IS IT TIME FOR ADULT MOVIES TO GO?

Hotel companies have realized they risk becoming commodities unless they forge emotional connections with their customers. Hotel brands are increasingly focusing on creating an experience that lifts the spirit by adding spas, focusing on healthy lifestyles through exercise and healthy menus and removing smoking rooms.

Having upgraded their service offerings (things like bedding, showers, high-speed Internet access and flat-screen TVs), hotels are looking to engage at the next level and connect to the softer side of the hotel experience and build brand loyalty without competing on price.

So where does providing adult pay-per-view movies fit in? It doesn't. So why don't hotels just remove them? They can't, and here's why.

The in-room entertainment business, which has been around for 35 years has a simple business model: Providers install PPV systems at no cost to the hotel and give the property up to 40 percent of the revenues generated. In return, the hotel signs a long-term contract, usually seven years.

While the pay-per view providers tout their major motion picture line-up, that's really a break-even proposition at best, because while the guest is paying per view, so are the PPV providers as they must pay the studios a fee each time a movie is viewed.

Not so with adult programming. Providers license adult movies for a fixed fee and then show them as many times as they want. After the one-time license fee is paid, the marginal cost of showing an adult movie is practically zero, so at $12.95 a view it's a very profitable business. If hotels just remove adult movies, they'd also give up substantial movie commission revenue, and their “free” PPV system in their hotels would no longer be free.

Everything else a PPV provider provides to hotels (like free-to-guest premium cable channels, wireless keyboard TV internet, video check-out, music on demand, video games) is either an expense or is unprofitable. The new Guest Connectivity Center features we saw at this summer's HITEC that allows customers to plug their own content into digital guest-room TVs may eventually hurt PPV viewing levels and revenues. The only thing keeping PPV providers in business is adult movies.

As more people carry their own content on PCs, iPods and other devices, time may solve the issue of adult movies in guestrooms. Brands have been called a set of shared values. Adult movies in major brand hotels was probably never a great idea. But now, as hotels move to nurture a positive lifestyle experience and create an environment of health and wellbeing for its guests, it may be time for in room adult entertainment to go.

Will major hotel chains and independent hotel owner/operators forego PPV profits to enhance the integrity of their brands and hotels? As they say in TV land, stay tuned.


Hospitality consultant Dennis Koci recently retired from Hilton Hotels, where he was senior vice president of operations support. He can be reached at 310-440-3040 or dennis@denniskoci.com

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