Too many times when we talk to hotels the question comes up
whether the hotel will be able to recoup the investment in an IPTV system
through VOD receipts, so I think it is high time I set the record straight on
where the true value of an IPTV lies.
To say it upfront: it’s not ROI, or at least not first and
foremost. As I have written about in a few previous blogs, VOD revenues are
declining steadily for a number of reasons, and while some hotels have bigger
hit rates than others, there is an inevitable trend away from VOD being a major
revenue contributor. In fact, we see more and more hotels adopting the Free to
Guest model (FTG) when it comes to VOD. These hotels understand that providing
movies for free creates intrinsic loyalty and is another building block for
creating lasting brand value.
And that’s the key word: brand value. That’s exactly what
IPTV allows hotels to create, and in an ever increasing competitive landscape, this
is more important than ever.
Scanning through industry
research, you can sense that guests increasingly select hotels by price which
puts hotels in danger of being commoditised. A recent report by Cornell University
School of Hotel Administration titled Eight Trends for the Hotel Industry 2012,
found that: “Given the strength of third-party
distribution portals and the push toward commoditisation, the hotel brand will
become more important than ever, particularly in the context of developing
customers’ loyalty”.
So in a nutshell,
IPTV provides differentiation and can turn a TV into a hotel brand ambassador
that helps in building a loyal customer base that will be there, even when
times are tough. It is not only the on-brand look and feel of the User
Interface when guests switch on the TV. It’s the variety of services and
features a hotel offers, and how they are tailored through the system, that
will ensure a personal and unique experience that guests will come back for.
On the supply and
demand side, if hotels are interested in giving their customers what they want
(and en route increasing their loyalty),they need to take heed of consumer
expectations and going without an IPTV
system is almost impossible. Here are the items respondents ranked items as
either “important or very important” to be available on the guest room
television for the HFTP Guest Survey from June 2011:
•
Room
controls — lights, weather, temperature, etc. (49 percent)
•
Connections
that allow guests to play own media (48 percent)
•
Television
shows on demand (29 percent)
•
In-room
messaging (29 percent)
•
First
run movies (27 percent)
•
Subscription
services — Hulu, Netflix, Pandora, etc. (22 percent)
•
Closed
captioning in multiple languages (10 percent)
All of these services and
features can be supplied with an IPTV system – and then some. Let’s not forget
the additional opportunities guests traveling with their own connected devices pose.
Being able to integrate a tablet or connected device on an IPTV network gives
hotels the opportunity to provide innovative new services as well as improve
operating efficiency. And yes, due to its interactive nature, an IPTV system
can also deliver revPAR generating services that will add to the bottom line.
So let’s summarise what
IPTV can do for a hotel:
• BRAND
VALUE: Enables delivery of tailored features valuable to the guest that
will create a positive brand relationship and long-lasting loyalty
• EFFICIENCY:
Streamlining backroom operations through TV-based housekeeping and
concierge functions
• FUTURE-PROOF
technology that enables adding future technologies/devices easily and cost
efficiently
• BOTTOM
LINE 1: opportunity to increase revPAR by enhancing features such as
in-room dining
• BOTTOM
LINE 2: opportunity to create new revPAR creating features, such as
eCommerce/boutique shopping features
But like with many other services, it’s how you do it that will make all
the difference. Hotels should focus on their brand and work with an IPTV
provider who can customise and create a system that is in line with the hotel’s
values and heritage and underpins its brand image. Getting
it right will mean hotels have the opportunity to build a long lasting
relationship with guests, and that should more than justify the investment.
