 If all pay-per-view entertainment available in the U.S. is lumped together,
sex comes second — after first-run movies but before concerts and sporting
events. According to entertainment industry analyst Dennis McAlpine, a
partner in McAlpine Associates, the “buy rate” for in-home pay-per-view
adult entertainment delivered via cable or satellite is between 5%t and 10%.
The buy rate goes up as the content becomes more explicit, topping out at
about 20%. (Ironically, one of the largest providers of in-home adult
entertainment is Direct TV, which is owned by Rupert Murdock’s News Corp.
News Corp. also owns conservative Fox News.)
In hotel rooms, however, the buy rate skyrockets to as much as 50%,
according to recent estimates. McAlpine said although that represents only 5
to 10% of any hotel chain’s bottom line (but as much as 70% of in-room
profits), erotic entertainment is still a significant revenue generator
because it requires no investment on the hotel’s part. Under contracts with
LodgeNet and On Command, the two largest purveyors of on-demand in-room
entertainment, hotels receive a percentage of each pay-per-view purchase.
Hotels were among the first publicly traded corporations to profit from
porn, although shareholders won’t find exact figures in their annual
statements. Sex and other on-demand fare typically are lumped together under
the heading “pay-per-view revenues.” Partially, that’s for reasons of
convenience, but it’s also so corporate executives don’t have to field angry
calls from conservative shareholders who, while they want to see their
investments grow, don’t necessarily want it bandied about publicly that they
profit from — or even worse, support — something as embarrassing as sexually
explicit content.
Hilton Hotels, Marriott International, Sheraton and Holiday Inn are among
the largest hotel chains to offer explicit in-room entertainment. Until
2000, Texas based Omni Hotels was among the illustrious brotherhood of sex
purveyors, too. That year, however, responding to what it perceived as a
growing need for corporate America to support pro-family issues, Omni
struck a deal with LodgeNet under which adult channels would be stricken
from the rooms at all 80 Omni-owned and managed properties. The move cost
the company an estimated $1.8 million per year, according to president Jim
Caldwell. Omni claims to have recouped the losses by selling more family
oriented entertainment.
Despite increasing pressure from conservative groups like Cincinnati-based
Citizens for Community Values — which in 2003 contributed to the removal of
pay-per-view porn from a group of hotels in Ohio and Kentucky under threat
of prosecution for “pandering obscenity” — representatives of other large
hotel chains remain firmly committed to the decision to let pay-per-view
porn remain on guests’ menus. Most say they respect guests’ ability to
choose for themselves what kind of entertainment is appropriate for them.
Some go so far as to say their guests demand erotic viewing options, and to
drop them would cause not only a plunge in pay-per-view revenues, but also a
decline in customer loyalty.
That view is not universal. When it comes to hotel erotica, the so-called
“prudish” U.S. may be pulling ahead of some European countries typically
seen as more liberal. Many of Sweden’s hotels became porn-free in April,
after the government agency that controls where military members, civil
servants and politicians may stay blacklisted all properties that offered
in-room adult entertainment, effectively canceling the demand except in
properties that cater primarily to foreign tourists. The Netherlands
outlawed hotel porn in 2003, and since 2004, unionized hotel staff in Norway
have been engaged in a campaign to convince their government to adopt a
similar policy.
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