In defence of hotels charging for wifi access

NB: This is a guest article by Daniel Edward Craig, a former general manager turned hotel consultant specializing in social media strategy and reputation management.

Lately discussion around hotel internet fees has been so inflamed you might think evil dictators and flagrant human rights violations were involved.

Among the decriers is Wired UK editor David Rowan, who accuses hotels of “unbridled profiteering” and urges travelers to “join the war on paying for hotel wifi”.

Like many hoteliers, I have two minds on the issue. As a traveler, I naturally want free wifi. I want it reliable and at lightning speed. But I also want free breakfast, massages and late-night mini-bar rampages.

As a hotelier, I understand that quality and convenience come at a price. Hotels are in business to make a profit. We’re just really bad at it.

Contrary to popular belief, hotel managers don’t sit around twirling our moustaches and conspiring over ways to cheat and deceive travelers. We leave that to the airlines. We loathe internet fees, too.

When I was a GM, each year we started budget season determined to abolish internet charges. But we could never figure out how to offset the loss in revenue. There’s a special place in the unemployment line for managers who submit budgets to ownership proposing a decrease in revenues.

The backlash was never as severe as we feared. Most travelers take internet fees in stride. Some don’t notice them—the rich, the blind, travelers on expense accounts. Others find them irritating but tolerable. Only a small minority finds internet fees as heinous as child slavery and tribal honor killings.

Problem is, social media has given this minority a voice—a loud, shrieky voice that makes hoteliers wince and squirm. In the good old days we used to handle complaints by quietly paying guests off or shooting them, and no one was the wiser.

Now travelers arrive at our doors more informed and empowered than ever, with all sorts of avenues for broadcasting disappointment and outrage if expectations aren’t met: review sites, blogs, Facebook, Twitter… the list goes on.

So when travelers cry foul, hoteliers need to sit up from our pedicures and take heed. Though calling for a boycott seems extreme in light of important issues like the Arab Spring, Occupy Wall Street and Kim Kardashian’s $2 million engagement ring.

Meanwhile, while hotels are under fire for charging fees that have been around for a decade, airlines are busy adding fees for previously complimentary services.

Air travel has become a largely miserable, soul-destroying experience for both travelers and airline employees. The latest indignity, the direct result of baggage fees, is the scrum to cram overstuffed carry-ons into the overhead bins before they fill up.

According to Amadeus, airlines will make an estimated $32.5 billion in worldwide ancillary fees this year, a 43.8% increase over last year. Despite the ailing economy, The New York Times reports that US airlines will have their second consecutive profitable year in 2011.

Meanwhile, have hotels ever made a profit? Like airlines, we anger travellers with exorbitant markups, but we rarely make money on them. It’s a special talent. Why expect anything different from internet services?

Because the larger the property, the more expensive installing wifi is. Travelers expect service comparable to home and office, but technology becomes obsolete long before it pays for itself, sometimes even before it’s installed.

At the same time, travelers have acquired a voracious appetite for bandwidth. They arrive with multiple devices and convert rooms into mini NASA flight control stations, utilizing every outlet, jack and network available – everything but the sources hotels make revenue from: telephone and Pay-per-view movies.

As further evidence of the greed and injustice, travelers point to the fact that many budget hotels offer free internet access whereas upscale hotels typically charge. And why is wifi free with a $2 coffee at McDonald’s or a $23 coffee at Starbucks but not with a $300 room? Isn’t that counterintuitive?

Well, yes and no. Granted, some hotels charge reprehensible rates for wifi, in part because luxury travelers are less price-sensitive. But you’re paying for convenience, quality, service and ambience. And you can’t work in your underwear at McDonald’s—I’ve tried. It’s the same reason you pay $8.00 for a can of Coke from the mini-bar when you can get it for $1.50 at the 7-Eleven.

Regardless of the rationale, the reality for hoteliers is that those who persist in charging for internet will continue to get a disproportionate number of negative reviews and commentary.

At a time when reputation rivals location, price and brand in influencing purchase decisions that can have a significant impact on rooms revenue. Hotels that offer it free will receive better reviews, but if they can’t afford to keep up with the latest technology, they’ll receive bad reviews too.

So are hotels screwed either way? If the in-room phone is any indication, yes. Hotels and travelers are deadlocked on this issue. Hotels persist in adding huge markups, and travelers have responded by avoiding the in-room phone like it’s infested with disease (which it may well be, but that’s another discussion).

Similarly, travelers averse to internet fees will stay elsewhere or find ways to bypass them—local networks, mobile hotspots, wireless network cards. Hotels will be left maintaining an expensive network that is rarely used.

A better solution is a tiered system, with free basic internet access and the option of upgrading to a faster connection for a fee. That way the perv downloading porn in the room next door pays a premium for clogging up the network. Sounds reasonable in theory, but on a recent trip I opted for the free version and aged approximately eleven years waiting for my email to download.

In weighing the options, hotel managers and owners must take into account the costs of guest dissatisfaction. Nothing is more infuriating to travelers than slow or spotty internet service.

Well, except paying for slow or spotty internet service. Or having no service at all. JD Power and Associates’ 2010 North America Guest Satisfaction Index survey of 53,000 hotel guests found wireless internet access to be the top “must-have” amenity.

