Vegas hotels find cell phones cutting into guest room charges

LAS VEGAS (AP) -- With each ring, cellular phones are eroding the earnings of southern Nevada hotel and motel operators and their peers around the globe.

Last year, telephone revenues at approximately 4,000 U.S. hotels were $212 million, down 22.4 percent from the $273 million reported in 2001, according to a study by the Hospitality Research Group of PKF Consulting, an Atlanta-based organization that monitors the hotel industry.

"Revenues from hotel communication departments have been sinking like a stone over the past few years because of cell phone usage," Jack Corgel, PKF managing director, told the Las Vegas Review-Journal in a Monday report. "Fortunately it's not the bread and butter of the (hotel) industry."

While telecommunications accounted for only 1.8 percent of the industry's $12.2 billion total revenues last year, guests' reluctance to pay often-expensive in-room telephone fees presents another challenge for an industry that's still trying to overcome recent reductions in worldwide travel.

Like mini-bars and pay-per-view movies, in-room telephone connection fees and long-distance charges help a hotel's revenue per available room.

In recent years, though, the use of cellular phones, pagers and personal digital assistants such as the Palm Pilot or BlackBerry has cut into that figure.

The Washington, D.C.-based Cellular Telecommunications & Internet Association said nearly 145 million Americans now subscribe to a wireless communications service. In early 1993, the number was a little more than 10 million.

Jim Bowen, vice president and chief financial officer at the Hard Rock Hotel in Las Vegas, said his 657-room hotel saw an approximately $100,000 decrease in telephone revenues in the first quarter of 2003 compared with the same period a year ago.

"As the cellular telephone trend keeps growing, we, like most of the other casinos, are experiencing some decreases in our phone revenues," he said.

With quarterly net income about $2.6 million, the Hard Rock's failure to maintain its previous telephone revenues reduced its earnings nearly 4 percent.

Officials at the MGM Mirage and Venetian hotel-casinos on the Las Vegas Strip said they were looking toward in-room, high-speed Internet connections to offset phone-related losses.

Kurt Ouchida, spokesman at the Venetian, said his 3,036-room resort also balances lost telephone revenues with fees generated from the use of in-room fax machines, a popular amenity for business travelers.

Amy Cravens, an analyst with In-Stat/MDR, a Scottsdale, Ariz.-based communications research firm, said diminishing telephone revenues could lead more hotels to install in-room broadband Internet connections.

"Hotels, especially those that cater to business travelers, see that their guests are demanding that type of service," said Cravens, who added many business travelers now ask for in-room, high-speed Internet access.

Some hotels are also letting cellular service providers put transmission towers atop their buildings, said Bear, Stearns & Co. analyst John Mulkey.

Ouchida said the Venetian in March 2001 worked with cellular providers to boost reception inside the hotel -- in return for a portion of cellular company profits.