The Hotel Wi-Fi Wars

This is the first of a series of stories on hotel Wi-Fi policies

Battles over paying for hotel Wi-Fi are winding down.

Travel managers—and the travelers they manage—can thank Marriott International for inadvertently killing one of the most disliked practices in the hotel business, charging for Wi-Fi.

“Marriott really started the conversation last year when they were caught jamming [guests’ personal] Wi-Fi at Opryland in Nashville and paid a $600,000 fine for violating federal communications law,” said Eric Jongeling, director of the Hotel Solutions Group Americas at Carlson Wagonlit Travel.

“Then they angered the agent community by offering free Wi-Fi for travelers who booked direct and bypassed TMCs and travel agents,” said Jongeling. “That created a lot of very negative publicity.

In a related development, Marriott International recently dropped its efforts to gain Federal Communications Commission (FCC) permission to block guests’ personal Wi-Fi in its meetings and convention space. That action followed further protests from travelers. [See our next story in the series.]

“Now you have Hyatt saying they will offer free Wi-Fi to all travelers starting in February,” Jongeling said.

“It is pretty clear that the entire hotel sector is moving toward free Wi-Fi. People expect Wi-Fi to be free. Period.”

An expected . . . .
Hotel industry insiders are saying much the same thing.

Jeff Weinstein, editor-in-chief at Hotels, a leading industry journal, wrote that “…it is only a matter of time before Wi-Fi becomes an expected free amenity and by the end of this year anyone who is not giving away Wi-Fi will likely suffer…

“There are too many emerging options for the tech-savvy, tech-addicted luxury guests to turn to…So be prepared to write a check to increase your bandwidth as it will soon become a point of entry to compete.”

 . . . and a must-have amenity
Free Wi-Fi usually tops the list of must-have business travel hotel services.

A survey by Skift and American Express last summer found that a third of business travelers said free Wi-Fi was the number one amenity they looked for in choosing a hotel for business travel.

Hotels are accepting the obvious.

A December, 2014 survey by the American Hotel and Lodging Association (AH&LA) found that just 11% of respondents said they were charging for Wi-Fi. That is down from 23% in a 2012 survey.  The AH&LA survey had 9,600 respondents.

Not all business travelers pay
The transition from paid Wi-Fi to free, however, won’t be direct or immediate.

For starters, not all business travelers now pay for Wi-Fi even when staying at properties that charge for the service. Some get free Wi-Fi as a hotel loyalty program benefit. Others get free Wi-Fi as part of a negotiated rate.

And Wi-Fi charges are not as simple as adding $5.95 or $15.95 per night to a traveler’s folio.

Most major brands have already adopted a two-tier pricing schedule, according to Robert Cole, founder of business travel consultants Rock Cheetah.

A base level is free to inexpensive and provides enough bandwidth to check email. Travelers who need more bandwidth to stream data have to pay more.

Complex programs
To further complicate the picture, some companies offer free connections at lower tier brands and charge for the same service at upper tier brands.

Hilton, for example, has free Wi-Fi at Hilton Garden Inn, Embassy Suites and Hampton Inn. But it charges at Hilton, Waldorf Astoria and Conrad branded properties unless the guest is a Hilton Honors member with Silver, Gold or Diamond status, in which case lower speed Wi-Fi may be free.

Most hotel chains have similarly complex and problematic Wi-Fi programs.

“The reality is that when you travel, you expect to go online just like you do at home or at the office,” Cole said. “When you walk into a hotel, you expect Wi-Fi to be a utility just like lights or running water.

“When Starbucks and McDonalds provide free wi-fi, customer expectations change,” he added. “It’s not a question of cost from the traveler’s perspective, it’s what is and isn’t appropriate to charge for. Travelers expect Wi-Fi to be free.”

Hotels’ own costs
The problem is that Wi-Fi isn’t free for hotels.

There is a significant infrastructure cost to create a Wi-Fi network plus ongoing repair and maintenance costs.

Just as hotels have to pay for electricity usage, they have to pay for Internet access and bandwidth usage. And the more devices guests bring, the higher the bandwidth needs.

“Building a network that can handle peak bandwidth demand is a technical and engineering issue like ensuring you have adequate water supply, Cole said.

“Recovering your costs for Wi-Fi is a business issue. Where hotels get into trouble is trying to confuse the two.”

Next time: Marriott International’s Wi-Fi woes