Another popular solution is to offer comp internet to the most valued guests—loyalty club members, direct bookers, corporate accounts, etc—and let the bottom-feeders who book heavily discounted rates on high-commission channels pay. But that won’t silence the naysayers, who are often the very travelers who seek bargains.

Hoteliers like to warn that if they offer free internet to all guests, room rates will go up and all guests will pay whether or not they use it. That’s not entirely true.

Room rates are largely influenced by the market, and to compete hotels must offer rates comparable to competitor rates, including those that already offer comp internet. So the lost revenue may never be recouped.

So what of the future? According to Wired UK’s Rowan, “the current rip-off is unsustainable”. As a traveler, I’d like to think he’s right. As a hotelier, I know it’s not that simple.

Perhaps when the economy recovers and room rates go up, the vision of universally free wifi may come closer in reach. But for now hotels are in survival mode. Policies will continue to vary dramatically, with fees ranging from zero to gasp-inducing.

In the meantime, travelers have options and can choose hotels based on the features important to them. If nothing else, they are forcing hotels to be more transparent about fees. As for hotels that don’t charge for wifi, you have the upper hand for now. If I were you I’d be singing it from the rooftops.

Just make sure it’s fast and reliable.

NB: This is a guest article by Daniel Edward Craig, a former general manager turned hotel consultant specializing in social media strategy and reputation management.

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Viewpoints

About the Writer :: Viewpoints

A founding principle of tnooz was a diversity of viewpoints from across the spectrum. Viewpoints are articles by guest contributors from around the travel and hospitality industries. The views expressed are those of the author. and do not necessarily reflect those of the author's employer, or tnooz and its partners.

 

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  1. Scott

    I like reading the comments of so many people–from those who have some understanding of what is involved, to those who just make up “facts” to suit their own desires and flaunt their ignorance and naivety. (PS., about the 64 kbps comment way up above, b=bit, not byte and that 64 kbps is only about twice as fast as a dial-up modem and NOT fast enough to stream any decent resolution video.)

    Also expecting that unlimited data and high speed for every hotel room only costs $0.05 a night is laughable. Are you paying $1.50 a month for your high speed, unlimited data connection at home? That’s what those figures work out to. You don’t get to just make up “facts” because they suit your wishes.

    It really does cost hotels something to get customers the kinds of data they want, set it up so it works well, and support it for them. I’m guessing it may cost them up to a few dollars a day per room.

    Having said that, fees in the $15 to $30 a day range really seem like price gouging to me. I could see charging $5 for fast internet by the room (not per device), or only providing limited speed suitable for web browsing and checking email for free. For $15 a day, the internet access should be flawless and the hotel staff should personally help all guests configure their devices and should bring them a snack while they do it.

    I agree with others, that it’s even more insulting to be gouged this way by supposedly mid to high end hotels where you’re often already paying $200 or more a night while the budget hotels that cost less than this can figure out how to afford to include it in their lower room prices. The situation makes no sense aside from the fact that the more expensive hotels are really gouging customers with the charge. Either that, or it really costs them a lot to run the service because they’re extremely inefficient.

    Those higher end hotels really need to find a way to compete and include internet in their prices, or at the very least as a reasonably priced extra (not exorbitantly priced) if they want to hold on to their existing customers.

     
  2. Vast majority of travellers now expect free wifi in hotels | China Hotel E-Marketing Strategies

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  3. Bill Quiseng

    As a former full service GM, I would respectfully disagree with Mr. Craig. While I can certainly appreciate the profitability conundrum with owners, if limited service hotels can offer free WiFi, then why can’t higher tier properties. I am sure limited service properties are making a profit for their owners even with giving it away. The service mantra in hospitality should be “The guest is paying for his experience, not ours.” And in the customer’s experience, WiFi is now free in restaurants, shopping malls and other retail establishments, even in the tire service store where I was having my tires changed last week. So there is a customer expectation that if it can be free in a Hampton Inn, it should be free in a Hilton. Customer loyalty is driven by long term reputation and not short term profit. My recommendation is to do as we did and give Wi-Fi for free and sell it as the marketing competitive advantage in your STR comp set. It’s bound to be worth a market share points in the long run that more than offset the WiFi revenue as we found out to be true in just seven months (of course with all other amenities we offered being equal).

     
  4. Greg

    This is a very insightful and entirely accurate piece Daniel. You bring a perspective that’s so valuable as both a hotel operations and social media / online marketing experienced enthusiast.

     
  5. Are Morch

    Hi Daniel.

    First of all I would say it was a brilliant article. And I enjoyed the irony here.

    And this shows that WiFi sparks a very vivid and lively debate.

    For me WiFi is a all about psychology. The modern guest is now accustomed to Free WiFi. This has moved WiFi into a service most guest today expect provided for Free.

    It interesting to observe even if Hotels on their website provide proper info about their WiFi guidelines, guest still have expectations that don’t match what the Hotel actually delivers.

    The psychology kicks in when the WiFi charge becomes visual on the bill. it is like someone said earlier here related to the airline baggage Fee. We know its there, but it dont be become annoying before we actually have to pay it.

    To put in a perspective I would rather have my bill read;
    Room Charge – $100.00
    Sales Tax – $10.00
    ———————————
    Balance $110.00

    Then

    Room Charge – $90.00
    WiFi – $10.00
    Sales Taxes – $10.00
    ——————————-
    Balance $110.00

    Even if I pay more for the room Free WiFi adds value to my expectations.

