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Hotel broadband market to experience rebirth in second half of ’02

The market for hotel broadband has been revitalized and is positioned for strong growth in the second half of this...


September 3, 2002  


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The market for hotel broadband has been revitalized and is positioned for strong growth in the second half of this year, according to a new study from In-Stat/MDR.

The Phoenix, Ariz. market research firm reports that while this space has a short, but rocky history, it has received a new lifeblood as applications for hotel broadband systems expand and business models evolve.

“The wounds, which hotels received from their broadband provider leaving their hotel with guest expectations yet no connectivity, are beginning to heal,” says Amy Cravens, an In-Stat/MDR analyst. “Not only are these scars fading, but hotels are also recognized, with renewed enthusiasm, the importance of broadband as a service offering in their hotels. With the negative business effects of Sept. 11 also beginning to lessen, and occupancy rates recovering, hotels are in a better financial position to consider these projects.”

However, despite the encouraging trend towards increased deployments, and the new perception that hotels seem to be forming of broadband deployments, there are several potential barriers that could slow the pace of deployment. These barriers include technology factors, business model concerns, and general market conditions that could negatively impact the growth and success of hotel broadband.

In-Stat/MDR has also found that:

* Broadband is still a differentiator among hotels, not a norm, and it is only the innovators that are introducing amenity broadband. Larger trends in the hotel and travel industries over the next several years, as well as the shape that mobile/remote connectivity takes, will drastically shape the evolution, and pace of this evolution, in the hotel space;

* In the early days of the market, most networks were based on ADSL technologies. An increasingly wider range of solutions is now being implemented, with a focus on higher bandwidth VDSL (typically Ethernet based). Over time, as many of the base of existing candidate hotels are deployed with a solution, the market will largely be driven by new builds, which will likely be wired with CAT 5, shifting the market towards Ethernet;

* Growth in ports shipped is expected to be strong in the next couple of years, as hotel contracts just began to re-emerge in March 2002 and negotiations are just now being completed. The number of ports will continue to grow after 2003 at a fairly stable pace of 250,000 ports per year, resulting in total worldwide shipments in 2006 of just over 1 million ports;

* Equipment revenue growth will largely follow the trend in port shipments, with high growth in 2002 and 2003 as the market builds. By 2006 the market will approach $286 million in annual equipment revenue. The largest contributor to this market, throughout the forecasted period, will be the North American market.

Further information about the report is available at www.instat.com.