Choice Creates Its Own Technology Company For In-Room Internet Access

SILVER SPRING, MD Choice Hotels International has created its own technology solutions company, Stay Connect, which will supply 50,000 of its guestrooms with high-speed Internet access. The strategy is part of an overall trend of hotel companies moving to take supply matters into their own hands, rather than surrender business to third party vendors. Rumors in the industry abound about a group of hotel corporations joining to form their own on-line reservations site. Marriott International and Hyatt meanwhile, have formed their own alliance that will give them volume and cost-savings benefits in the purchasing arena. (See story, page 1). Choice s recent move is part of an overall strategy to integrate e-commerce into its corporate strategy, which also includes creating the new corporate position of senior vp/e-commerce and emerging business opportunities, which has been filled by Dan Rothfeld, Choice s former vp/partner services, who now reports directly to Charles Ledsinger, Choice s president and CEO. We have spent the past 16 to 18 months doing due diligence on how to create a better model focused against the hotel owner which will increase their RevPAR and daily room rate, said Rothfeld. Stay Connect is an independent operating company owned by Choice with a minority investment by Baron Capital. Since it is independent, Choice will treat it as an endorsed supplier with access to the franchisor s 3,700 domestic Comfort, Quality, Clarion, Sleep, Econo Lodge, Rodeway Inn and MainStay Suites brand hotels. Stay Connect s initial efforts will be to supply turn-key services to Choice Hotels, which include installation of in-room Internet PCs and a 24X7 help desk. Stay Connect is also developing a Choice-branded Internet portal that will be connected to the hotels property management systems (PMS), which will allow portals to be customized for guests upon check-in. Thirty percent of the Stay Connect-enabled Choice guestrooms will be supplied with in-room PCs; the remaining rooms will have hook-ups to high-speed Internet access for those travelers carrying their own laptops. Pairing With Good Vendors Darwin Networks, the broadband provider, has been selected to provide the entire telecommunications infrastructure for Stay Connect, while Compaq will supply the in-room Internet PCs. That equipment will be in the form of iPAQ Desktop PCs. In explaining why Choice decided to become so closely involved in the supplying of in-room Internet access to its franchisors, Rothfeld explained that Stay Connect is actually a product borne of Choice s knowledge of the hotel industry as well as a series of key alliances. We re taking our hospitality knowledge and applying that against some very good players, he said. We are partnering with Darwin Networks, the second largest broadband provider to the hospitality industry, and we are partnering with Compaq Computers, the number-one equipment provider. The goal here is combine our knowledge of the hospitality industry along with key players in the telecommunications and computer arena so that we come to market with a solid business solution. Choice said that in beta testing in-room PCs at select properties, it found that the product was used 52% of the time, for an average 67 minutes per session. Choice, meanwhile, is addressing the technology issue in other ways as well. Indeed, Rothfeld described the company s e-commerce strategy as being four-pronged, which he in his new duties will oversee. I am responsible for leveraging Choice s existing size and scale to create distribution opportunities that are out there, he said, noting the volume power Choice s 2,200 domestic licensees brings to the table. One prong of the e-commerce strategy, he said, is to continue to evolve the Choicebuys.com e-procurement system which debuted in April 1999. Fifteen hundred properties, or 55% of domestic licensees, are currently using the system regularly, he said. Choicebuys is now providing services to

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