With a flat-panel television installed in nearly every hotel room in North America, TV brands catering to the hotel TV market will have to work harder to expand in 2012 after celebrating solid double-digit growth last year, according to an IHS iSuppli Digital Signage & Professional Displays Market report from information and analysis provider IHS.
Shipments in 2012 of flat-panel televisions comprising both liquid crystal display (LCD) sets and plasma models into the hotel TV market for the United States and Canada are projected to reach 1.21 million units, up a relatively tepid 7 percent compared to the notable 28 percent increase achieved last year. Growth in the North American market also will continue to moderate in the following years ahead, with expansion from 2013 to 2015 hovering in the 4.0 and 5.5 percent range. The forecast numbers, which do not include any in-room hotel TV smaller than 25 inches, also show that overall shipments are anticipated to hit 1.40 million units by 2015.
The expansion of the market in 2011 occurred due to a surge in shipments, after hotel chains raced to comply with mandates within the hospitality and hotel industry to replace bulky TV sets featuring old analog technology and upgrade them to digital, high-definition flat-panel models. The mandates, set by the corporate management sectors of individual hotel chains, included the imposition of fines on hotel properties not in compliance within the time frame they had set. Upscale hotels, along with management- or corporate-owned properties, were the first to comply with the high-definition switchover, followed then by individual franchisees.
Among the hotel chains that strived to enforce the upgrade mandate last year were InterContinental Ho- tels Group, Hyatt Hotels Corp., Hilton Worldwide and Marriott International Inc., which together held 1.35 million rooms out of a total 5.80 million supply of rooms in North America. This year, it will be up to the late movers—including the likes of Best Western International Inc., La Quinta Inns and Suites, and Wyndham Worldwide, which have mandates to conclude their upgrades in 2012—to nudge the market forward.
Hotel TVs: a Breed Apart from Consumer Sets
Televisions outfitted for the hotel and hospitality TV market are not the same as regular television sets sold through retail to consumers. For instance, hotel TVs are likely to be equipped with embedded Pro:Idiom technology that allows the sets to get premium high-definition TV content from cable or satel- lite services, with no optional cards or external set-top box needed. The sets are compatible with most major video-on-demand and pay-per-view systems requiring digital rights management to the available content or material being shown.
Some manufacturers also offer customized services for their hotel TV offerings. LG Electronics, for instance, has the Pro:centric interactive content delivery system, which can be used by hotel-room guests to check on daily weather forecasts and review hotel amenities, in addition to enjoying regular TV enter- tainment from a channel-selection-guide application. Another manufacturer, Samsung Electronics, has a system to manage applications like channel lineup, TV cloning to save the settings of one TV for quick configuration of other sets, and firmware upgrades.
In addition to these features, hospitality TVs can display hotel logos on their screens for branding purposes, and are Energy Star-compliant for efficient power consumption.
Television sets intended for the hospitality and hotel trade are generally more expensive than sets destined for the consumer channel. It costs an average of $850 for a 42-inch, Full HD, LCD hotel TV unit with the Pro:Idiom encryption technology tailored for the industry, allowing a central decoder in a hotel to decrypt video from a satellite or cable feed, and re-encode it for secure delivery to TV sets in each room. In comparison, a similar consumer-grade TV model and brand would cost an average of $650 in retail.
Growth Opportunities Lie Ahead Despite Near-Market Saturation
So far, the hotel TV market is nearly saturated from the flat-panel upgrade, which occurred after LCD and plasma technologies were chosen to replace the long-serving bulky, analog televisions of old. But despite slowing growth in the space, further opportunities for expansion lie ahead, specifically through early hotel-chain adopters to implement TV sets featuring the more advanced light-emitting diode (LED) backlighting technology.
Many luxury and upscale hotels now are poised to upgrade to LED TVs to replace once state-of-the- art LCD and plasma sets, with the midscale hotel segment expected to follow suit in short order. Already owning LED TVs at their own homes, travelers in the luxury segment are increasingly vocal about televi- sion viewing preferences when on the road, so the jump to provide LED TVs among high-end hotels is a logical move, IHS believes. LED TVs also have the additional benefit of sporting a slimmer profile—an important consideration in hotel rooms, where space is at a premium—along with better picture quality that allows hotels to future-proof purchases, and 30 percent improved energy efficiency that can lower the electricity cost for hotels.
A former driver of growth in the hotel TV space, the construction of new hotels in North America, will play a less significant role in 2012 compared to prior years. U.S. hotel companies in particular, emerg- ing fresh out of a tough economy, are likely to rein in capital expenditures on new construction, choosing instead to focus on the renovation of existing infrastructure.
In the North American hotel TV market, South Korea’s LG Electronics remains the market leader, but share is growing also for fellow South Korean rival Samsung. Panasonic Corp. also continues to be a strong competitor in the hospitality trade with its line of LCD sets. Each brand offers its own specific technology set and price point, leveraging strengths against those of the competition to continue vital customer and channel relationships.
Learn More > IHS iSuppli Signage & Professional Displays Market Tracker Q4 2011 report