In 2012, wireless subscriber use surpassed 100% – meaning that the average person in the US has more than one wireless device. Wireless data use quadrupled between 2012 and 2017 (CTIA) and continues to increase exponentially. The problem for wireless carriers who provide these data services is that their cellular systems were designed to accommodate voice traffic, not data traffic. Since voice traffic is significantly less burdensome on a wireless network than data traffic, the wireless carriers invested over $25 billion in 2013 alone to improve their wireless networks. This capital is going primarily to new cell site development and to modifications on existing cell sites. In either case, hotel owners stand to gain additional revenue from rooftop cell site leases.
Most hotel owners like that the revenue from rooftop cell site(s) is ancillary and is not subject to fluctuation due to the general economy. A rooftop cell site rarely impacts any usable space in the hotel as the carriers place their equipment on the roof itself. After initial construction, the wireless carrier sends technicians to the site on an infrequent basis and most hotel owners rarely notice their presence. The downside from a rooftop cell site is the occasional disturbance when construction or maintenance work is being completed. Furthermore, the average cell site lease is for 25 years, so the hotel owner who signs a lease with a wireless carrier may be limiting future redevelopment of the property. Despite these small issues, most hotel owners would prefer to acquire additional cell site leases and revenue.
The lease rates that are paid by the wireless carriers fluctuate fairly widely with most hotel owners receiving between $1,000/month and $3,000/month per each individual lease. These leases typically escalate at 3% per year and are rarely terminated. The primary factors that we have identified that impact lease rates are as follows:
If you already have a cell site lease, chances are you have been contacted or will be contacted in the near term by the carrier to make modifications. Sometimes the carrier will ask for your consent to perform “maintenance” on the rooftop equipment and in other cases, they will offer to compensate you for the modifications. In either case, the smart hotel owner should ask for construction drawings before they consent to any modifications. In many situations, the wireless carrier has no right to make the modifications and is asking for consent to avoid paying the hotel owner additional rent which would otherwise be required. Thus, before you grant consent, make sure you understand whether your lease allows for these modifications. If it does not, you may be entitled to extra compensation. If in doubt, contact an expert in wireless leases.