    It is no doubt that Hotels have to cover the cost of providing Internet Services to their guests. And like Daniel says Hotels are in business to make a profit we are just not looking at creative ways to make this happen.

    Cheers..

    Are Morch
    Hotel Blogger

     
  6. Elby

    Companies are pressuring their employees to conserve on their traveling expenses. Many will not pay for wifi access and have it show up on the expense report. But there is a very simple solution. Get rid of those expensive light bulbs that don’t even produce satisfactory lighting, return to the cheaper and effective 100 watt light bulbs and your wifi will pay for itself with leftover revenue. I can get by with one lamp turned on with a 100 watt bulb. I turn on every light in the room with those “energy saving” glow sticks.

     
  7. Gary

    I have to say that I have seen this from many different sides; a business traveller, a hotelier (albeit in a consultancy role) and a provider of wifi to hotels for over 10 years.

    It’s complex!

    First the cost of providing wifi to a hotel cannot be likened to providing it in McDonalds or Starbucks. Consider the cabling infrastructure for a ratio of 1 (enterprise grade) access point to every 6 rooms; add in conference rooms and common areas and a 200 room hotel is gong to need 40+ access points. McDonalds, 1 or 2. These units are several hundred pounds each to buy, let alone the cost to cable and install, switches, fibre and anything esle required.

    Brand standards often dictate a 24/7, multi-lingual, free to guest, helpdesk is provided. Believe me, this does not come cheap. Granted the individual tech-savvy user may not need them, but if it’s a brand standard the hotel has to have it.

    And then add bandwidth. £1k per month for 100Mb in London is achievable. Go to more remote areas and you can quadruple that, if you are lucky enough to find fibre. If not add any number you like for dig-in costs.

    Oh, and make it all free? You quadruple the number of devices connecting, so you’ll need more bandwidth..

    But as a business traveller will I pay for internet? Not if I can help it, but if I do I won’t lose any sleep. The key thing is it has to work, which means if it doesn’t I want to talk to someone who will make it work. And if I am paying I want flexibility, let me buy an hour if that’s all I need.

    My belief is that free is the future. From a hotelier perspective I understand the desire to limit this either through speed or data levels. The increase in cost of bandwidth is not linear, and enterprise

    From a business traveller perspective I want it all, for free, now.. And if my room rate went up by £2 a night to cover it I wouldn’t even notice. (From a supplier perspective I’d take any number of rooms you have for £1 a night!)

     
  8. Are hotel internet fees a necessary evil? | Daniel Edward Craig

    […] your comments here or check out the heated debate on Tnooz, where this article was originally […]

     
  9. Carl Hancock

    I wouldn’t har a problem with paying for Internet in hotels of it was fast and reliable.

    But the fact of the matter is I have found hotels with free wifi to have faster, more reliable wifi than the hotels that charge! That simply pisses me off.

    The fact that my free wifi in a $75 La Quinta hotel room is faster than the $12 wifi in my $300 Hilton hotel room is completely absurd.

    I completely understand your perspective as a hotelier. But as a consumer this simply doesn’t fly.

    Maybe if the hotels I have stayed in and had to pay for Internet actually provided fast, reliable access… I might have a different opinion on the matter. But personal experience trumps witty, kinda pompous, talking down to consumer, industry insider’s opinion.

    Excuse the typos… I’m typing this from my iPhone on free hotel wifi.

     
    • Carl

      I agree with you – and it seems to me that a good chunk of the connection problems and delays, as well as performance problems and support issues, are generated by the tolling system – the hoteliers can reduce the cost of the system by eliminating the system which tries to charge. If they are worried about freeloading, they can simply require a Key to connect to the wifi (not needed for wired connections) and change it monthly or weekly.

       
  10. Roaming charges putting off two-thirds of travellers from using mobiles overseas | China Hotel E-Marketing Strategies

    […] poll also comes hot on the heels of a firm defence of hotels charging for wifi access this week by ex-hotel executive and consultant  Daniel Edward Craig. This entry was posted in […]

     
  11. Eric C

    Wi Fi in hotels should be like electricity – it should just be there. No business traveler – and very few pleasure travelers – can function without it, especially when traveling abroad. If the hotel operator wants to save a few cents every day, don’t replace our shampoo bottle after one use – that’s just wasteful. The “extra cost during construction” argument holds no water either. I’m an interior designer with a large global hospitality design firm, and I’m involved with the design of hotels around the world from virtually day 1 of the process. Every hotel has a budget from the start, and every operator has a list of “must have” items that cannot be sacrificed, and data networking is one of the biggies. I can guarantee you – bet my next paycheck even – that other things are sacrificed before data networking gets sacrificed. As an end user, both for business and for pleasure, having to pay for Wi Fi is one of the most aggravating things I can think of in a hotel. Like others who have commented, when I travel for business, it’s no skin off my nose because the cost is expensed, but when I travel for pleasure, I won’t stay at a hotel without free Wi Fi. And IN ROOM Wi Fi. The airline argument is a good comparison, but the original mission of cutting travel costs to offset rising operating costs has spiralled out of control to boost profits, and it has only served to alienate loyal customers. Try flying an Asian carrier after flying only US-based carriers for a while and you’ll see what I mean. Sorry for the rant, but this one touched a nerve.

