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Comcast Snares Hotel Deal

Alan Breznick
5/15/2013
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Feeling quite hospitable after a strong first quarter, Comcast’s business service unit is delving deeper into the hotel market. Comcast Business announced a deal late Tuesday with Raymond Management Company, a Midwestern hospitality real estate developer and management firm, to supply data, voice and video services to seven hotels in the greater Chicago area and Ann Arbor, Mich. The contract covers about 1,000 rooms across the seven hotel properties. Financial details were not disclosed. Under the pact, the MSO’s Comcast Business Hospitality unit will provide the hotels with an integrated package of voice trunking, Ethernet-based Internet and HDTV services for their guests. Like such fellow MSOs as Cox Communications, Comcast recently launched the hospitality division to move more aggressively into the promising hospitality services market. (See Comcast Checks Into New Revenue Stream.) LodgeNet, the largest incumbent player, has dominated the hospitality market for years. But with LodgeNet just emerging from Chapter 11 bankruptcy reorganization in March and hotels scrambling to upgrade their services and capacity for business travelers and vacationers, competitors see opportunity. Raymond Management executives, who run 28 Midwestern hotels under such well-known brands as Hilton and Marriott, said they chose Comcast because they were seeking a way to deploy high-capacity Internet, voice and HDTV from one vendor. In particular, they wanted one supplier for multiple properties. The deal caps off a strong period for Comcast’s business unit. In a report issued earlier this week by Infonetics Research, Comcast Business ranked as the top provider of hosted VoIP services for the second year in a row, beating out 8x8, Verizon Communications and West. Plus, two weeks ago, Comcast reported that its business services arm raked in a record-high $741 million in revenue during the first quarter. That puts the MSO on a pace to reach, or even clear, the $3 billion mark for commercial services revenue this year. (See Comcast Mines Business & Home Services.) Why This Matters While it’s relatively small, this hotel deal matters not just because it will generate more business services revenue for Comcast. What’s really notable is that it marks an incursion by a large MSO into a major new vertical market. Up to now, most cable operators have focused their business services efforts on four main verticals -- financial services, government agencies, educational institutions and health services. This deal also matters because it shows how Comcast and other MSOs can leverage their growing expertise in Ethernet services to capture more midsize businesses (firms with 20 to 250 or more employees). Riding the early success of their flagship Metro Ethernet service, Comcast officials say the middle market now generates about 15 percent of their total commercial services revenues. — Alan Breznick, Cable/Video Practice Leader, Light Reading

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