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HSIA for Hotels (US)-Market Study

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EXECUTIVE SUMMARY

OUTLINE

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Released in Q3 2012

Executive Summary

Following the economic recession of 2009, the hospitality and travel industry has shown clear signs of recovery. In 2011, improved pricing and occupancy gains drove revenue growth for hotels both in the US and internationally. This trend is expected to continue in 2012 and beyond. As in-room entertainment systems and their underlying technologies, such as High Speed Internet Access (HSIA), Video On Demand (VOD), and internet capable TVs (IPTV), continue to evolve, hotels are increasingly allocating bigger budgets to enhance the consumer experience.

This report presents the latest market developments in the US hotel industry with respect to HSIA and its usage. It aims to provide relevant insights on key trends, current capabilities and the shifting dynamics within the technology industry for hotels as well as the wider hospitality industry. Through this report, our goal is to provide an in-depth understanding of the size of the hotel industry, and more critically the impact HSIA and the HSIA "take rate" (percentage of guests that use HSIA when it's available) have on this industry, despite the impending threat from cellular networks and Distributed Antenna Systems. Already this year, industry experts suggest a fairly healthy HSIA take rate for full service hotels across the US: 30% to 35% for paid HSIA and 40% to 45% for free HSIA.

Key takeaways from this report include:

  • The overall size of the hotel industry in the US and globally
  • Hotels providing HSIA services
  • Trends in the HSIA take rate and occupancy rate, with current and projected values
  • The current demand in bandwidth across hotels
  • Market drivers for HSIA services within hospitality
  • Actual costs and benefits of HSIA
  • A 2-year forecast demonstrating the growth in demand for HSIA
  • An understanding of HSIA charges levied by hotels via three important questions
  • Actual costs and benefits of HSIA
    1. How much do hotel chains charge for HSIA?
    2. Why do most high-end hotels charge for HSIA while many low-end ones do not?
    3. How does tiered-service HSIA impact this situation?

In preparing this report, our team of analysts undertook extensive research across several industry reports, journals and whitepapers. The findings in this report have been validated with insights from over 15 interviews with industry experts, and over 400 responses to our in-depth survey. Survey respondents included CIOs, General Managers, and IT heads of hotels and HSIA service providers across the US. Further, technology descriptions and vendor profiles (Service Providers and SIs) are included in our other report "HSIA for Hotels- Vendor Analysis."

Outline

Table of Contents

  1. Executive Summary - High Speed Internet Access (HSIA) Technology for Hotels
  2. Key Findings
  3. The State of the Hotel Industry
    1. Market Size
      1. The Worldwide Hotel Industry
      2. Segmentation of Hotels
    2. The US Hotel Industry Landscape
      1. Geographic Distribution
      2. Occupancy Rate
      3. Average Daily Rate
      4. Revenue per Available Room (RevPAR)
  4. Introduction - HSIA Technology
    1. Background
      1. Market Drivers - an Overview
        1. Connectivity - Advent of Smart Devices
        2. Customer Loyalty/Expectations
        3. Operational Expense Savings
      2. Market Barriers - an Overview
        1. Infrastructure Cost
        2. Capacity of the Internet Backbone
  5. High Speed Internet Access - The US Hotel Industry
    1. HSIA the Backbone of Hotel Technology
    2. HSIA Take Rate
      1. Factors Influencing HSIA Take Rate
    3. HSIA and Consumer Demographics
      1. The Reason People Are Traveling Is Changing
        1. Leisure Travel versus Business Travel
        2. Purpose of Business Trips
        3. Understanding Travelers' Preferences
      2. Every Generation Responds To Technology Differently
    1. Impact of HSIA on Hotel Revenue
      1. Impact through Occupancy and Customer Loyalty
        1. Customer Loyalty - Lost
        2. Loyalty - Found
      2. Impact through Ancillary Revenue
        1. What Hotels Charge for HSIA?
        2. Why do Hotels Charge for HSIA?
      3. HSIA - Challenges and Emerging Solutions
        1. HSIA - Performance and Reliability
          1. The Right Infrastructure
            1. HSIA Deployment options
          2. The Right Technology Partner
          3. Improving HSIA Reliability
      4. HSIA Bandwidth Demand - Current and Future
        1. Bandwidth Hotels Currently Subscribe To
        2. How much Bandwidth per Guest-room?
        3. Is it Enough for the Future?
  6. Conclusions - Future Outlook
  7. Research Methodology

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