     
  12. Predrag Supurović

    As someone who installs networking equipment I learned that hoteliers are either open minded and offer Internet access for free or greedy and charge as it is made of gold. It is hard to see something in the middle.

    Thing, is, Internet resources do not cost much comparable to other costs hotels have, and it is not impossible to offer free internet access within a budget, especially at basic level of service.

    However, I have no problem to pay for internet access as long as it is reasonable priced.

     
  13. stano

    In the modern world the internet is a basic human need. Most guests now expect free internet access in their hotel rooms and this expectation is justifiable since most of us are used to free internet at home and work places.

     
  14. Eugene Chang

    Will all the good discussion, there are two observations that are not explained.

    1- Wi-Fi is often free in second tier hotels while top tier hotels charge for Wi-Fi.

    2- Staying at a hotel that charges for Wi-Fi does not ensure a service free of rush hour congestion.

    It certainly makes it hard to feel that paying the equivalent of a months (residential) service for one night is a good deal.

    Gene

     
  15. Gratis internet på hotellet är en självklarhet, eller?

    […] om jag var tvungen att välja mellan gratis frukost och gratis wifi. Häromdagen läste jag en artikel på tnooz från en person som har god insyn i varför hotell erbjuder eller låter bli att erbjuda fri wifi, […]

     
  16. Weltbild, Dailydeal, MyMobai. — mobilbranche.de

    […] Kostenloses W-Lan wird von immer mehr Hotelgästen erwartet – und eine fleißige Schar von Vielreisenden beschwert sich regelmäßig via Social Media und auf Bewertungsportalen über Hotels, bei denen das W-Lan Geld kostet. Hotelmanager Daniel Edward Craig will das nicht auf sich sitzenlassen und verteidigt die Branche. tnooz.com […]

     
  17. Hermann

    in the old times we paid for longdistance phone calls $3 per minute, or a local call for $1, but they were payphone in the lobby and you could use a calling card

    now we pay for Ethernet in the room, and get free WiFi in the Lobby and free computers in the business center

    now you use your cell phone and no more calls from the room phone

    just charge me for internet $10 per 24 hours in the room and I am happy

    just back from Europe with a EU35 per day for internet in the hotel room, that’s just highway robbery

    I use a Blackberry and a BB Playbook tablet now, with the phone data plan I do all my work, as the phone and tablets are linked by Bluetooth, the rest over wifi in the Lobby
    most hotels have an area or lounge for early arrivals or checkout waiting for pick up, I use it during my stay in the UAE, it works well

     
  18. Graeme Powell

    Thanks Daniel, it’s great to see a more balanced discussion, which takes into consideration the infrastructure issues, as well as the user’s issues.

    As you know, the reality is that the average hotel’s Wi-Fi system is already overloaded, and the demand placed on it is set to continue increasing exponentially. According to recent global research by the YPartnership for iBAHN, some 60% of surveyed travellers in America, Europe and Australia indi¬cate they already have had a poor downloading experience in a hotel because the system was slow. The popularity of mobile devices such as the iPad is only increasing the number of unhappy guests.

    Therefore the key driver of future success for hotels will be the ability to provide guests with the same level of technology capabilities they have in their homes and offices.

    However, if a hotels’ Wi-Fi system was designed before 2010, it likely needs to be reconfigured to support the video demand aris¬ing from new devices like the iPad, which can be very bandwidth hungry. This means, unlimited free Wi-Fi makes little sense in this new environ¬ment, unless hotels have unlimited bandwidth, along with unlimited budget to continue adding additional bandwidth.

    Hotels must choose either to not increase the amount of bandwidth, so everybody will get much slower service, or upgrade and essentially put in a metered fee-based system. It’s about managing that bandwidth. Each hotel owner will have to decide what free should be, for example is a limited level of service free, but higher levels of demand charged for?

     
  19. Sceptical corporate traveller

    Some wonderful anomalies thrown up by free vs paid for wifi.

    There is a certain pair of large chain hotels in Brussels right next door to one another. One charges, the other offers free wifi. But wifi signals have no great respect for walls and so even the most unskilled travellers log on to the one that costs nothing – no matter which hotel they are in. SO, hotel “H” gets less revenue and hotel “C” gets more demand on their resources. Ho hum, the law of unintended consequences!

     
  20. Timothy O'Neil-Dunne

    OK Biting my tongue has been hard watching this stream of consciousness come through the ether.

    I would not expect to agree with Daniel. But I kind of do. Let me explain.

    It is purely a question of horses for courses. If I am buying a business product – I dont expect to have to be nickel and dimed. So for any major non-extreme budget brand – it makes sense. Let me give 2 analogies – On Ryanair – I expect to pay for everything. Yes they have trained me and I accept that. Well done Ryanair for achieving that milestone. At Tune Hotels (in Asia) where you pay unbundled for everything including such essentials as air conditioning – I am actually OK with this.

    Using the utility argument (one that I do all the time) says that I will only be happy with included (not free) wifi. And it had better be reliable.

    We all know that certain things dont work well and Hotels are notoriously cruddy at solving Wifi signal issues. We also know that many hotels were lazy and expected to buy the pitch from certain vendors that it was a revenue generating idea. Well get over that. We expect internet to work like a utility whether we pay for it or not.

    Let me just add this. I specifically use web sites that allow me to select wifi as a source. If you dont offer me that option sorry you are no longer on my list of hotel search sites. This includes both direct and intermediary sites.

