Starwood Sees $$$ in Wi-Fi

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NEW YORK -- Having invested heavily in Wi-Fi at hundreds of locations worldwide, hospitality giant Starwood Hotels & Resorts is crossing its fingers that the unrelenting promise of a wireless world will justify the million dollar investments.

In a frank discussion at the iBreakfast Conference series here, Starwood's VP of technology business and systems strategy Carl Cohen lamented the absence of a 'killer app' to drive enterprise Wi-Fi adoption, and warned of an "uncertain path" for businesses jumping on the Wi-Fi bandwagon.

"We have to put in hundreds of access points in each building because our guests have high expectations for the service. It's a dramatic investment. They tell us we'll have many, many many wireless users soon. But, when is soon?" Cohen said.

"The hospitality industry is taking huge beating. This will all be based on return on investment. It's about Wi-Fi generating revenues and cost savings immediately. We're not trying to prove that it makes sense to do this," he added.

In partnership with Unisys, Starwood has added Wi-Fi hotspots at 750 hotels and resorts around the world and the company has launched experiments with new wireless initiatives aimed at saving on operational costs.

Instead of putting all its Wi-Fi eggs into the subscription-based basket, Cohen said hotel maids/cleaners and servers at resort restaurants and bars would be working with 802.11b-enabled PDA devices to speed up service for customers.

Cohen said Starwood -- which operates the Four Points, Sheraton, St. Regis, Westin, and W Hotels brands and 18 time-share resorts -- would continue to experiment with new applications aimed at increasing guest loyalty and adding to the revenue pot.

"It's no secret that we believe in Wi-Fi. We have spent dramatically on a Wi-Fi strategy. In five years, we think Wi-Fi will be ubiquitous and we want to be part of that momentum. But we need to find the value. Where is the killer app? How do we leverage it?" Cohen said.

Today, Starwood does not charge for access to its hotspots but Cohen said that could change. "We're still in that uncertain period. We're trying to figure out what the model will be. We believe that the revenue pie will grow ten times with Wi-Fi. Will it be subscription-based? Will it be free? We just don't know. We're not sure where the market is going," he added.

Cohen said there was "high value" for wireless access in meeting rooms, especially because Starwood has complete control of the availability of the Wi-Fi signals. "In common areas and in meeting rooms, we can control it. We can wheel in access points to any meeting room because there is high opportunithy for revenues from that."

To rationalize the investments, Starwood has joined Intel's Centrino wireless program, which will equip an additional 150 hotels in North America by the end of the summer.

The wireless housekeeping pilot, where cleaners and maids carry a Wi-Fi PCA, a device that connects them in realtime to room inventory, is another area where guest satisfaction and improved inventory management can be improved, he said. "This test went live about three weeks ago. If this is successful, it could potentially stand on its own."

"We are searching for that application. I don't see a killer app that will make the difference in our industry," he said. The other pilot, a Restaurant Point of Sale (POS) unit, allows servers and runners with wireless PDAs to quickly fill orders at resorts. "The runner is bringing the food and drinks much faster. It keeps our guests happy and that's crucial for us."

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