from www.usatoday.com – Hotel-room entertainment provider LodgeNet went on the defensive Wednesday after a Wall Street analyst’s report revealed that one of its major hotel-chain customers will start phasing out pay-per-view porn in 2013, Dow Jones reports.
LodgeNet responded with a press release that says, among other things, that the chain’s decision won’t hurt the company in 2011 or 2012 as much as the report suggested.
The news, however, will likely have an impact on what hotel guests will – or won’t – see on their hotel TV screens in the future.
Hotel porn is a profitable, but little-discussed, revenue stream for hotels. Most of the big chains – with the notable exception of Omni – offer it as an option to guests.
One veteran hotel manager who has worked in various higher-end hotels, and who asked not to be identified, told me that his company’s research suggests that 80% to 90% of all movies watched are “adult content” movies. In another bonus for hotels, guests also tend to be less concerned about price than they are with more generic movies, he told me.
Perhaps not surprisingly, the analyst report in question assumes that a full 50% of LodgeNet’s guest-entertainment revenue at the unidentified chain’s hotels comes from adult entertainment, despite the fact that LodgeNet’s video-on-demand systems also give guests the choice of ordering music, games and Hollywood blockbusters.
So which chain plans to quit porn?
For now, we still don’t know which hotel chain plans to phase out what LodgeNet calls “mature content.” Neither the analyst’s report nor any of the news articles that followed identified the chain.
But if it’s really one of LodgeNet’s biggest customers, then we’re talking about a short list.
In a May 2010 investor presentation, LodgeNet identified its three largest hotel customers as Marriott and Hilton (19% of LodgeNet-serviced hotel rooms apiece) and InterContinental Hotels Group (10% of rooms).
The only other hotel-chain customers with a big enough share of rooms to be identified by name accounted for smaller percentages of LodgeNet’s rooms: Starwood (8% of rooms), and Hyatt (5%). The remaining percentage (39%) was not broken out by individual chains, although the LodgeNet presentation did list Four Seasons, Accor, Fairmont, Harrah’s and Loews Hotels as other hotel customers.
In the same presentation, LodgeNet described itself as the world’s largest media and connectivity provider to the hotel world covering 1.9 million rooms.
From a broader perspective, news of a hotel chain planning to drop pay-per-view adult entertainment is particularly shocking given recent changes in the how people view content.
LodgeNet’s revenue from all of its guest-entertainment programs has been falling for roughly two years, as people traveled less or, when on the road, cut back on personal frills. Many travelers today travel with their own Netflix DVDs or click on Hulu.com to watch free TV shows. Noting the decline of pay-per-view movie rentals – and specifically porn – Hotel Check-In reader 24×7 commented: “I’m not going to pay another $20 for something I already get on the internet (for free).”
In 2009, LodgetNet saw guest-entertainment revenues slide by 19% vs. 2008. And as the shift among consumers became more evident, LodgeNet has increasingly been taking steps to diversify its business with accounts outside the hotel industry.
In the meantime, LodgeNet said in its statement that it still has a “good” relationship with the hotel chain getting ready to phase out “mature content” offerings. In fact, LodgeNet’s even talking with the chain about upgrading its existing systems to high-definition – a move that would mean more money.