In-Flight Entertainment vs In-Room Entertainment

While reading a recent report by Deloitte's on the future of In-Flight Entertainment systems (IFEs) and how they are changing the flying experience for both passengers and airlines, it struck me how the findings could just as well apply to hotel in-room entertainment systems (let's call them IREs, not that it's a recognised industry term yet, but if there's IFE, there should be IRE...).

Of course, there are some differences in operation and value proposition between planes and hotels. But the fundamentals on which both are rated on are essentially the same: price, destination served (airlines) or location (hotels) and quality of service. Yet, while these days even short haul and low cost airlines see IFEs as mandatory in order to compete, the notion that IREs are an unnecessary expense is still surprisingly widespread in the hospitality industry.  

This is in stark contrast to how airlines value their entertainment systems:  embedded IFEs are typically the single biggest expense after engines (yep...big gasp). Of course there is no point doing a like for like cost comparison between IFE and IRE, given the unique environmental and regulatory challenges of an aircraft that keeps the entry barrier for competition high. But are airline customers and hotel customers really that dissimilar an audience that it would warrant valuing entertainment systems so differently?

Let's take a look at some of Deloitte's findings.

Embedded IFEs are now able to improve the level of service, reduce costs and open up additional revenue streams for the airline.

Given that it is way more complex and expensive to upgrade an IFE system, it's understandable that hotels were somewhat quicker in realising the potential that IREs, combined with flat panel TVs and even smart TVs offer. Having said that though, viewing IREs as a revenue generator and cost reduction enabler has yet to be embraced by the industry as a whole. Way too often hotels still hold the view that now in the age of declining VOD revenues IRE is a cost centre and that's that. Maybe the big price tag forced airlines to find a better way to utilise - and thereby rationalise - their systems, but fact is that good IREs have long been ready to provide substantial tangible and intangible value to hotels.

Personal electronic devices (PEDs) will not replace IFSs, at least not in the immediate future. Airlines must choose IFE systems which allow and encourage the use of PEDs in conjunction with IFEs.

An important point that hotels should note: simply abandoning the TV and concede defeat to personal devices would be shortsighted. A TV is prime marketing real estate in a hotel room and even with an increase in the use of PEDs, television still reigns supreme when it comes to entertainment - even among the

much coveted Millennial demographic. Interaction is key here, so offering Miracast and/or Airplay integration with the in-room TV is a must for any IRE system to provide the type of sticky service that creates brand loyalty.

A cost effective and scalable Wifi internet solution will be an industry game changer.

Well ok, this is where the airline industry has long been on the backburner because (we were told) it was not compatible with navigational instruments. Or something. But where there's a will there's a way, apparently, and just now I read that ANA has joined the fray of airlines that are enabling Wifi internet access on their flights. My guess is that the airline industry will go through a similar trajectory with Wifi as the hotel industry did: to start it will be a novelty that people are willing to pay big bucks for, then it will be an expected commodity with charges petering out towards a free or tiered model. I wished airlines took a leaf from their cousins in the hotel business and go straight for the freemium model. But somehow I think it's not going to happen... 

  

IFE is no longer a must-have offering for long haul full service carriers, but a tool for improving business of low cost and short haul carriers.

Just like IFEs, IREs were very much a five star proposition just a few years ago. But the relentless march of technology has made IREs now an affordable and viable option for budget hotels, just as it has done for budget airlines. Smart TVs are playing a major role here, but so does the ability to integrate with workflow systems that streamline backroom operations, such as housekeeping. For airlines it is now much easier to provide IFE, for example with tablet based systems, but it is also how they use it that matters. And similarly to budget hotels, low cost airlines see the system as a tool to provide upsell or streamlining operations, rather than "just" an entertainment tool, which has long been the main purpose of IFEs.

Passenger are placing increasing emphasis on IFE and connectivity, thus a quality offering is an easy way to market an airline as cutting edge and an effective way to fill seats.

Well, replace "airline" with "hotel" and "fill seats" with "generate bookings" and you have the purpose of an in-room entertainment system in a nutshell.

Thanks Deloitte!