Cellphones give hotel guests the upper hand

In-room phones once produced profits for hoteliers. Today they eat into earnings as guests use cellphones instead.

“Phones used to be a revenue centre,” said Best Western Chief Executive Officer David Kong. “Now they are a cost centre.”

The dwindling utility of the hotel room phone is part of a wider trend that has land lines vanishing from homes and workers doing business on the BlackBerry.

AT&T Inc and Verizon Communications Inc, the big local phone companies, are losing 10 per cent to 12 per cent of their lines every year to other providers, said independent telecom analyst Jeff Kagan. That rate will only increase, he said.

But hotels can’t hang up on their phone systems. Guest safety and security demand them, said Bjorn Hanson, a professor at New York University’s Tisch Center for Hospitality, Tourism and Sports Management.

“We are stuck with them,” Kong said.

Guests use room phones if they need to call for help. In non-emergencies, they pick up the receiver to order room service and wake-up calls.

But guests save money by using their cellphones to take or make most outside calls.
In New York City, it costs about $1.50 to make a local call from a hotel, which also might charge a fee of about $4 to connect to a long-distance carrier like AT&T.

The guest who does decide to use the phone can often do so from the desk, the bed or the bathroom, because installing multiple phones is cheap once the larger system is in place, said hospitality industry consultant Ted Mandigo.

“I get my wake-up call in the bathroom,” said Jim Abrahamson, an early riser who heads InterContinental Hotels’ operations in the Americas. “I am already up. That way, I don’t have to scurry back to the phone by the bed.”

But hotels pay dearly to install and maintain this glorified system of house phones. From the mid 1980s through the early 1990s, the telephone generated about 2 per cent of profits for hotels, which essentially operated little internal phone companies and charged guests the highest legal rate, Mandigo said. But now a hotel spends $3 for every $1 generated from in-room telephones as guests swap them for cellphones, he said.

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