    Bottom line, depending on my trip type and total cost – I will decide what I do with Web access. I am really ticked off at the high cost of roaming. Apparently I am not alone. Check out the ITB survey on the subject from ITB – http://www.itb-kongress.de/media/itbk/itbk_media/itbk_pdf/Whitepaper-Mobile-Leisure.pdf

    Hope this helps cheers

    Timothy

     
  21. Sergiy Redchyts

    I am for Free WiFi.
    To pay for WiFi is today like to pay for elevators…

     
  22. Martin Soler

    Daniel that was a great laugh and an excellent article. You’re right GMs aren’t sitting in their back offices working on ways to squeeze their customers. More likely they are working on ways to make their guests happy.
    But as a user I still think WIFI should be free. As a GM I added free WIFI and bumped up my average price by a few dollars. I noticed my guests preferred to pay a little more and have an all-inclusive experience than to constantly have to pay a little extra at every corner.
    Try booking a flight on easyjet, you’ll start with a smile and finish the booking wishing you could strangle the owner. They charge a little extra for your suitcase, then a bit more for taxes, and a bit more for checking-in and finally a bit more for the fact that you’re breathing their air. Even though the total price is still low, it’s still annoying like hell.

     
  23. brian harniman (@bharniman)

    As an FYI – You can get free wifi when you travel…

    BusinessTravel.com is in beta launch, but I’m currently offering any US or Canadian based travelers a first-of-its-kind free Wifi bonus on all hotel stays booked at the site now until the end of 2011.

    To make hotel or car rental reservations or for more information, customers can call BusinessTravel.com toll-free at 877.477.8009, and mention Promo Code: HBC2029, or visit the website at http://www.businesstravel.com?promo=freewifi

     
  24. Bruce Rosard

    Won’t this all be a moot point in a year or two when everyone has 4G and can get Wifi through their mobile device? The hotels that are charging now will be losing customers later… Maybe this is different outside of the states where there are exorbitant data fees, but that has to change soon too, doesn’t it?

     
    • Mims Wright

      One would hope this is the case, Bruce. Only problem now is that 4G isn’t so hot in most buildings….it will take another round of city build-out by the wireless companies to get decent penetration.

      As for the hotels that are charging now, if they could package and price it smartly so that it’s a real value for guests, it wouldn’t be so bad. For example, a package that includes (true) hi speed WiFi for all your devices throughout the property for under $10 would probably be acceptable. They would probably be smart to have their own streaming content, as well. It’s the gouging for a slow connection that really upsets people.

       
  25. Buigas Travel

    The hotels we promote charge for internet. We have discussed this with them and they mentioned that now guests that come as families bring a variety of internet devices and expect the same or better service than they get at home or office like Daniel mentioned. The hotel increased their internet service to improve the connection and speed to insure they get great service since they are paying.

     
  26. Ursula Silling

    For me, there are a number of issues from this article:
    1. I think that wifi access is becoming part of a “human right”. From the traveller’s perspective, it is very hard to understand that a high quality, expensive hotel would charge extra fees for this. Whilst I do think that with a low budget hotel this would be fully tolerated.
    2. there is some complete misperception about airline profitability – airlines have only turned to ask for more ancillary revenues as their average revenues are going down year by year – significantly – whilst cost triggered by all the suppliers in the value chain go up. There are hardly any profitable airlines. Why would a flight be so much cheaper than staying in a hotel for a night? The latter being more readily accepted by customers.
    3. In the end, it is a lot about managing expectations and convenience. The worst case is a hotel charging for internet yet it does not work properly – unfortunately not a rare case.

    I think it is no surprise that this is a heated debate… Instead of being innovative about how to become the favorite choice and increasing revenues hotels rather focus on preserving what they have. Not unsimilar to airlines, which in a panic attack add a lot of ancillary revenues without thinking, rather than making this part of their brand approach and thus sustainably increase revenues rather than losing more customers.

    Just a view from both a long experienced aviation expert and a frequent traveller. For me, wifi access has become a key decision making criteria for hotels.

     
  27. Margo

    I have heard it said lately that to all people now Wifi is like – breathing in air …………..or switching on the light, instant and without second thought !!

     
    • Carl

      I think that’s particularly true for travelers. We use the Internet to book travel, check flight status, get touristical information, and communicate back home.

      While we can do some of that on our phones, a lot is easier on a bigger screen, and the hotel can provide it for about the cost of washing a towel.

       
  28. Patrick Goff

    Hotels used to sell tickets for a bath. Now walk-in showers and soaking tubs are standard for 4 & 5 star most places (except the UK). New standards on the continents now set a separate toilet cubicle as necessary for a 4 or 5 star acreditation. All these add cost but are provided free – no penny in the slot to use a toilet, although Ryanair are trying.

    I was told by one hotelier that the cost of providing a high speed internet service to every room was about 3p per room per night (5cents American).

    Charge £18 per night for internet? Of course it is banditry.

     
    • Hill Rider

      Well said.

      You nailed the argument in the head.

      And the US$0.05 per room per night in cost seems right if you include the price of the hardware etc: my uberexpensive home internet costs $0.03 per 24-hour per 256kbps, which in many hotels is considered a luxury.

