LodgeNet to offer hotel guests movies to go
— -- The nation's No. 1 provider of pay-per-view programming in hotel rooms is fighting to turn itself around as travelers increasingly use mobile devices to watch their own programs when they want.
As the hotel industry increasingly talks about video-on-demand being passé in the mobile digital world, video provider LodgeNet says it will announce today that it's joined more than 70 film studios, retailers and cable companies in a venture called Ultraviolet to let guests order movies in their rooms and take them outside the hotel via cloud computing.
On Wednesday, LodgeNet said it planned to launch by January a mobile application that transforms smartphones into hotel-TV remote controls.
LodgeNet also got a boost from billionaire media mogul and Dallas Mavericks owner Mark Cuban. Cuban spent $2.3 million last week buying more shares of LodgeNet, boosting his stake in the company to nearly 10%. Cuban says he bought the stock because shares are trading near 52-week lows (the close was $1.35 Wednesday), and because "I have confidence in the company." He is involved in movies through ownership of Magnolia Pictures.
LodgeNet's moves come as travel slumped during the economic downturn, hotels have turned from pay-per-view in favor of digital systems, and as guests have sought entertainment from the Internet rather than pay for it on TV sets in their rooms. The company was dealt a blow last year when Marriott began to phase out adult content.
LodgeNet CEO Scott Petersen says that despite having new devices to turn to for entertainment, company research indicates the average hotel guest still spends more than three hours a day watching TV in the room.
"The general talk for the last couple of years has been that guests don't watch (video on demand) anymore, that it's passé, so we've been doing studies," Petersen says.
Among LodgeNet's findings:
•Two-thirds of guests think a hotel with no interactive features feels dated.
•The average guest is more likely than the average U.S. consumer to watch movies frequently, look up directions or local information on a mobile device, and download podcasts from the Internet.
•Only 1.5% of hotel guests connect their mobile devices to the in-room TV, a rate that's remained steady for the last two years, according to audience-tracker Nielsen.
LodgeNet says it's having some success encouraging budget-conscious hotel guests to rent Hollywood titles — as opposed to adult films — by lowering prices for old movies and raising prices for just-released movies. LodgeNet now charges as little as $4.99 for Hollywood movies and as much as $14.99 for just-released titles such as Bridesmaids.
"We're getting more people in our video store," Petersen says. "We're selling more tickets."
Though third-quarter results are three weeks away, Petersen says that under the new pricing structure, revenue from first-run movies rose about 5% in June and early July.
"That would have been the first time since the start of the recession that Hollywood movie revenues were up period over period," he says.
But David Garrison, CEO of rival iBahn, which provides broadband digital entertainment to hotels, says travelers demand new ways to see content.
"We believe that video-on-demand in hotel rooms is all but dead," Garrison says. "We've seen a year-over-year decline in percentage of guests that purchase movies. It's fallen about half in less than four years."
He says iBahn's research indicates 30% of travelers now use three devices — smartphone, laptop and tablet — on a hotel's Wi-Fi system, compared with one just three years ago. Privately held iBahn doesn't release the number of hotel rooms that its systems serve, but Garrison says the company has customers in 12 countries.
LodgeNet serves some 1.8 million hotel rooms here and abroad, with chains operated by Marriott, Hilton and InterContinental Hotel Group accounting for most of them.
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