Voice over Internet Protocol (VoIP) - From an Hotelier's Perspective.
By Sachin Suri
Sunday, 18th June 2006
E-mail and cellular phones have replaced the telegram as a method of delivering information, and VoIP is going to have the same impact on the current worldwide telephone system. Making the migration strategically will be essential for hoteliers. 

On January 27, 2006, Western Union discontinued its telegram services. It should come as no surprise that e-mail and cellular phones have replaced the telegram as a method of delivering information. VoIP is going to have the same impact on the current worldwide telephone system (known as the PSTN or public switched telephone network). Although it will not happen overnight, making the migration strategically will be essential for hoteliers.

What is VoIP?

VoIP allows you to make telephone calls using a computer network, over a data network like the Internet. VoIP converts the voice signal from your telephone into a digital signal that travels over the internet then converts it back at the other end so you can speak to anyone with a regular phone number.

When placing a VoIP call using a phone with an adapter, you'll hear a dial tone and dial just as you always have. VoIP also allow you to make a call directly from a computer using a conventional telephone or a microphone.

In order to view VoIP from an hotelier's perspective, we first need to look in the context of the broader consumer and business sectors and then consider how those issues apply. After all, consumers and business travellers are our intended guests.


Currently, virtually all homes have been cabled with analog cabling while data requires a better quality of cable. Most new home construction is continuing this legacy installation practice except in high-end developments where some data cabling is installed as well. Businesses have virtually all been retrofitted with data cabling to all work station locations and now have parallel cable infrastructures for voice and data. New construction is continuing this parallel installation, but VoIP now makes it possible to eliminate this dual cabling requirement.

Hotels are truly a blend of both scenarios. Hotel rooms have been traditionally cabled in a similar fashion to homes and the administrative locations are installed as in any other business. New construction is, or should be, following the same approach as other businesses are realizing the cost savings of avoiding parallel cable infrastructures.

Additional construction savings can be made due to the recent advent of IPTV, or television signal over a data network, which will also eliminate coax cabling, the traditional method of delivering TV signals. Reducing the wired infrastructures from three to one will not only reduce construction costs, but also ongoing maintenance. The ability to connect any required device to the same cable network will enormously enhance flexibility as well.

Savings Opportunities

For today's traveler, telephone service is as much as part of a hotel stay as a bed and a hot shower. But hotels have traditionally had to charge high rates for phone service because of their own costs (which include high-capacity trunk lines that are often under-utilized) and their need to ensure that those services are sufficiently profitable. These high rates have not been popular with guests.

However, because hotel chains have so many locations – and because those locations are typically connected via an IP network that supports the chain's data services – an important new communications opportunity has emerged. By utilizing that IP network to carry the long-distance portion of guests' voice calls, hotels can significantly lower their telecom costs.

In fact, those savings can be substantial enough to allow hotels to pass a significant percentage of those savings on to their guests and still increase their per-call profits. This opportunity is particularly lucrative for hotels with multi-national locations and sufficient spare capacity on their IP networks. International call can be extremely expensive, especially in countries that still have regulated monopolies in place.

The use of a hotel's corporate IP network allows the expensive monopolies to be bypassed. This voice-enabling of the IP network can also be used to eliminate long-distance charges for calls between hotels themselves, as well for forwarding calls from a hotel chain's call center to its individual locations and vice versa.

Investment and Cost of Ownership

Traditional PABXs are proprietary in design and, apart from guestroom analog phones, so is virtually all of the hardware. The buyer is locked in to single source pricing for ongoing maintenance, parts and upgrades. Additionally, although they traditionally have been perceived to have the benefit of longevity, you still have the same basic system 10 years later and it is not reflective of the current and foreseeable rate of technological change.

IPT systems are essentially network servers and switches, and the software is being written primarily for open platforms. This makes them far more flexible and easily upgraded as the individual components can be modified or replaced with relative ease. Since the components are not proprietary, maintenance, parts and upgrades can be competitively sourced. Over time, this will not only reduce the ongoing cost of ownership, but also ensure that the system can be regularly refreshed and that after 10 years it is still a current solution.

Also important from a labor standpoint, the skill set needed to manage the system is largely the same as that required to manage the network overall. This reduces the diversity of skills and personnel required to support and maintain the system whether they are internally or externally sourced.


