June 18, 2003, 9:50 AM — Wi-Fi evangelists have for years been spinning alluring tales about an unwired future, but many businesses eyeing the sector are still struggling to find revenue models that will let them turn a profit on providing wireless connectivity and related content and services. Several executives tackling Wi-Fi projects gathered Tuesday in New York for a panel discussion of their field experiences, organized by the iBreakfast conference series.
Starwood Hotels & Resorts Worldwide Inc. counts among its 750 hotels several luxury brands, including Westin, Sheraton and W Hotels, that target business travelers often drawn toward road-warrior technologies like Wi-Fi. But with the hospitality industry crunched in the last several years by a sharp drop in travel spending, the company can't afford to build wireless connectivity infrastructure without a clear return on the investment, according to Carl Cohen, Starwood's vice president of property technology business and systems strategy.
"I don't yet see any killer app that's going to make the difference in our industry," he said. Lacking any single Wi-Fi offering that will turn a profit, Starwood is cobbling together an assortment of projects, mixing initiatives aimed at creating new revenue streams with internal cost-cutting endeavors.
Starwood has fitted several of its hotels with full wireless access -- a pricey proposition, Cohen said, because spotty access only annoys customers. Most of those properties are still in a test phase, offering visitors free access in exchange for feedback. Soon, Starwood intends to begin charging those taking advantage of its hotels' networks. Access fees for coverage in corporate meeting rooms are a particularly high-margin opportunity for the hotels, Cohen noted.
But fees from hotel guests are unlikely to cover the cost of deploying and maintaining a Wi-Fi infrastructure, he said, so Starwood is also experimenting with several initiatives it hopes will lead to operational cost savings.
In the W hotel in Times Square, a just-launched test project equips the building's housekeepers with wirelessly connected handhelds. Desk staff can route the cleaning staff to rooms needing attention, and the housekeepers can report back as they complete assignments. The goal is to more quickly turn over rooms, reducing the length of time customers wait for rooms to be ready for occupancy.
Another internal project furnishes waiters in one of Starwood's hotel restaurants with wireless handhelds they can use to instantly relay orders to the restaurant's cooking staff. If food and drink orders take less time to reach customers, Starwood hopes the customers will order more than they would have if faced with longer waits. Calculating the return there will be relatively easy, Cohen said. After several months of testing, the company expects to see an increase in sales.