Selling to Motels

Members of the ISP-Wireless list suggest that since ISPs are small businesses, they should work with the small businesses of the hotel world, motels, and ignore all of those Hiltons.

[March 12, 2002]

On the ISP-Wireless list in February, SH asked,

"Have any of you gone out and convinced hotels in your area that giving their guests access to broadband Internet was a good idea? If so, what strategies did you use? What are people willing to pay?"

Some respondents contended that it's a great idea:

[SS noted] "It's super lucrative to offer this to hotels. You charge them a flat monthly fee, and they can charge $5 per night and make tons of cash. Even people I ask who have never had broadband access said they'd be willing to pay that for broadband access in their room."

[DL added] "We just set up one. They charge users $10 a night: they keep $1 and give us $9. It's very simple, and it cost us just over a grand for the entire hotel."

[MS offered] "We're going to be doing this here. The hotel will buy the gear and run the cable to each room. We'll provide the bandwidth. When someone wants broadband access, the front desk will plug in the cable for that unit. We'll get half of the take. We'll probably charge a little more than most (I suggested $15), because I know the take rate will be low, and I'll bet that the price won't matter to those that want the service."

LY warned that technical support could be a nightmare:

"What happens when the 'customers' can't figure out their IP settings or can't get it to work at 2 AM? I don't suspect that the front desk clerk at the hotel will be a great source of technical support!"

Others added that it's just not a big enough market:

[BR recalled] "If I remember the numbers correctly, only 2 percent of hotel guests will pay to get high-speed access in their room. We set up a few hotels and never made a dime. The management thought it was a great idea, but were unwilling to spend their own money to make it happen. We took the risk in exchange for getting the lion's share of the revenue—revenue that never materialized. There's a reason all those big players that offered this service went broke."

[JJ agreed] "I was personally involved in a hotel venture. The numbers we saw were closer to 1 percent and below in the US, though we were seeing 3 to 5 percent in the UK and France. The problem is, according to our research, only about 30 percent of business travelers carry a laptop, and even fewer use them 'after hours,' even when on the road. Since many Europeans still pay per minute for Internet access, they were more accepting of the pay per use model. If Joe American is paying $19 a month for dialup or $50 a month for broadband, it's hard for him to see the value of $10 to $20 a night for access from his hotel room."

Still others suggested that, with the right arrangement, it can work very well:

[SS explained] "It should never be your risk. Charging the hotel a flat monthly fee is the way to go. They'll buy the stuff and deal with the revenues on their end. If they cancel the service, it's not your loss. You're not trying to run their business: you would have bought a Motel 6 if that was your goal in life."

[DH agreed] "The hotel should buy the service and then offer it as a perk to their customers, much like they put HEATED POOL, COLOR TV, etc. on their signs. Keep in mind also that the extended-stay places are much better markets."

[DS added] "We have had one hotel come to us and ask for the service. They purchased a T1 because they needed it for their own use, and they let their customers feed off of that bandwidth. They charge what they want to, and we troubleshoot the equipment as part of the deal. It's true, though: most hotels just don't seem to want to buy into it and share the cost. We just have to figure out a better way for all of the hotels and motels to buy into it, so it becomes the norm."

—End