Mr. Garrison

Mobile Technology

The Impact of the iPad on Hotel Owners and Operators

By David Garrison , Chief Executive Officer, iBAHN

Challenges with the New Tech-Savvy Traveler

New mobile devices meant to simplify life also create new challenges for the hospitality industry. For example, the latest must-have mobile device, the iPad, comes with bandwidth requirements that have significantly impacted hotels providing free Wi-Fi. Point of fact: iPad video traffic is more than 600,000 times more data intensive than equivalent text. If a hotel’s bandwidth is “hogged” by a few iPad users, the remaining guests will have a poor Internet experience.

Additionally, 30% of travelers said they are likely to carry only a tablet device while traveling, versus also bringing along a laptop. 25 million iPads have already sold to-date, making it the fastest selling consumer electronics device in history. This makes it obvious that hoteliers are going to need to step up to the enhanced-bandwidth plate and reconsider the concept of free Wi-Fi.

So how do hotels deal with this trend? How can costs and guest expectations be managed? And more importantly, how can the burgeoning iPad presence actually translate to increased revenues for hotels around the globe? A few points to consider:

Why should hoteliers care?

The average hotel’s Wi-Fi system is already overloaded. Some 60% of surveyed travelers in America, Europe and Australia indi¬cate that they already have had a poor downloading experience in a hotel because the system was slow.

The advent of the iPad threatens to increase this number of unhappy guests. iPads are the first truly video-centric Internet devices, and as such place huge demands on hotel Wi-Fi systems. iPads consume 400% more Wi-Fi data on a monthly basis than the average iPhone, iPod or Android device, according to a recent report from Meraki.

Additionally, a recent YPartnership study of frequent business travelers indicated that nearly 30% of respondents are likely to carry only a tablet device like the iPad when on future business trips, versus bringing along what was previously the travel standard, the laptop. Then, consider that more than 25 million iPads have already been sold and the message should be clear: hoteliers must quickly be able to support these devices.

A key driver of future success for hotels will be the ability to provide guests with the same level of technology capabilities they have in their homes and offices. 67% of guests stated they will not return to a hotel where they have had a poor technology experience. Therefore, the ability to provide good experiences in using the same devices guests use at home while they are traveling is now an imperative for hoteliers.

What’s the future of iPad?

Three million iPads were sold in the first 80 days of its availability – more than 37,000 per day. And, by the iPad 2 launch in March 2011 (less than a year from the iPad 1 launch), more than 15 million iPads had been sold – selling more than all other tablet PCs combined since the iPad’s release.

Gartner Group, a leading US-based research firm, predicts 100 million iPads will be sold by the end of 2012. And that’s only the Apple tablet format — there are more than five dozen competitors.

According to a 2011 Yesawich Partnership survey, 40% of business travelers have incomes well above what is considered normal in developed countries, thus providing higher disposable income. They are therefore likely to spend it disproportionately on new technologies like the iPad.

What makes iPad different?

There are several characteristics of the iPad that make it different from other devices currently carried by hotel guests – such as laptops and smartphones – which means that hoteliers will need a new set of capabilities in order to support their guests’ activities:

• It is designed, built and used for the viewing and dissemination of video. According to Cisco, video traffic is more than 600,000 times more data intensive than equivalent text.
• It is driven by a highly intuitive user interface, thus requiring no significant existing computer skills. New users are up and running with an iPad at an average of one hour, according to Apple.
• The majority – some 75% — of iPads are equipped with only Wi-Fi (no 3G capability), which is already creating hotel network/bandwidth problems, especially when coupled with the high video needs of iPad users.
• The antenna receptivity on iPads is significantly lower than other devices, particularly laptops, creating a predisposed setting for negative guest experiences. In fact iPads are, on average, about 30% worse in receptivity compared to devices like laptop computers. And despite the iPad popularity, it is shown to have lower receptivity than other tablets, as well, including the Nook Color and Lenovo ideapad.

Are iPads already affecting your hotel?

If a hotel’s Wi-Fi system was designed prior to 2010 around laptop antenna reception, the hotel’s iPad-carrying guest is likely to have a bad experience. It has been observed in some hotels that the iPad works at the desk but not on the bed, or vice versa!

Data versus voice traffic growth is another indicator of guest behavior changes in hotels – much in the same way that mobile phones changed the telephony picture in the hospitality industry. Network usage of iBAHN indicates that while there is continued incremental growth in voice traffic, the geometric growth for data (i.e. video) traffic will change the requirements for hoteliers. iBAHN saw that the average bandwidth per session in megabytes increased from roughly 100 MB in June 2010, to just over 150 MB in March 2011, to nearly 250 MB per session in September 2011 – a rapid rise in demand that is unlikely to slow anytime soon.

Do hotel guests want free Internet, or reliable Internet?

Research shows that nearly 70% of hotel guests have had a bad Internet experience in hotels and many would be unlikely to return to that property as a result. Therefore, the hotelier who focuses on “free” at the expense of the other attributes – especially amidst the burgeoning bandwidth demands of the iPad – does so at their own risk.

With the increasing demands that the iPad is placing on hotel Internet bandwidth, many hoteliers are considering offering tiered levels of paid Internet service in addition to free Internet. By offering choices, guests who care more about Internet performance than cost have the option to pay for a higher performance level of service. By offering tiered levels of service, hoteliers may find a new revenue stream. In more than a million surveys of global hotel guests, price consistently ranked fourth behind speed, security, and ease of use, in terms of guests’ priorities for hotel Internet service.

Another recent study indicates that 65% of travelers are willing to pay for Internet access in hotels. This is a growing trend as Internet access is now becoming a commodity that consumers are willing to pay for in other places when they travel – such as airlines, airports and restaurants.

So what’s the takeaway?

Hoteliers need to prepare to support their guests who are currently traveling with iPads, and they should expect that number to continue to grow rapidly. Among those preparations, hoteliers should consider these four points:

• If a hotel’s Wi-Fi system was designed before 2010, it likely needs to be reconfigured to support the video demand arising from new devices like the iPad.
• Unlimited free Wi-Fi makes little sense in this new environment, unless hotels have unlimited bandwidth, along with unlimited budget to continue adding bandwidth. Tiered levels of service in addition to free service can address all guests’ needs and create a positive experience.
• Get in front of the iPad curve by identifying a partner with deep expertise in developing and implementing systems designed to keep up with guests’ needs.
• Analyze the capacity of existing bandwidth circuits at peak hours to anticipate guest satisfaction levels before it is too late.

The advent of the iPad creates both a challenge and an opportunity for the hospitality industry. The device has already begun to show its power to change how travelers work and play while staying at hotels. At the same time, it has put an added strain on existing hotel Wi-Fi systems, many of which are already at or near capacity. By accommodating – and anticipating - guests’ evolving technology demands, hotels can show visitors that they are dedicated to providing a positive guest experience and are in synch with their needs, now and in the future.

When David W. Garrison joined iBAHN in October 2002 as president and chief executive officer, he brought with him more than twenty years of successful experience in leading telecommunications and technology services companies in the wireless and Internet industries. Mr. Garrison has served as chairman and chief executive officer of Netcom, a pioneering Internet service provider. During his three-year tenure at Netcom, he successfully led NASDAQ financings, using the proceeds to expand geographically within the United States to build one of the first significant Internet networks. Additionally, he expanded the company internationally to create one of the top-rated Internet companies in the United Kingdom and Canada. Mr. Garrison can be contacted at 303-728-6150 or dgarrison@ibahn.com Extended Bio...

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