A hotel phone no longer costs more than the revenue it generates

A hotel phone no longer costs more than the revenue it generates

In January 2013, Skift – a travel “industry intelligence” website, ran an article ‘A hotel phone now costs more to maintain than the revenue it generates’, this was an Excerpt from a Hotel News Resource article by Robert Mandelbaum titled ‘U.S. Hotel Guests Hanging Up and Logging In’.

In both  Mr. Mandelbaum explains that:

According to PKF Hospitality Research, telecom revenue at the average U.S. hotel has declined from a peak of $1,274 per available room (PAR) in 2000 to $269 PAR in 2011. The represents a 79 percent decline. During the 1990s, telecom revenues used to account for three percent of total hotel sales. In 2011, that number declined to just 0.6 percent of sales.

Now there are many reasons for this trend.

For example Mr. Mandelbaum points out that “the initial decline in telecommunications revenue during the period 2000 through 2009 can be easily explained by the increased use of calling cards, then cell phones.” Then there was the high in-room per call fees (sometimes even on 1-800 or credit card calls) followed by advent of Skype, smart phone VoIP and texting (SMS) apps. Meaning that guests were finding other ways to communicate, and leaving the in-room phone alone.

This trend is shown very clearly via the chart:

US hotel Telecom RevenueA closer look at the chart show that there is an increase in 2010 and 2011 which seems to be related to “more hotels are beginning to follow the successful paths of those chains that have always opted to charge for internet connectivity.” Meaning that free in room WiFi was no longer free.

Taking this one step further, Lodging Magazine reviewed PKF Hospitality Research’s 2013 Trends in the Hotel Industry survey and found that Hotels Struggle to Grow Other Revenue Sources:

 Based on a sample of operating statements collected from approximately 6,500 hotels during PKF-HR’s 2013 Trends in the Hotel Industry survey, rooms revenue increased by a healthy 6.3 percent from 2011 to 2012; however, total hotel revenue grew by just 5 percent. This means that the combined revenue earned from food and beverage, other operated departments, and rentals and other income increased only 2.3 percent per available room (PAR), or a mere 0.5 percent when measured on a dollar per occupied room basis (POR).

Now, a hotel phone need not costs more to maintain than the revenue it generates

Phonebnb takes the problem of declining telecom revenue and a desire to find other revenue sources and combines them.

By combining Flat-rate international calls with the in-room WiFi hotels can offer a communication package that will truly interest guests while reviving a lost revenue stream. Additionally, there is a benefit of reducing operating expenses related to having a separate call billing system.

There is money sitting on the table waiting for the right solution to bring it back to the hotel’s bottom line.

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Photo Credit: CITAlliance via Depositphotos

Please note that Phonebnb is not affiliated with PKF Consulting or it’s parent CBRE, but in recognition for the insightful article we suggest that if you are interested  to learn more about PKF Consulting and PKF Hospitality Research, you to to their website or as it says on the site contact: Robert Mandelbaum+1 404 8093959 email.