BETHESDA, MD—Following reports yesterday that an unnamed hotel chain customer of in-room television and internet provider LodgeNet that was planning to phase out in-room porn, Marriott today said that it was the chain in question.
But the company announcement also strongly implied, though it did not actually say so, that existing rooms will continue to serve adult fare while new rooms being built over the next several years will not.
Indeed, the announcement made to USA Today also augurs more access to adult content in Marriott rooms rather than less. Considering its stated commitment to upgrading digital technologies that will supersede the traditional way in which video and other forms of in-room entertainment have been made available to customers, Marriott's guests should have unlimited access to content of all types for years to come, a prospect that has the company taking an understandably defensive position.
"It is our practice to keep adult content out of the reach of children and unavailable to any adult who chooses not to view it. We have strong controls in place that allow guests to block these materials,” the company said in response to a query by USA Today. “Changing technology and how guests access entertainment has reduced the revenue hotels and their owners derive from in-room movies, including adult content. We are working with in-room entertainment providers and technology vendors to transition to the next generation of in-room entertainment. This new platform of Internet-based video-on-demand will facilitate our exit from the traditional hotel video systems that included adult content in the menu selection, and will also provide guests greater choice and control over what they watch across our system.
As we transition to this new platform," it added, "adult content will be off the menu for virtually all of our newly built hotels. Over the next few years, this will be the policy across our system."
It is the off-the-menu move by Marriott that no doubt contributed to the initial confusion and drama that followed a Wall Street analyst’s report Wednesday saying that a leading chain was removing “mature” content from the video-on-demand menu, resulting in a 17 percent drop in the price of LodgeNet shares. The Wall Street analyst did not name the chain, but Barbara De Lollis of USA Today surmised that is was Marriott or Hilton, each of which accounts for 19 percent of LodgeNet serviced hotel rooms, or Intercontinental, which claims a 10 percent share.
LodgeNet issued a hasty press release, defending its position, saying, “The Company stands behind its guidance, and has not adjusted its projections or outlook as a result of the agreement referenced in the report. The information in the report is not expected to have any impact on the Company’s covenant compliance.”
In-room spending on adult fare is not inconsequential, even if the manner in which people get the content is going through a profound transition from paying for passive VOD offerings to using internet access to either pay for online content or get it for free. Either way, the latter options remove historically significant revenue from the hotels as well as the content distributors and the studios they distribute. The move from VOD to IPTV by the hotels would seem to be a necessity rather than a luxury.
According to De Lollis, “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 percent to 90 percent 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.”
The same article also states, “The analyst report in question assumes that a full 50 percent 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.”
In the current economy, with the hotel industry just starting to see improvements in occupancy rates after several years of decline, revenue from in-room entertainment is and will continue to be a vital component of a healthy bottom line. Similarly to how adult webmasters find themselves working doubly hard to maximize the retention of (and revenue drived from) their current members, hotels probably need to do the same with their individual guests.
It is no wonder, then, that Marriott has made the commitment to cutting edge technologies that meet the needs of today’s more demanding and value-seeking fans of in-room entertainment, especially with respect to adult offerings. The sad fact is that they, too, have to provide more access, quality and value if they have any hope of staving off the yawning specter of guests bypassing them completely in favor of unlimited (and often free) online content.
