Hotels Find Keeping Travelers at Home Can Be Good Business

“If you can’t beat ’em, join ’em,” may be the best maxim to explain why travel companies are getting into the virtual meeting business, actually helping clients avoid flying halfway around the globe.

Two of the world’s biggest hotel companies, Starwood Hotels and Resorts and Marriott International, are outfitting some of their meeting rooms with telepresence suites, a high-end system that leapfrogs typical videoconferencing technology. Their goal is to rent the rooms to customers who are already embracing virtual alternatives to travel, but do not have telepresence suites everywhere they would like to use them.

“Major multinational companies have this technology in their corporate headquarters,” said David Townshend, Marriott’s senior vice president for sales. “But it’s expensive, so they’ve looked to Marriott and some other providers to really extend their footprint into regional locations.”

Telepresence technology has been around for several years, but analysts say the business model for public rooms, which rent for about $500 an hour, is converging with tight travel budgets to create a more compelling reason for companies to give it a try. The technology itself has also improved, eliminating the delays that can make the typical videoconferencing experience awkward.

The telepresence suites are intended to make participants feel as if they are meeting face-to-face: when you walk into the room, there is half a conference table facing high-definition screens that project life-size images of people sitting in similar suites elsewhere in the world.

To enhance the feeling of being in the same room, the other half of the table appears on screen, participants’ eyes are at the same level and the walls are even painted the same color.

“With telepresence, you really feel like you can look people in the eye and get a real sense of what they’re about,” said Richard Redelfs, a general partner with Foundation Capital, a venture capital firm in Menlo Park, Calif., that has rented suites at a nearby Cisco Systems office to meet virtually with entrepreneurs in India.

“I’m a people person and that’s the nature of the venture business, so I was a little skeptical about the experience,” Mr. Redelfs said. “But it’s amazing. There’s no latency in the system — when you say something you get an immediate response. Psychologically, you really start behaving like you’re face to face.”

Although the company does not use telepresence often enough to buy its own suite, which can cost $200,000 plus charges for network services and support, renting one has turned out to be an efficient and economical way for all nine partners to size up the founders of far-flung start-ups before deciding on an investment. (A few partners still make the trip to meet in person before anyone writes a check.)

That is precisely the type of business Starwood and Marriott are hoping to capture, along with revenue from customers who travel to metropolitan markets to use the telepresence suites for recruiting interviews, legal depositions and other small meetings.

“There’s an opportunity for us not just to host a meeting but also to host room nights for people traveling to those hubs,” said Mary Casey, a vice president at Starwood, which plans to have at least two telepresence suites open by the end of the year, with more following in 2010.

Starwood locations in development include hotels in New York, Sydney, Toronto, Los Angeles and Chicago, while Marriott plans to open its first telepresence suite at the New York Marriott East Side in December, followed by hotels in San Francisco and Bethesda, Md.

Both hotel companies are working with Cisco, a leader in telepresence technology, with about 3,100 of its suites installed by customers worldwide.

There are other providers as well, among them Polycom, Teliris, Hewlett-Packard and Tandberg (which Cisco is seeking to acquire). And one of the challenges has been to link the technology of those various systems and getting network providers to talk to each other. Cisco, for instance, works with Tata Communications at Starwood’s properties and the Taj Boston hotel and has worked with AT&T at the Marriott hotels. “You’ve got to make it possible for all these various networks to hook up to each other,” said Scott Morrison, a vice president with the technology research company Gartner. “That will help grow the demand for these rooms.”

The telepresence providers are also seeking to expand the number of suites by introducing more that can be rented by the public.

“The value goes up every time somebody else gets connected,” said David Hsieh, a marketing vice president with Cisco, which hopes to have 50 public suites open by early next year.

In fact, some companies that have telepresence technology are incorporating it into their travel booking systems, Mr. Morrison said, so employees consider it as a choice in lieu of taking a trip.

Seizing on that trend, travel companies like American Express and Carlson Wagonlit Travel plan to help clients weigh whether to use a telepresence suite and then to reserve a room. The move is meant to expand, not chip away at, their core travel booking business.

“Travel is about connecting people with each other, and traditionally that means putting people on planes, on trains and in automobiles, but the recession has changed that environment considerably,” said Alicia Tillman, a vice president with American Express.

“Offering telepresence as a different option to still connect people with each other is a method that we fully expect our client companies are going to adopt and embrace.”