams. 

The creator of Business Anywhere, Kim Kao, describes an alternative technology that is employed by the Santa Anna-based vendor of audio visual and stand alone office products.  A patented fully interactive touch screen allows for the operation of up to 256 devices, including vending macines and video conferencing.  Business Anywhere has recently been selected to be the sole provider of stand-alone business centers implemented in Hilton Hotels across the nation.  The user-friendly touch screen is fitted with a single card reader, easy-to follow user instructions, and the custom splash screen serves as a marketing vehicle.  This system separates the transaction processing from the functional equipment, allowing greater flexibility of product offerings, and concurrent use by multiple guests.  Open architecture allows for the ability to quickly increase the number of devices based on temporary volume.  This would be particularly useful if a hotel expected increased business center demand, as a result of large group in house. 

Each of these vendors supplies an attractive, efficiently designed and placed workstation.  Various financing and revenue models are available to meet the needs of the independent or chain-affiliated properties.  As an appraiser of full and limited service properties, I can attest to the correlation between a hotel’s ability to capture the lucrative commercial segment with modern conveniences, and its overall performance.  Business centers just make sense.

We are entering the era of the fully automated hotel, connecting hotels and their guests to an expansive marketplace of diverse products and services offered by an array of providers.  There exists the possibility that some day technological innovations may actually reduce business travel.  But as long as our guests are schlepping their laptops down the causeway, into overhead luggage bins, and up to our hotel rooms, we must be prepared to supplement their tools and support them in a world where commerce never sleeps. 

Elizabeth Lauer is a Consulting and Valuation Analyst for HVS International.  She can be reached via email at elizabeth.lauer@hvs-intl.com

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Also See: Confused about Hotel Property Management Systems? It wouldn’t be surprising since there are so many choices / Jon Inge / Summer 1999
Damn Interfaces!How Will Standards AffectThe Hospitality Industry Today? / Mark Hamilton / Mar 1999
From the Hotel Property's Perspective; The Network Computing Alternative / Richard M. Brooks / Spring 1999 

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