Enjoy your stay: Watch a movie, play Nintendo, surf the Internet, use the shampoo, but please don't steal the towels. Through subsidiary The Hotel Network, LodgeNet Interactive provides free and fee-based guest services, including cable TV, on-demand movies, Nintendo video games, DIRECTV broadcast satellite TV programming, and Internet access to more than 10,000 hotels, serving about 2 million rooms. The company installs broadband networks to enable its Internet and interactive services, which include video checkout and room service menus. Hilton and Marriott hotels account for about 35% of revenue. The company also offers its TV programming services at 45 hospitals, including MD Anderson Cancer Center.
LodgeNet began to offer interactive TV service at hospitals to diversify its business and decrease reliance on revenue from the hospitality industry. The LodgeNetRX Interactive Patient Television System launched through a partnership with health care services provider McKesson, but the service has not taken off and represents less than 5% of total revenue.
The company is perennially unprofitable; it eked out a tiny profit in 2006 and generated red ink in other recent years. Sales dropped almost 10% in 2009 and it expects to post a net loss again in 2010 due to general economic conditions. It has about $470 million in debt and is focused on reducing operating expenses, which it did by more than 20% in 2009. The previous year it reduced its headcount by nearly 18%. The company is vulnerable to variable interest rates on some of its debt and may need to raise additional capital if its cash flow is inadequate to meet its credit requirements.
In 2011 the company will launch a new, next-generation interactive television platform called Envision, which will connect its interactive TVs (iTVs) to the Internet to offer more revenue-generating applications. Envision will allow hotels to offer eConcierge services, including the ability to sell, manage, and post local advertising, communicate hotel and meeting group events, and provide wakeup service via guest room TVs.
LodgeNet hasn't made any acquisitions since the global economic recession hit and hotel occupancy levels dropped. In 2007 it bought two companies -- StayOnline, a provider of broadband Internet access services to the lodging industry, for $15 million; and competitor On Command for $380 million. Liberty Media (On Command's former parent company) acquired nearly 10% of LodgeNet's stock as a result of the deal.
In 2008 the company changed its name to from LodgeNet Entertainment to LodgeNet Interactive as part of a broader rebranding effort intended to better integrate the operations of its 2007 acquisitions with its existing business.
No individual shareholder owns more than 3% of the company's stock; however, Federated Investors owns 14% and Black Horse Capital Management owns nearly 12%.