       
  29. Larry Smith

    Feels like a classic example of “Porter’s 5 forces” framework:

    1 The threat of the entry of new competitors
    2 The threat of substitute products or services
    3 The bargaining power of customers (buyers)
    4 The bargaining power of suppliers
    5 The intensity of competitive rivalry

    WiFi as a benefit to a hotel booking will go the same direction as the in-room telephone as substitute products — my Android App phone — become standard. My phone includes a wifi hotspot feature so my PC can use the internet, not to mention other options for tethering, mobile hotspots, or 3G/4G modems as add-ons or built into the device (i.e., iPads, Kindles).

    Regardless, in practice, what would I do as a Hotelier who wants to keep charging exorbitant prices for WiFi?

    Innovate and differentiate: How could a hotel connection be better than a free one?

    From the gateway page, offer a menu of software and services.
    – Use theBranded “CleanMyPC” software to get rid of viruses, malware, and unused files to speed up performance by 50%.
    – Back-up your files to “big branded cloud service” free for 30 days, and link it to our Loyalty Program for access and annual plan discounts.
    – Paying for WiFi entitles you to borrow a Webcam and Skype software for video chat with your family.

    Offer different levels of data plans — this is already a growing issues as promoted by cellular carriers.
    – Simple data Plan: 1GB of data which is enough for email and 2 hours of internet browsing (no video)
    – Family Plan: for watching YouTube and playing games online
    – Streaming Plan: high speed streaming from Netflix

    Rent an iPad for $25/day and get free wifi in your room.
    Rent a 4G mobile hotspot for the fastest speeds here in the hotel.

    The above ideas may be good or bad, but changing the perspective that WiFi is a universal commodity to that of something special at my property could make all the difference in Guest satisfaction.

     
    • Don Birch

      Larry

      I thought your contribution very useful. There is a common consensus that you have to pay in one form or another and your list means that there is a better chance of meeting the very different needs of individual guests. I like to stay in touch when I travel, but US$15 a day and up (they even levy 10% service charge!) just to check emails is fraudulent.
      With your schemes I can pay per Mb (just like prepaid phone cards) but stay connected and ultimately have a sensible choice of how I spend my WiFi dollars.

       
  30. Srishti

    On a side note: Sincerely enjoyed the brevity and humor of your post. Hope you contribute more!

     
  31. Carl

    I see Internet access as a required utility, just like heat or water.

    You have on staff maintenance people to unclog toilets and bathtubs and fix the heat, and the energy and water have a consumption cost, too, but you don’t charge extra for them.

    I’d rather you eliminate my television and don’t pay the DTV or cable fee for my room and give me the Internet, which is more useful.

    The time is not far when it is a given that Internet is in the room rate, and all hotels have the same operating cost, and the room rate while also reflecting demand, also reflects operating cost. That time is pretty close today.

    Also, a significant portion of the support costs relate to the metering and payment system, which can be eliminated when it is free.

     
  32. Mims Wright

    Mr. Craig seems sympathetic to an older hotel management point of view, definitely not customer centric…a strategy straight from the back of the house and is the losing difference in a highly competitive landscape.

    The “small, loud, shriek minority” are your actually customers. Really, they make hoteliers “wince and squirm?” Social media is free consumer research; paying attention to those “empowered customers” will give hoteliers an advantage, not get them sacked. So rather than grieving over the arrival of review sites, and gadget toting minority, teach your clients how to embrace them and gain an edge.

    And, yes, customers DO arrive with multiple devices and have no need for phones and overpriced pay-per-view movies (the “small shrieky minority again?). If you know this, then plan updates to accommodate this new breed of customers instead of mourning the drop in phone revenue. Are hotels really victims (hotels are screwed)? I have never seen a company (or industry) win from a position as victim. The winners anticipate customer needs and meet them. If you focus on your customer, you will figure out the right WiFi pricing plan.

     
    • Daniel Edward Craig

      Mims: Good points, but my intention was to explore the issues with a bit of humor and levity, which I feel is sorely lacking in the hotel industry these days. My website and business are fully dedicated to embracing social media and the many benefits of guest feedback. http://www.danieledwardcraig.com.

       
      • Mims Wright

        Fair enough! You’re right, we do need more relaxed and open attitudes, especially humor! I get your point and, yes, your business sounds really well-focused on the value (and now the necessity) of well planned and executed social media.

        Hotel WiFi is really a trigger for both hotels and guests these days; my “rant” should be (and is) directed to the hospitality segment that clings to the philosophy that they’re “entitled” to certain revenues (you all know who you are).

        Just last week, I was registered at a Marriott charging 12.95 for (what they called) high speed PER DEVICE. A while later I was waiting in the lobby trying to login and reception told me I had to use my credit card..separate and apart from the fee I had already paid! This is a property that lacks any sense of reason…not to speak of levity.

        Thanks for the article and keep up the good work!

         
  33. Robert Hicks

    If hotels used proper connections to the internet, ie a 100meg fibre connection, which in London will cost less than £1k a month, the charging to use that is value.

    If you have 60 guests a night, with a 25% take up rate with 30 nights in a month, you have 450 “users”. If you charge at £3 a night on the day and £2 prebooked, you end up with a cost free internet.

    The hotel then gets it internet for free. You can, with the best of suppliers also run your voice, firewalls and so on through the same connection.

    Hotels aren’t using the best internet provider.

