Thursday, May 19, 2011

Hotels’ Wake-up Call: Illegal Downloads

What’s as bad as bedbugs for hotels today? Like bedbugs, this threat is invisible when guests check in and the consequences may not be evident until long after the guest leaves. It’s extremely costly, with loss of revenue and legal costs. (Yes, it’s so nasty that lawyers are involved.) It’s a growing trend: video downloads on your network.

It started off innocently enough. Once upon a time, hotels had a nice revenue stream from pay-per-view films. Travelers who wanted to relax in their room had a few options: the regular TV programming, the book they may have brought, or splurge for a pay-per-view movie.

Then the internet revolution came about. Hotels began offering internet access in response to demands from business travelers and others who wanted to keep up with emails and their favorite websites. Then the availability of high quality video downloads and new devices with higher resolution began to change the game. Instead of paying for pay-per-view movies, guests could download videos for free on their own notebooks or iPads.

What does this mean for hotels? Colliers PFK Hospitality Research reports that hotel revenue from pay-per-view films has shrunk by 39%. Their study shows that in 2000, each hotel room would collect approximately $288 in pay-per-view revenue annually. Today, the average hotel room collects only $175 annually. The likely cause of this decline in revenue is the many alternatives found on the Internet for videos, gaming and other on-line entertainment.

Even more ruinous, many of these downloads are illegal downloads of copyright protected movies. Hollywood is becoming aggressive in pursuing perpetrators. Film producers are hiring law firms such as one known as The U.S. Copyright Group to issue subpoenas to internet service providers and get the names of individuals who downloaded these films. For hotels, that ISP address is under their name, and is their responsibility. Fines range from $1,500 to $2,900 or more per incident, or defendants could face even larger fines in court. While this type of tactic may not bear up under the scrutiny of higher jurisdictions or legal reviews, the risks remain the same, whether for an individual or a hotel management group: downloading of illegally-obtained copyrighted materials may be bad for your health and your wealth, if the lawyers have their way with you. (To see what one company is doing to offer hoteliers a sound solution go to:

Naturally, for hoteliers there’s the ongoing challenge of finding a way to provide the guest with good service, ample access to the Internet and still protect the institution from legal problems. Hotel IT administrators: this is your wake-up call. Make sure you are blocking illegal downloads on your network. Secure your network and sleep well at night: just don’t let the bed bugs bite.(that’s another worry for hoteliers, but not the topic of this post, by the way).

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