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Hotel Telephone Revenue Project

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  • #35568

    Alexandros
    Participant

    Over the last 3 years, Hotels like the one I work for have experienced a drop in Revenue from Telephone calls made by our guests. This is largely attributed to the proliferation of mobile phones.
    I have been assigned a project to stem this decline. What kind of  VOC should I be collecting? Probably some of you travel a bit and use hotels, what would encourage or discourage you from using the hotel phone?
    Has any of you worked on a similar project using Six Sigma? What were the results and what do you advise that I look out for?
    Thank you
    Alexandros

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    #100409

    Bob J
    Participant

    Alexandros,
    I would be very careful with this project.  Current reality is that cell phones are easy to use and convenient ways to stay in touch and a critical lifeline in todays business (and personal) world.. 
    Unless you can build a value proposition around why I would want to use a hotel phone over my cell phone, I will not be motivated to change my behavior. 
    You don’t want to be improving the buggy whip when everyone is buying cars….
    On the other hand, I do count on computer connectivity when I travel so I can access my EMAIL etc.  Many hotels have realized this and provided CAT5 or 802.11 connectivity and I often pay for it.  The point is that if you look at a larger opportunity such as connectivity revenue you might be able to make some headway. 
    Hope this helps…
    Bob J
     

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    #100414

    Ken Feldman
    Participant

    DUH!!!!! Look at the ridiculous charges and surcharges and more charges for calls made on a hotel phone.  My company provides a cell phone so why would I ever use the hotel phone except maybe for free local calls.  And unless some of the connectivity charges for high speed computer connections come down, I refuse to use those either.  I would rather do a PAL dialup with a local number to pick up a few emails than pay a large amount for “all day” service when the reality is that I might use it for 30 minutes not all day.  By the way, I travel over 70% of the time so I am a potential customer.  My suggestion is to forget about phone revenue, it is a thing of the past.  Try ripping off the customer through other means.

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    #100415

    Line Wiegandt
    Participant

    Hi Alexandros
    An interesting project, where I think you need to really get out of your box. What is it the customer wants? Is it a telephone, or is it connection to other people? As one suggested, connectivity may well be your area, rather than a phone. Or – it could be cost driven, despite the fact that mobile phones are often expensive too – it’s just from a different account. At least, it is for me. No one questions my mobile usage, but hotel phones have notoriously been known to be very expensive.
    Perhaps offering a mobilephone from with the room might be an idea? With a local call rate, for international travellers it is extremely expensive making calls from abroad, and you also pay for incoming calls- one they can take with them around the town – maybe on a pay as you go basis etc.
    Again, ask your customers what it is they want or need. But you will also need to work hard on changing the perception/actuality that hotel phones are more expensive.
    Good luck
    Line Wiegandt

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    #100472

    Alexandros
    Participant

    Thanks to all who have responded, your input is invaluable. While the telephone revenue has dropped it is still an amount that Hotel Managers fear to lose. They have therefore resisted proposals to reduce hotel telephone charges citing the possibility that guests may still shun the phones for historical reasons (they are expensive).
    The idea to provide alternative connectivity e.g CAT5 and 802.11 is welcome and has already been implemented in a growing number of hotels.   Its application still has defects due to the desparate models of laptops, operating systems and even Network Interface cards out there. We even have user group restrictions from Company IT Managers to contend with. Revenue from this avenue though, is not viewed as a replacement to what was lost from the phones. This puts pressure on finding a way to exploit the in room phone.
    Thanks for any comments.

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    #101476

    Concerned
    Participant

    Without going into detail and using six sigma, perhaps
    people should use the old fashioned logic thinking. Calls
    from the Hotels cost more than using an outside land line
    or mobile. (I use my mobile as my tariff has free calls).
    Hotels should therefore reduce the cost of their calls, and
    maybe clients may start to use them again.
    Is it profit over customer requirements?

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    #101478

    Szentannai
    Member

    Hi Alexandros,
    maybe it is only my impression but it seems to me that you already have some pretty tough constraints around your project, with some investigation directions already shut?
    I’d try in your place to simply do a very correct VOC with lot’s of data an go to where the data leads me . If this will be something like “there’s nothing the customers want from a hotel phone that they can not get cheaper by using their own mobile” then that’s what you have to tell the management and maybe provide some ideas of where to focus the improvement effort instead.
    Six sigma will probably not work, as it seems to be the expectation in this case, by magically making the customers want to do something that is unreasonable :-))), altough it migh prevent management from doing something unreasonable if they are prepared to listen to the data :-)).
     
    Regards
    Sandor

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    #101483

    AJ
    Participant

    mmm…let’s see…why would I not use the phone in my room?

    Surcharge of 60% on long distance
    Local calls at 75 cents each
    In these days of corporate cost savings initiatives (6 sigma for example), how would I ever justify spending on these exhorbitant mark ups?
    I would agree however, with other comments that providing high speed internet access has some value that I would pay for…with the caveat that I would need to perceive the benefit of this service as a better alternative to paying 75 cents connection fee for my global dial-up.

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    #101492

    Fernando Gutierrez
    Participant

    One thing that discourages me from using the Hotel/Motel’s phone is that of the higher cost associated with using it.  Until the cost comes down and is comparable to cell phone use (my current cell phone plan does not include out of state calls hence I would have to change my plan when I go on out-of-state trips which means more $$$) the cell phone is still the preferred option.  Hope this helps out.

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    #101496

    Creative Thinker
    Participant

    Alexandros,
    Try installing magnetic shielding around the hotel’s exterior so that no one gets a cell phone signal. Or, give escort service credits proportional to minutes used on the land line.

