Published in October 2006

Video Evolution
By Anthony Fonzo

The hospitality market is brimming with opportunities.
The hospitality market has a lot of potential for integrators who know how to work with hoteliers. Today's vacation and business travelers have high expectations when it comes to displays in their rooms.

    As an integrator, you have to be aware of segments that are growing and offer profit opportunities going forward. In recent years, the video focus has been on the consumer market, due to the shift to high definition, and on the B2B market, with the increased need for digital signage and display technologies.
    One segment that often is overlooked is hospitality. Don’t succumb to the long held belief that the hospitality segment is lagging in technology and complicated in implementation. In the immortal words of Bob Dylan, “The times they are a-changin’.” In fact, the hospitality segment is undergoing a complete transformation, centered on digital television.
    This can be quite profitable to the knowledgeable integrator and, further, the hospitality segment is in the midst of a period of record growth. At the end of 1Q/06, the construction pipeline grew to 3377 projects having 448,156 rooms, and it has increased for ten consecutive quarters, with the last five at an accelerated pace [Source: Lodging Econometric]. So, there clearly is a lot of business out there for integrators.

Shift to Digital
    Unless you have been hiding under a rock, you know that the television market has undergone a dramatic change over the last several years. Just how dramatic can be seen in Charts 1 and 2.
    In essence, the entire market has inverted, from 2004 when traditional projection television (PTV) and traditional glass tube televisions (CRT) made up the majority of sets purchased by consumers for their homes (46% and 29%, respectively) to today, when liquid crystal-based FlatTV and plasma-based FlatTV do (40% and 26%, respectively).
    In addition, the growth of HDTV has led to a greater appreciation for better picture quality. According to a recent NPD Group survey [August 2006], 63% of all respondents indicated they want their next TV to be HD-ready. The latest statistics show that fully 17% of all US households already have an HDTV [Screen Digest, March 2006]. Coupled with the explosion of DVD penetration (82% as of January 2006 [CEA]), it is safe to say that today’s consumer is both experiencing and seeking better picture quality than ever before.

Chart 1

Chart 2

Interesting Question
    A more interesting question is, “what does this huge shift in the market mean to the hospitality segment?” First and foremost is the change in expectations of hotel guests. In 2004, a guest seeing a fairly new CRT television in his or her room would feel comfortable, as he likely had the same technology at home. Today’s guest is likely accustomed to a digital set, either FlatTV or Micro Display, with a CRT television appearing outdated and unappealing. Although guests expect to make some compromises in other aspects of their stay, the television is the one amenity that they expect to be at least as good as home. Because guest expectations have changed, we see hoteliers rushing to install the latest FlatTVs.
    The final catalyst in the digital revolution going on in the hospitality segment is digital rights management (DRM) technology. For the first time, hotels have access to true HD content that is protected. This is a significant development because, without adequate DRM, hotels cannot deliver HD content to rooms without fear of litigation should that content be compromised and later copied and sold.
    The solution is a strong encryption technology known as Pro:Idiom, which secures the video feed from the head end all the way to the screen using AES encryption with 128-bit keys. Using this solution, satellite broadcasters and PPV companies are upgrading their head-end equipment to offer even first-run high-definition viewing in the hotel room.

How to Profit
    The common belief is that the hospitality segment is difficult to work with. To a certain extent, this is true, because typically there are more stakeholders and competing interests in a hotel install than a business or consumer one. A typical hotel install will involve the hotel, a pay-per-view company, a television manufacturer and an installer. The installer might be hired by any of the other entities listed (i.e., you may be working for the hotel, the PPV company or the TV manufacturer). The trick is to remember that, although you have to please your client, you must also balance the concerns of the other stakeholders.
    The good news is that this is much easier than you might think, because most of the actual stakeholders you will work with do not understand how to implement and optimize a digital TV or high-definition system, and they will rely on you to be the expert. Here are some pointers to help you successfully approach your next hospitality install:

  • Find out if the hotel is going to install or upgrade its RF delivery system to digital delivery, or if it is going to add high-definition satellite or PPV at the same time. If they are not adding it now, do they plan to add it later? When?
  • The delivery method of the content to the room is a critical factor in all installations. Digital and/or high-definition content can be delivered to a hotel room from R/F pay-per-view (i.e., Lodgenet, On Command), IP de-livered (i.e., Kool Connect, nStreams, NXTV, TotalVision), satellite (DirecTV, etc.), cable or even off-air. Note that neither cable nor off-air allows PPV for the guest in the hotel room; the other sources do.
  • Be sure to ascertain the hotel’s requirements for guest access and control. Coupled with the source of content, these likely will lead you to select a true hospitality-grade commercial television and not a consumer set. A more detailed discussion follows.
  • Understand that cost is a major issue for hotels because every bit of cost put into the room must be recouped from the daily rental rate.
Different Management
  • Recognize that a hotel may fly the flag of a chain, but be owned and managed in one of several ways. Fewer and fewer hotels are corporately owned and managed. It is more likely that you will encounter a hotel that is franchised out to local management or run by a management company that may own other hotels (with other brands) in other cities. Know the decision makers because they will be the ones you have to convince when suggesting needed or desirable updates. And know that they are motivated by lower costs or better reliability.
  • Purchasing for these hotels also can be varied, either from corporate or through a hotel supplier or distributor, even down to the occasional property that buys individually. It is wise to know how the equipment will be purchased and what brands/options are available from that supply source.
  • The minimum standard for RF coaxial cable acceptable in hospitality is RG6-U Quad shield because it gives maximum content delivery capability and maximum shielding.
  • 100% shielding is a requirement for all taps and splitters. Unshielded equipment actually can interfere with aircraft communications and is illegal.
  • Hospitality distribution systems require a data path both outbound and inbound on a sub-channel. This necessitates planning and balancing the system.
  • It seems obvious but assume that, as the integrator, you are the only one who truly understands HDTV and system planning. Many hoteliers think that simply putting an HDTV in a room will provide the guest HDTV. Others simply will run consumer sets with QAM on their local cable signal, and wonder why the channels keep moving.
Commercial vs. Retail TVs
    The simple fact is that commercial sets and retail sets are different and, in almost every case, a hotelier will be better served by purchasing true commercial products. First of all, only commercial sets offer Pro:Idiom encryption, so any property serious about offering high-definition content to its guests must have commercial sets. Although retail televisions have ATSC decoders, they do not contain the Pro:Idiom security keys and will not work with high-definition PPV systems.
    High-definition content can be offered in hotels without encryption, but the non-encrypted means of delivering HD content are fraught with difficulties. A hotel could use, for example, a standard antenna on the roof to pull down the free off-air HDTV content that is being broadcast in its location. However, off-air broadcasts usually are in high definition during prime time, but are rarely in high definition the rest of the day. This offers an inconsistent and unappealing solution to the guest.
    Cable companies carry a number of free high-definition channels, which can be shown on any TV with a QAM decoder (all of today’s HDTVs have QAM decoders). Unfortunately, local cable companies change the channel maps with such frequency that HD channels appear, disappear and move around. In fact, in many locations, cable companies actually offer their own PPV services to consumers, and they map channels like a large hotel, sending the movie ordered down an empty channel using QAM encoding.

