New hotel entrants want to help companies shave a few billion dollars from their collective travel spend. They’re not cutting room rates; they’re cutting ancillary fees and they’re starting with Wi-Fi.
London-based Amba Hotels said U.S. businesses spent $7.3 billion on Wi-Fi connections for business travelers in 2014.
Most of those dollars went to four and five star hotels. High end hotels, especially chain properties, are almost the only places business travelers still have to pay for Wi-Fi connections, said Amba CEO Belinda Atkins.
Airports, coffee shops, even mid-range hotels now offer free Wi-Fi.
Most major hotel chains have free Wi-Fi in public areas and provide slow wireless connections to loyalty club members in guest rooms.
Hyatt rolled out free Wi-Fi for all guests on Valentine’s Day—but as in other chains-free means slow.
It still costs extra to get the kind of Wi-Fi speed and bandwidth most business travelers have at home or in the office. The exception is for upper-tier loyalty program members.
No charge for air conditioning. . . no charge for Wi-Fi
Free Wi-Fi for all guests throughout its properties. Not free slow Wi-Fi but free high speed Wi-Fi with reliable connections and bandwidth to spare for the multiple devices that most travelers are carrying.
“We don’t charge for air conditioning, we don’t charge for hot running water,” Atkins told Travel Market Report. “It’s all wrapped into the rate. As far as business travelers are concerned, Wi-Fi is no different.
“Few things are more infuriating than paying top rate for your hotel and then being squeezed another £20 [about $30.50] just so you can stay in touch with your office and your family while you’re on the road.”
No fees for ancillaries; period
Virgin Hotels is taking a similar approach with its first U.S. property.
The Virgin Hotel Chicago, which opened earlier this month, doesn’t charge for any ancillary fees; period. No charge for high speed Wi-Fi, no charges for early check-in or late check-out, no room service delivery charge, no business center transaction fees. Even the bottled water is free.
Virgin boss Richard Branson told reporters in Chicago that all those extras can add $100 to $150 to the typical hotel bill.
According to Virgin Hotels CEO Raul Leal, U.S. hotels earned $2 billion in 2014 from ancillary charges for Wi-Fi, luggage storage, business center transactions, and similar add-ons to basic hotel rates.
“Customers are being ripped off for services that should be a right, not a revenue stream,” he told Forbes magazine. “Virgin Hotels plans to be that customer champion the industry needs.”
Getting the message out
Virgin isn’t being shy about its free Wi-Fi offerings. To get the message out, it parked a cherry red company van in front of nearby neighbors, the JW Marriott and W City Center, touting its free Wi-Fi.
Both the Marriott and W Hotels charge for in-room Wi-Fi and offer free access in their respective lobbies.
Marriott does offer free Wi-Fi but only to members of its Marriott Rewards frequent guest program and only if they book with Marriott directly.
Starwood offers free Wi-Fi to its Starwood Preferred Guest (SPG) members who book through its websites and through travel agents who book through SPG Pro, its program providing upgrades and other perks for agents and meeting planners. Starwood’s brands are Sheraton, Four Points by Sheraton, Luxury Collection, W, Le Meridien, Element, Westin, St. Regis and Aloft.
Free Wi-Fi may be a tough sell to hotel owners and investors, but it’s a no-brainer for business travelers.
An American Express survey last summer found that free Wi-Fi topped the list of factors that influence business travelers’ choice of hotels.
More than a third of business travelers who responded, 35.2%, said free Wi-Fi is the most important amenity when it comes to choosing a hotel for business travel.
Among veteran road warriors earning $75,000 to $99,000, 52% put free Wi-Fi at the top of the list. Millennials were only a little less fixated on free Wi-Fi with 48.3% putting it at the head of their must-have list.
Among business travelers earning $100,000 to $149,000, 24.8% said they choose hotels based on free Wi-Fi.
Arguments that free Wi-Fi is moot because most business travelers already get it through hotel loyalty programs look weak.
Only 10.9% of business traveler respondents said their hotel loyalty program membership played a factor in selecting their hotel. A quarter of respondents, 25.5%, said a free breakfast was most important and 28.2% said location was the key factor.