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    #101500

    Hitendra Bhambhani
    Participant

    Dear Mr. Andrew –
    6 sigma or no 6 sigma – one has to understand the business – if cell phones are cheaper than than the hotel phones, then people will certainly not use the hotel phones for making external calls. Even if you improve the services of the phone, money talks and acts. You make the phones cheaper than the cell phones – every body will use it.
    Drop the cost of phone tariff to half the rate of the mobile phone. Add the cost in the room rent. Your phones will be used without adversely affecting the room tariff.
     
    All the best … Hitendra Bhambhani
     

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    #101509

    Greg Crow
    Participant

    Whilst mobile prices do tend ot be lower than hotel rates you will find that dropping hotel tariffs below mobile rates will produce a drop in revenue and profit – don’t ask me why but people still use the hotel phones. 
    The question is one of priorities – if your internal CTQ of revenue/profit overides the guest CTQ of cheap calls (which it sounds like it does) then I would focus VOC gathering on the potential value added services your guests may require e.g. wireless handsets for the rooms, ability to conference call from the phones etc…  An alternative would be to focus on the internal VOC which would probably be revenue from calls, cost reduction in phone line rental etc…
    It all depends on where your sponsor wants to take the project.
    Hope this helps.
    Greg
     

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    #101516

    sixsnoopma
    Member

    Alexandros,
    An additional characteristic of the VOC is what market your hotel is in.  Are you family-based, business, vacation hotel (chain)?  If so, you have to cater your usage of the phone lines or internet connectivity accordingly.  For example, if you are a family-based hotel, guests may be more likely to use internal phones for ordering pizza for the family.  If it’s a vacation resort, guests aren’t as likely to have their cell-phones or laptops therefore requiring in-room phones and no connectivity to CAT 5 or 802.11.  However, both of these requirements (or lack thereof) are drastically different from a business chain. 
    Long story short, make sure you have adequately judged your niche in the market.

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    #101517

    Reinaldo Ramirez
    Participant

    I suggest to change the system to a mobile-like service included in the rate of the room with not additional expenses or paym,ents.
    How to do? It´s an out of the box thinking.
    Reinaldo

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    #101519

    Resident
    Participant

    Define: I would start with a questionaire for customers. How do they communicate to others while staying in the hotel and why they use a particular method (mobile, fax, pay phone, hotel phone, etc.)?Also already existing reports in that matter might contain helpful hints.
    Measure: Collect data.
    Analyze: How do all the other methods stack up against the hotel phone usage? Here is where you should find your answer, why revenue for hotel phones are dropping.
    Improve: Insert your idea here.
    Control: Control the measures to facilitate your idea.
     

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    #101543

    Deanb
    Participant

    I think Creative Thinker is on the right track, in part. You can go down a “defensive” path to boost hotel phone usage, such as by shielding mobile signals, offering no open recharging outlets in the rooms, etc, which work to force customers to default to more hotel phone use out of shear necessity.  This might be considered “hostile” or “anti-customer” so do defensive strategies with care.
    Obviously the landline hotel phone has traversed far into a highly mature/declining Product Life Cycle stage, meaning its elasticy of demand is highly inelastic (will not respond to price cuts, so do not cut prices hoping for a boom in revenue growth). Rev maximization here depends on channelling a few poor fools to your expensive phones who have no other option.
    Another strategy worth considering is the “offensive” path, where you look for more product/service revenue streams that fit customer needs, such as more movie options, more pay-per views, cable music channels, laptop rentals, office/copy services, FAX, currency exchange, etc, that start new possible Product Life Cycles. The key here is doing the research to know what your customers’ needs are.
    Managing defensive and offensive revenue strategies here may be more about marketing research, demand elasticity analysis and product mangement skills, than six-sigma as we know it. I fear six-sigma thinking could be too constraining here, and could possibly lead you into flat out wrong thinking if you are not careful. Good luck on this one.

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    #101548

    Jonathon L. Andell
    Participant

    This has been a fun discussion thread to read! Since my propensity is to point out the obvious, here is what seems to have been said so far:

    One (outrageously overpriced) revenue stream is drying up because customers found a competitive alternative.
    Attempting to prevent customers from accessing said competitive alternative may have short-term benefits, but is likely to have bigger long-term penalties.
    Increasing what is charged for some other revenue stream (like the $3 can of soda pop) is unlikely to work well.
    If you want to make some money, be creative and competitive in providing something customers might be willing to pay for. With thanks for a good laugh regarding the escort service, be sure to seek services that most hotel guests might find useful…
    This sounds like an exercise in understanding customers, and in developing creative solutions. Six Sigma is among the approaches that can get you there, but be willing to consider alternative approaches. No, this project does NOT sound like DMAIC, because the cause of the reduced revenue is no mystery.

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    #101607

    Arora
    Participant

    I agree with Jonathan.There is no mystery about the cause.It’ s evidential.Infact, 100% of the votes from this forum suggest that the using hotel phone is economically unjustifyable when one can use a cell phone at his convinience at a lower cost.
    MEASURE whats the Profit/call in your current tariff?. Find out the customers/calls ratio. For instance: If your profit/call = 1$ and the customers/calls ratio = 100(1 call is made out off 100 customers), then you reduce profit/call to 0.5 or less and increase the customers/call to 500. This would earn more profit.
    Best way to start is to ask your customers to fill in a questionaire when they walk in/out which should give you what tariif they think is competetive(give them options).You can then try the ‘pilot-phase’ of it and see if the customers/call is increasing to profitable levels.
    Regards,
    Kris

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