Creative pricing, customizing lead CAS trends

Hotel & Motel Management, Nov 15, 2004 by Bruce Adams

Creative pricing, customization and centralization are three trends in the call-accounting system industry that are giving hoteliers some hope to revive a long-dormant source of revenue.

"We are seeing CASes that are doing more special pricing that is geared to particular guests instead of pricing all calls exactly the same way for everybody," said Don O'Neal, principal of O'Neal/Gaj, a hotel technology consulting and managing company. "Hotels are looking at flat-rate pricing or bundling services."

Hotel revenue earned from phone systems dried up years ago at most U.S. hotels because of the use of cell phones, and before that, phone-calling cards. A CAS tracks phone calls made on the hotel's private branch exchange, computes a charge for the calls and sends that information to the hotel's property-management system, which posts charges to the guests' folios.

"Many smaller hotels that only offer domestic calling have seen their phone revenue drop so low that they only need a very basic CAS, if they need one at all," O'Neal said. "Some may need it just for administrative-type monitoring, to make sure employees are not abusing the phone system."

For such hotels, the company offers eSentri, an electronic sentry that monitors trunks and interfaces to make sure they are working properly, and watches for administrative call abuse and fraud. It is not a CAS.

Examples of customization and creative pricing are plans offered by Wyndham International and Marriott International, O'Neal said. Wyndham offers free local and long-distance phone calls and high-speed Internet access to certain frequent guests. Marriott's Marriott and Renaissance brands offer a wired-for-business plan that offers unlimited high-speed Internet access and unlimited local and long distance phone calls within the United States for $9.95 per day at most hotels.

Dinosaurs

Hotel phones can be profitable once again, but the industry needs to make some dramatic changes, according to Ron Tarro, president and c.e.o. of SDD and Telemanager.Net.

"Hotel phone-pricing models have not changed in 20 years while the telecom industry has restructured itself eight times," Tarro said. "Hotels are not a trusted source of phone service because their rates are not transparent. People are not using hotel phones because they are not price competitive. Cell phones will take a percentage of your phone business, but if you are priced in 1984, no rational person will use your phone."

Hotels could be a low-cost provider of phone service by charging slightly more for a minute of use than what they pay, which is about 2 cents to 5 cents a minute, he said.

"Hoteliers should copy the cell phone carried-minutes plan, which has figured out how to make money in a low-end business," Tarro said. "They could offer a prepay card that offers 100 minutes of phone use for $2.95. They could do it for local or long-distance calls, and use it strategically to encourage guests to come back or keep the spoilage."

SDD's Jazz Enterprise CAS, which is used by Wyndham for its phone and HSIA package for frequent guests, also can handle self-administered prepay cards, he said.

All bundled up

Ron Contrado, president of Homisco, a provider of hosted or onsite CASes, agreed that creative phone service pricing by hotels could revive phone revenue.

"If hotels would give guests a break on pricing or provide bundled pricing, they would get a lot of the phone traffic back," he said. "A wired-service network is far superior to wireless, and an increasing number of travelers run over on their cell phone budgets and get whacked 25 to 40 cents a minute."

Contrado suggests bundling local, long-distance and HSIA into a package and charging one price.

"They will get more revenue back and make guests feel like they are at home," he said.

There can be drawbacks to the one price for all services because hotels cap their revenue but don't cap their costs, Tarro said. If somebody stays signed on to the Internet for their entire stay because they don't want to go to the trouble of disconnecting and reconnecting, the hotel could come out on the short side of the equation.

A centralized CAS allows hotel companies to negotiate a deal with a large company by charging a fixed amount per employee who can use phones in that company's hotels for free or at a designated rate.

"Wyndham has a centralized system and can change pricing for all the employees of a certain company across the entire brand very simply," Tarro said. "Without a centralized system, you would go crazy administering that."

The system could be centralized at a CAS company like SDD, at a hotel company that offers the shared service to franchisees, or at a competitive local exchange carrier, such as Sprint, he said.

For more info...

Company                   Circle No.

Homisco                          380
Metropolis Technologies          381
SDD                              382

badams@advanstar.com