     
  34. Tom Bacon

    Hotels, like airlines, must seek creative ways to maintain revenue in a recessionary time. I wouldn’t expect the internet fees to continue forever in the face of traveler protests but I expect that there will be new fees to replace them. Actually I applaud experimentation in this arena (free lobby access, options for free bfast vs free internet, slow vs fast internet) — at airlines we have tried to experiment but are often limited by legacy technology systems.

    I believe our introduction of ancillary fees – and branded fares – at Frontier Airlines saved the company from liquidation. Hotel GM’s – and airline CEO’s – must look creatively at every potential revenue source just as they scrutinize every cost item.

     
  35. Hedwig

    The other day I was offered a choice:
    – double room standard
    – double room superior, including free wifi in the room

    The hotel makes (a fixed) revenue on the wifi and guests, not caring if and what they pay extra for wifi, get the cheaper room. Lesson learned: do not bother guest with arguments they do not want to hear but offer them a choice between simple propositions.
    This, to me, is a brillant way to meet the customers needs and priorities without getting into never ending discussions.

     
  36. Troy Thompson

    David, wonderful article. Love the style and the wit, I honestly read the entire thing.

    For me, the issue is a basic challenge of human expectations. Hotel revenue, technology and other factors aside, the free internet / WiFi debate comes down to a simple point…we now expect free internet access…or at least, instantly on internet access.

    While at home, the majority of consumers simply open their laptop or power on the iPad and bam, like magic, there is the internet. Same thing happens when I walk into my office, a Starbucks or even an airplane (which I am willing to pay for because the technology to get the internets in the sky is mind-blogging to Joe Consumer).

    The only place where I get stopped in my tracks from the bliss of free WiFi is at a hotel.

    Unfortunately, it is a losing battle. Everyone else on the planet is giving it away, but somehow hotels are trying to convince me to pay.

    And I don’t think they have a strong enough argument.

    Good stuff.

    – Troy

     
    • Joe Buhler

      Well written article but the arguments are not convincing me to change my opinion that wifi is today part of the expected basic infrastructure to be included in the room charge as is the aforementioned water, electricity and TV, as well as a comfortable bed and pillow! A profit center it certainly shouldn’t be any longer, if it ever was one.

       
      • Troy Thompson

        Agreed Joe.

        Somehow Waffle House has cracked the code to offer free WiFi, yet Hilton cannot make the numbers work?

        Something does not add up and consumers know it.

        Unfortunately for hotels, we are not going to help hotels find that new revenue source.

        We just want our free WiFi.

        Oh, and free coffee too.

        – Troy

         
        • hotelmarketing@facebook.com

          think of the waffle house as your hotel lobby… that’s the only place in a hotel where wifi should be free in a hotel(except maybe for a basic 64 kbps service in room).

           
          • Carl

            That’s lovely. Why not limit the complimentary hot water to a communal bath down the hall, and make it only available between 6am and 8am? I’m sure there’s a savings or an upcharge possible with that, too.

            We won’t be booking in your hotels.

             
          • hotelmarketing@facebook.com

            regular internet usage rarely exceeds 64kbps bandwith, even when watching youtube videos – think before you write…

             
  37. Sceptical corporate traveller

    Much as I like free internet, and preferentially select hotels that have it, I’m actually prepared to pay a REASONABLE amount for a decent service. BUT when I’m asked to pay for 24hrs what I pay for a month of high speed access at home – that IS a ripoff.

    Like Pam – I can do without the TV, rarely watch the movies (for which I would have to pay) because nowadays it’s easy to bring my choice with me, so I feel quite strongly about the implicit costs I am paying to make those available. How about offering me a choice – free internet OR 127 channels of TV?

    Fortunately hotels have not yet found a way of charging me for the additional electricity that re-charging all my mobile devices consumes. OOOOPS – should not have let that thought escape, although I suspect somebody is already working on a way of doing it. Wait for the outrage when they do!

     
  38. Brian Searl

    Please ignore the fact that I can’t spell or place proper punctuation this morning 🙂

     
  39. pam

    I see internet as a utility, like water, electricity, cable TV. Hotels don’t run a meter on my water use, I can take nine showers a day for all they care. I think internet should be handled the same as any other utility, and be included. Don’t get me wrong, I don’t think it’s a requirement that a hotel offer internet. But I find it irritating when I have 127 of television that I don’t watch for free and I have to pay 15 dollars for a web connection.

     
    • Brian Searl

      That’s what I’m saying though. Every traveler is different. When you reserve you’re room what if you are given a menu. Choose 2-3 services for free among breakfast, internet, television, fitness room, spa etc.

       
      • Amelia

        I really like Brian’s idea…it’s like the opposite of those ghastly resort charges where you have to pay for access to everything, wanted or not. And Daniel, your article was really interesting, thank you.

         
  40. Tom

    First, thanks for a truly witty article, especially your reference to ‘the rich, the blind, travelers on expense accounts.’

    Good will aside, I think the article ignores a basic economic truism that is key to understanding the high dudgeon surrounding the issue, and explains why hotels will ultimately cave. Travelers understand being charged extra for mini-bar drinks and other services consumed incrementally. Wifi, however, feels more like a basic service that should, in 2011, be included in basic rates. Supplemental fees for internet feels roughly like being charged extra for television or having a pay-box on the loo. In fact its even more aggravating because we know that that the incremental cost per guest of even high-speed wifi is effectively zero. That’s so regardless of capital costs, that should be returned by a small increase in rates (ten cents or P or whatever) or higher occupancy driven by traveler good will.

