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.