Hoteliers, commentators, consultants and industry experts have been wrestling with this question for years.
No-one has come to a consensus and that’s because it’s actually quite a conundrum. I believe the answer is “It Depends”.
What does it depend on? Quite a few things, here are some of the more important variables; the hotel, the guest, the level of Internet Service and the property’s marketing strategy.
In case you were wondering – Yes, things are changing, about 23%* of all US hotels (84 percent of luxury properties and 76 percent of upper upscale properties charge for in-room Internet) are charging for Internet Services mainly due to dramatic escalation in data consumption largely exacerbated by tablets, in particular iPads. Their thirst for video (AKA more bandwidth and more expense) and wireless is very quickly changing the playing field.
So how do you decide to charge or not to charge for Hotel Internet Access?
What should be included as Standard when you book a hotel room?
“WiFi has become a standard expectation, like electricity, A/C, or a television. If you are going to charge for WiFi, you might as well start charging for those items. Heck, why not charge for toilet paper and towel service. that seems like a good idea too.”
This was a real response to an article about the challenges of juggling increasing guest demand for WiFi and associated increases in bandwidth.
I am sure you have heard similar comments or seen them on comment cards.
Different properties offer different things – maybe tea and coffee, bottled water etc. It depends on the property but, unlike Internet Access, these are controlled. By way of example, you might give the guest 2 bottles of water per stay/day, when the guest runs out they need to ask for more and you may or may not elect to give them more free of charge. There is an inherent control on how much is consumed.
With Internet access, if a guest chooses to download a movie, they will consume a massive amount of bandwidth and may even set it up to download multiple movies and leave the room. In addition, depending on your set up, the guest downloading a movie may decrease the internet speed for all other guests. Internet access in often uncontrolled and can quickly cause spirally costs as bandwidth is increased to quell guest complaints.
So….we have to look at free Internet access differently from free bottled water.
* The American Hotel & Lodging Association (AH&LA) 2012 Lodging Survey
What do guests want when it comes to Internet Access?
1 – Want access to the Internet
Expected at 4 and 5 start properties and desired at 3 star properties and a bonus at 1 and 2 star properties. Corporate travellers expect there is an Internet offer and they are increasingly expecting access to wireless. Over two-thirds of business travellers would “not return to a hotel where they had a poor technology experience”*. Leisure travellers are also keen but it is less critical to them in their overall assessment of their stay.
* iBAHN Survey
2 – Want Access from Room and Public spaces too
Guests want access from within their room, but more and more also want access from public spaces be it foyers, food and beverage outlets and the pool via wireless.
3 – Need for Speed
We’ve all heard the phrase “Content is King” when it comes to the Internet but “Speed is the Experience” and slow access will send customer complaints through the roof. A good rule of thumb is that if the guest can watch a 5 minute YouTube video without buffering, that’s fast enough and equates to about 512kbps for a single person.
4 – A Fair Price for a Fair Offer
Not all guests have the same needs when it comes to Internet access. Accordingly, some are willing to pay and others are not. In addition, the type of property has an impact – a corporate guest at a 5 star property who wants to quickly check email will probably complain if he is excessively charged for the privilege. A guest that got a’ room only’ rate at a 3 star property expects to pay for ‘extras’ such as Internet Access.
You get what you Pay For
I believe we need to think about segregating Internet offers based on the level of service – a tiered offering is an equitable solution and is well accepted by guests and hoteliers alike.
Some guests want to quickly check email, others want to watch a movie, others want a video Skype call to say hello or goodnight to their loved ones – maybe even read their child a bedtime story, others may want to conduct or participate in a Webinar.
1 – The guest checking email uses minimal bandwidth and minimal time and does not expect to pay much, if anything for the service.
2 – The guest watching a movie or doing a personal Skype call may or may not be prepared to pay for the service. He will be annoyed if the movie is unwatchable or he can’t hear or see his loved ones (due to slow internet speed) and he has no options. If you give him options, he’ll be happy as he then has control
a) Not watch the movie/do the Skype call
b) Pay for a higher level of service and enjoy his movie or Skype call without buffering or distortion.
3 – The guest wanting to take part in a business a webinar, I am sure will be more than happy to pay for a guaranteed level of Internet service (guaranteed minimum speed).
An Outline for a Tiered Offer
Many factors need to be considered and I have not offered pricing guidelines other than to say that each tiered offer would be charged at more than the previous. Don’t forget, cost recovery can be achieved multiple ways; one off charge, packaged into deals, packaged when negotiating Corporate deals, upgrade offers. Obviously each Property has its own positioning and that will dictate what and how guests should be charged.
I recommend you ‘pool’ your available bandwidth to facilitate the offerings you chose to make. By example, if you have a 10/10Mbps connection, allocate 2Mbps to the complimentary public areas users, allocate 2Mbps to the entry level guest users, 4Mbps to the Mid Level Corporate Guests and 2 Mbps (reserved not pooled) to your VVVIPs and Conference Presenters.
Pooling your bandwidth means anyone in that pool can have access to as much bandwidth as is available in that pool without effecting others. By example, if there is one person using the Public Access pool, they will get up to 2Mbps, if another user starts, they each get 1Mbps. In reality, people are not transferring data all the time so in effect, when people log on and say, download email, they get their email quickly, as they read the email, they are not transferring much data so the pool is available for others. No matter how many users are using the Public area pool, the bandwidth pool for the Mid Level offer remains at 4Mbps.
1 a) – Entry Level – Public Areas
An Internet offer that allows users to access emails. This offer should have a maximum data cap of say 30MB, after which time, the Internet speed in reduced to 128kbps. This offer should probably also have a time limit of say 30 minutes to 2 hours, particularly if you chose to offer it free of charge. This will ensure that an individual cannot ‘abuse’ the system at the detriment of other guests or cause hotel bandwidth costs to escalate in an uncontrolled manner. Ensue the guest has upgrade options to extend time and or increase speed.
1b) – Entry Level – Suitable for many Guests
An Internet offer that allows users to access emails, news type web sites. This offer should have a maximum data limit of say 50MB, after which time, the Internet speed in reduced to 256 kbps. This will ensure that an individual cannot ‘abuse’ the system at the detriment of other guests or cause hotel bandwidth costs to escalate in an uncontrolled manner. Ensure the guest has upgrade options to a faster level of service.
2 – Mid Level – Suitable for many Corporate Guests who need more than email access
An Internet offer that allows the above and sufficient speed to allow a 5 minute video not to buffer. Data limit should be generous, say 500Mb. This plan should also allow the guest to connect a number of devices simultaneously on the same plan. I would suggest a minimum of three devices.
3 – VVVIPs and Conference Presenters – Premium Offer
Guaranteed minimum speed of say 2Mbps for an individual. To do this, the bandwidth must be ‘reserved’ this will ensure other guests cannot have any impact. It also means, if this reserved’ bandwidth is not being utilised, it is unavailable to other guests who may be on line at the time. During a conference, you may set it up so only one person (the presenter) has access to the reserved 2Mbps.
Question: Should you be offering Free internet Access at your Property?
Answer: It Depends!
I hope I have provided some insights to this tricky conundrum. A simple question but there is no simple answer.