    Oh, and forget about the internet in the lobby idea. I just stayed in a property that had that and nothing – except possibly hotels that decline to put a coffee pot in rooms so travelers can enjoy higher levels of service (at $9 per cup!) from room service – is more aggravating than having to huddle in a corner of the lobby with all the other folks not traveling on expense account.

    Great article though, even though I disagree respectfully.

     
  41. Charles de Gaspe Beaubien

    We’re building our Group Hotel Booking Engine so the Planner can filter by “Free Wi-Fi” and we predominately list it as a benefit. Web sites that call it out more aggressively will put pressures on hotels to not charge for it.

    With Personal Hotspot, I am not as dependent on Wi-Fi domestically as I am Internationally and travelers will stop paying for it as we all have our own internet sources in the car, phone, iPad or laptop.

    If Internet is Free in the NYC Parks, I have a thought time to see why I have to pay for it at my hotel. It shouldn’t be a profit center anymore.

     
  42. David Turnbull

    A model we have been exploring on behalf of some clients is similar to the spotify approach to music. Pay a premium or put up with advertising. There are some hotel specific platforms appearing in the states but is still in its infancy here in Europe.

     
  43. Brian Searl

    Here’s the deal. Nobody wants to hear the opinions in this article (no matter how true they are) because we as a society continue to demand things for free. It’s the guiding principle behind why airlines are losing money as well. When adjusted for inflation ticket prices are actually down since the 1990’s.

    The truth is that I am a frequent business traveler and I absolutely hate not having access to free WiFi but at the same time I continually remind myself (as a business owner) that nothing is really free. Someone has to pay for it and like the author of this article, I would prefer free breakfast if I had to choose.

    That’s merely my opinion though and many other people’s are likely to vary so here’s a solution for hotels. Give guests a choice. If you offer free breakfast and paid WiFi then let them switch if they choose and pay for breakfast and get free WiFi. If you offer free WiFi and paid breakfast then do the same.

    Everyone has a different opinion of what should or should not be free and much of it depends on what you travel for. This article mentions a lot of uproar over charging for WiFi but I don’t see many leisure travelers complaining. I see travel bloggers complaining because they travel for business and need it. Leisure travelers are almost never in the hotel except to sleep.

    There is a point where we have a right to expect certain things for a hotel and those include a good night’s sleep, good service and cleanliness. Everything else is just a bonus.

     
    • Hill Rider

      The point is that a society we abhor being taken advantage of. We hate profiteers (Enron, whoever is behind the financial crisis, etc.). And being charged $12 for something that costs $0.05 is absolutely repulsive to the average person. Doing the math, that’s a 99.6% profit margin.

       
      • Graeme Evans

        I think you’ve hit the nail on the head Hill; I don’t think anyone resents paying a reasonable amount for the service – but with many hotels charging $10-20 per night, how can it be anything other than profiteering. It is interesting how the author uses extortionate charges made by airlines to defend those levied by hotel management around the world, when in reality hotel chains have been the masters of such fees for far longer than I can remember!

         
    • Dance Mother

      I’m not interested in stuff for FREE – the room costs way more than free. It should be included in the horrifyingly high price of the room. Let them add 3 bucks to the price of EVERY room and let wi-fi be part of the cost of the room rather than only getting money from travelers on expense accounts to pay and leaving everyone else in the dark. It makes way more sense to me – who will notice a 3 dollar increase in room price when they can update their status in that high-dollar room?
      Doesn’t it make more sense to limit wi-fi to in-room where the users at least have paid for the room (and throw wi-fi in the bargain)?

       
    • Dave Burke

      Not these days – hoteliers should move out of the archaic times that a lot of them are living in. Wifi is not expensive to install and maintain. Initial outlay may cost but post this they will capitalise by advertising free wifi – this is the swaying factor in hotel choice for me.

       
  44. Alex Bainbridge

    Not mentioned as a solution in this article would be free wifi in the lobby / common areas. So free in the common areas, paid for in the rooms….. as it is the in room connections that compete with the alternative revenue generating communication devices / entertainment.

    That would probably be sufficient for leisure travellers (might not get positive press, but it might stop the negative press). Business travellers would continue to pay for in-room as described above.

    Now for leisure travellers who are booking in-destination activities while already in destination – why can’t wifi be subsidised by local tours & activity providers – e.g. howabout a splash screen when you connect to the wifi saying – you could do this tomorrow etc etc… just a matter of getting creative with revenue sources.

     
    • Troy Thompson

      Love that idea Alex. One would have thought that the people who publish those wonderfully informative city guides, the ISP and hotel could work out a sustainable model.

      There is no guarantee that I am ever going to pick up one of those guide books from the desk (but go ahead, count me as an impression), but you are darn right I will see you splash screen as I frantically get online to check Facebook.

      – Troy

       
      • Daniel Edward Craig

        Alex: I agree this is a good compromise. I’ve managed a hotel that offered free wifi (and coffee) in the lobby and paid internet in rooms, and it was remarkable to see how many people took advantage of it (some in bathrobes and slippers). The effect was to bring the otherwise quiet lobby to life. It won’t be enough for all travellers, but is certainly a starting point.

         
    • Timothy O'Neil-Dunne

      A bunch of hotels already do this.

       
 
 

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