Scalability is the primary area where VoIP can bring significant benefits and cost savings to business enterprises, including hotels. When VoIP calls need to eventually connect to the PSTN, costs are accrued, but when VoIP calls remain within the data network from end-to-end, they are free. Businesses with multiple locations can eliminate all internal administrative long distance charges which, while low domestically, can still be significant. These savings are considerably greater when the business enterprise is distributed globally.

VoIP offers features to small enterprises that are typically only found in much larger and expensive PABXs. Many individual hotel properties have historically had to install PABXs that were oversized, and therefore overpriced, but essential to deliver the services required. VoIP systems can offer better priced solutions tailored to individual enterprises, while still offering the required, and often richer, feature sets. When scalable applications are coupled with the elimination of redundant cabling infrastructure, expansion becomes simpler, both small and large businesses can operate more efficiently at a lower cost.

Service Offerings

A much hyped aspect of VoIP/IPT has been the ability to deliver enhanced services to the guest and to the operation in general. To a large extent these benefits have not yet been realized and the killer apps have not been identified, but that does not mean they will not. VoIP/IPT simply introduces the potential for an IP device to replace the traditional analog device in the guestroom for voice communications. What the device looks like and what else it can deliver beyond voice is, and should be, largely outside the realm of IT and in the hands of those who can understand, develop and deploy targeted, guest centric product solutions. As IPT implementations continue to grow, the opportunities will be identified for enhanced service solution development.

VoIP and IPT have converged with data services and how we communicate is changing. It is now possible, and becoming increasingly functional, to simultaneously utilize text, voice and video messaging with application sharing and conferencing. Consumers and business travellers are increasingly becoming savvier in the use of these tools and expect to be able to shape their own communications environment. Hoteliers need to enable their guests' ability to do so and find ways to provide enhanced services and find potential revenue streams in the process. The fundamental hospitality requirement to satisfy guest needs will drive the services and solutions to be developed.


VoIP is not without potential challenges and these need to be understood.

  • Quality of Service: The first is quality of service (QoS), or the quality of the call connection itself. VoIP requires a robust network to avoid quality of service (QoS) issues and dropped calls. If the wireless coverage is less than perfect in the home environment, the consumer can make the choice of correcting it or living with it. The same issues will not be tolerated in the guestroom or business so the deployment must be carefully planned.
  • Robustness: One of the inherent advantages of the PSTN has been that it is self-powered over its own analog cabling. Digital telephone sets used primarily for administration have typically been line powered as well. Traditional PABXs have always had robust power backup capacity to ensure that in the event of a local power failure, telephones still operate. IPT implementations do not yet have the same level of redundancy that is an assumed requirement of a telephone system. The system must be supported by UPS units not only at the core, but also at any point where a network device is connected to a power source. This is absolutely key as a fire/life/safety issue in hospitality and should be as important in the consumer and business verticals as well.
  • Security: As with any data service, security is essential to prevent eavesdropping and unauthorized access to the network and, in particular, wireless deployments. An advantage, however, that has been previously referenced is that the same personnel responsible for network security in general will manage the security concerns. Voice security then becomes a recognized element of an enterprise's overall security strategy.
  • Emergency Services: Not all VoIP services connect directly to emergency services through 9-1-1.
Challenges mentioned above continue to be an issue for many VoIP vendors, but the necessary changes in the technology architectures are being resolved. Any system should be thoroughly tested and certified in advance so it meets current and predicted emergency response requirements.


By virtue of their numerous locations, hotels have a tremendous opportunity to bypass national and international long distance carriers by using their existing IP networks to carry voice traffic. Barriers to such a bypass strategy include risk of call-quality degradation, concerns about management complexity, and the need to minimize disruption of existing infrastructure, so the deployment must be carefully planned.

The key is to proactively consider how best to move your hotel along a path that most efficiently utilizes the benefits of the new technologies. The speed of change will be fast enough, though, that no hotel should take a wait and see attitude toward VoIP adoption. From a technology viewpoint at least, no one wants to be known as the last customer to send a telegram.

Aspects of these considerations may change with new developments in internet technology. You should always check with the VoIP service provider you choose to confirm any advantages and limitations to their service.

Mr. Sachin Suri
HVS/American Hospitality Management Company, Operations (HVS Internal), New Delhi, SSuri@HVS.com

Excerpt permission granted by Hospitality Upgrade, May 2006. The author of the article, "The Truth About Voice Over IP," Douglas Clark, can be reached at dclark@tyleryan.com.
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