LodgeNet’s New Hospitality Business Model Gaining Momentum With Hoteliers

LodgeNet_logoOver 5,000 Rooms Contracted Under Hotel Investment Model in First 5 Months of 2009

Company Presenting at Noble Financial Fifth Annual Emerging Growth Equity Conference

LodgeNet Interactive Corporation today announced that over 25 properties representing more than 5,000 hotel guest rooms have been contracted under the company’s new Hotel Investment Model during the first five months of this year. Under this model, hoteliers purchase their LodgeNet interactive television system, pay the company an ongoing support fee and share a portion of guest entertainment revenues. LodgeNet expanded the scope of the Hotel Investment Model late last year in order to address the significant demand for its high-definition (HD) systems.

In return for purchasing the LodgeNet system, hoteliers are guaranteed an expedited installation of their system as well as receive greater control of programming content, pricing, and customization. Once installed, the hotel’s LodgeNet system becomes a revenue producing asset, enhancing the overall value of the property. As a part of this expanded program, LodgeNet has also made arrangements with 3rd party financing sources to allow customers to finance their system purchase. LodgeNet offers the Hotel Investment Model for its full line of interactive TV platforms including HD Advanced (coaxial or IPTV), HD-Ready and VOD Basic.

Speaking today at the Noble Financial Emerging Growth Equity Conference, LodgeNet Chairman and CEO Scott C. Petersen said that the company’s Hotel Investment Model contracted base represents a variety of hotels across a range of brands and market segments. Major properties contracted under the Hotel Investment Model this year include the Trump International Hotel (Hawaii), the Omni Shoreham Hotel (Washington, DC) and the Sheraton Fallsview Hotel (Niagara Falls). The company has previously installed its interactive television system under this innovative business model at the Venetian Hotel in Las Vegas and in Macao, China.

“Sales of interactive television systems under the Hotel Investment Model are an important component of our strategy to grow and diversify our revenues,” said Petersen. “During the First Quarter of 2009, LodgeNet generated revenues of $51.6 million, or 40% of total revenue, from its strategic growth initiatives, which represented year over year growth of 27% from non-guest entertainment sources.”

Petersen explained that LodgeNet launched the expanded Hotel Investment Model late last year in response to high demand from hotels for HDTV installations and upgrades. “In the challenging economic environment, all companies are looking for alternative approaches to how they conduct business. We have outstanding relationships with our customers and based on their feedback are pleased to be offering this new business model,” he said. “Our Hotel Investment Model has been well received and allows us to meet demand for our advanced television solutions beyond the confines of our traditional model.  In addition, this business model is part of our business strategy to generate greater cash flow without capital investment.”

Source: LodgeNet