You Never Know…
    The upshot of all this is that you never know which channels you will see on a cable system if you have a QAM decoder. At the time you program the set, the hotel may see 12 channels, but one might be a PPV movie ordered by a house down the street, and two might get remapped a week later.
    So again, the experience is inconsistent and unappealing from a guest perspective. Many cable companies are pushing the cable card as a solution in hotels. Unfortunately, cable cards are unidirectional only and do not allow PPV or on-demand viewing. These services can be offered via cable boxes, but because the billing systems of the cable companies are not integrated into the TV, there is no easy way for the hotel to use them.
    To really offer HD consistently to guests, and to be able to collect revenues for the service via PPV, a hotel has to have an encryption-based system, such as Pro:Idiom, and a commercial television.
    Further, commercial products often come with a better warranty, and even when the warranty is the same, the service level often is better on commercial products. Suppliers know that commercial sets require greater service focus because, unlike a broken TV in a home living room, a broken TV in a hotel room makes the room un-rentable and costs revenue.
    In addition, commercial sets have been designed to minimize the time required to set up and maintain them. They offer cloning of all settings, so multiple rooms can be completed quickly and consistently, and they offer lockout and control features that prevent the guest from inadvertently changing the system. All of this means more uptime with less effort for the hotelier.
    Finally, commercial sets are tested and certified to work with PPV systems, and do so with the connection of a single cable. So, although it may be tempting to procure consumer sets because they are readily available in the marketplace, it is unwise to do so.

Selecting The Right TV
    As the recognized expert in making the correct decision about what TVs to purchase, you may be asked to help guide the hotel in making a choice when purchasing TVs. You should keep in mind that this purchase is a major investment for a hotel, and there are certain factors that should be considered. Here are some questions that can help guide the stakeholders:
  • How long has the brand being considered been in the hospitality segment? You will want one that understands this segment and its unique needs.
  • Of what other hospitality projects has the brand being considered been a part? Experience matters; lessons learned on other projects will save you time and money.
  • Will the brand being considered be in this segment in five to seven years, or is it looking for short-term sales? You need a partner that will be able to meet the client’s needs over the full life of the investment.
  • If the hotel has properties outside the US, can the brand being considered be a global partner for the client? With different broadcast standards, PPV partners and guest expectations in various parts of the world, a partner is needed that is successful globally.
  • What service and warranty support will the brand offer? Will it be around to back those promises?
  • Does brand matter to the hotel’s guest? You likely do not drive the cheapest car, even though it would get you from point A to point B as well as your chosen vehicle. Hotel guests have similar expectations when they stay in hotels. A leading brand of television with the latest technology matters to most guests, who surveys tell us expect a TV better than that in their home.
Integrator’s Role
The real moral of the story is that there is a lot of money to be made right now for the integrator who is able to navigate the various interests in the hospitality segment and add value through his or her knowledge. The integrator must be able to help the PPV company sell to the hotel, and help all parties understand the best solution for their needs.


HDTV Hospitality Market is Exploding
    According to Pacific Media Associates, the hospitality market is experiencing unprecedented growth, and presents important opportunities for sales of flat panel HDTVs. Almost 111,500 new hotel rooms were under construction in the US as of March 2006, of which about 75,000 will be completed this year.
    In addition, however, renovation of existing properties accounts for even greater opportunities. With some sources estimating that there are 4 million hotel rooms in the US, and they undergo major renovation every seven to 10 years, there are at least 400,000 redecorated rooms each year. However, many of these rooms are in economy hotels, which wouldn’t offer such amenities as flat screens.
    The new Cambria Suites chain has reported contracts for 23 properties averaging at least 100 suites each, with flat panel TVs in both the living and sleeping areas; this totals more than 4600 units. Large renovation projects also are planning for flat panels, such as the 532-room Radisson Hotel Martinique in New York City, and the 190-room Doubletree Hotel Claremont that recently reopened with 32-inch LCD HDTVs.
    For more information, go to

Anthony Fonzo is the product marketing manager for Philips Business Display Solutions. He manages all aspects of new product launches to the hospitality market.

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