In-Stat/MDR Reports Infant Hotel Broadband Market to Experience Rebirth in 2H 02

SCOTTSDALE, Ariz.--Despite the devastation that the hospitality market experienced in late 2001, the market for hotel broadband has been revitalized and is positioned for strong growth in the second half of 2002, according to In-Stat/MDR (www.instat.com).

The high-tech market research firm reports that while the hotel broadband space has a short, but rocky history, with the combined effect of an unsustainable business model and lower occupancy following Sept. 11 nearly destroying the infant market, the market has received new lifeblood as the growing demand for remote broadband access continues, hotels continue to become increasingly competitive, 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," said Amy Cravens, an analyst with In-Stat/MDR.

"Not only are these scars fading, but hotels are also recognizing, with renewed enthusiasm, the importance of broadband as a service offering in their hotels. With the negative business effects of Sept. 11, 2001 also beginning to lessen, and occupancy rates recovering, hotels are in a better financial position to consider these projects."

However, despite the encouraging trend toward 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 toward 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, specifically the United States.

The report, "Pay-per-View or Free Shampoo: Where is Hotel Broadband Headed?" (#IN020165MU), discusses the trends driving hotel broadband and the expected resulting growth in equipment revenues, service revenues, take rates, and penetration.

To purchase this report, or for more information, please visit: or contact Matthew Woods at [email protected]; 617/630-2139. The report is priced at $2,995.

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In-Stat/MDR (www.instat.com) offers a broad range of information resources and analytical assets to technology vendors, service providers, technology professionals, and market specialists worldwide. The company stands alone in its ability to integrate both supply-side and demand-side research methodologies into a single comprehensive view of technology markets and products.

This capability relies on a unique ability to cover the entire value chain from engineering-level technology, through equipment, infrastructure, services and end users.

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