What is the future of charging for HSIA?

By Les Spielman

To charge or not charge for HSIA, that is the question.

The time is very near when hotels will be forced to purchase a lot more bandwidth from their Internet providers, even though competition will require them to offer Wi-Fi to guests for free, or on a tiered-fee system. While Wi-Fi service might be free for the basic level of use, like e-mail and casual Internet browsing, fees will rise in increments for higher levels of data use, especially for video streaming.

Travelers, in general, hate hotel fees.

It’s much the like the airlines, charging the passengers for all sorts of things, and looking to grab every last cent from each service added. You need to make sure that your price and your product offering are clearly spelled out. Those annoying airline fees, for example, are widely disliked especially when, with no advance notice, you get hit for the “oh by the way” fuel surcharge, extra “tax” fees, carry on baggage, etc.

In general, business travelers seem to have two reactions. Most feel that the hotel room Wi-Fi experience is deteriorating, regardless of whether the hotel charges for the service, or bundles it as part of a “package”. The true road warriors know that there are other options for ensuring good Wi-Fi service on the road, that do not include paying the hotel any fees.

One way around these outrageous fees, and increasingly slow response times in hotel HSIA networks, is for the road warrior to carry his or her own mobile broadband, via a 4G USB modem from a mobile vendor, at a cost of about $50 a month. It takes only a few nights’ saved charges to pay for this better, more flexible service. The new 4G mobile hot spots are extremely fast, and the guest will have access anywhere their vendor of choice has service. An increasingly popular way for road warrior guests to create personal solutions, is to use one of the newer 4G enabled mobile phones, allowing you can “tether” your “Smartphone” and use it as a wireless “hot spot” for up to five devices – for only $20.00 a month more than the guest’s basic monthly mobile phone bill. The basic tone throughout the industry, as 4G mobile phones proliferate, will be to use these mobile phones as personal Wi-Fi hot spots. One point to note is that if guests are using a 3G Smartphone as their hot spot, their other wireless devices connected, especially iPads, will suffer from much slower speeds. So speed of service will become both a qualifier for some guests and a requirement for properties to compete.

Cellular service providers are also being hit with major strains upon their systems, from the data-heavy demands of smartphones and other Wi-Fi enabled personal devices, which have quickly changed the economics of the industry. After the first wave of Wi-Fi enabled smartphones hit, wireless providers began revising the way they billed the customer’s account for use. In some cases instituting tiered-fee systems based on monthly data consumption. This restriction upon use of data-rich streaming will favor those hotels charging a reasonable fee for Wi-Fi service without data caps.

If more hotels do upgrade their Wi-Fi services, and put in place a tiered-fee system depending on which bandwidth level customers decide they need, the hotels must do so carefully. Many guests already react to existing fees, often $14.99 a day for basic Internet service in a $300-a-night room, or $5 for that bottle of water left on the desk, as an outrage. Business travelers have a lot more choices among hotels than among airlines, and can be a lot more exacting about paying an extra fee, or finding another property without such fees.

In many hotels that I have stayed at, the Wi-Fi speeds are close to dial-up intolerably slow speeds, even at 7 a.m., when speeds should be near their fastest. I wouldn’t mind spending a reasonable amount for reliable, fast speed HSIA. However, if there are multiple-tier Wi-Fi speeds, I can’t help but wonder if the free or lower-cost Wi-Fi will be so poor that the free tier would be useless? Further, are hotel fees rational? Sure you, the hotelier have many ongoing costs for bandwidth and infrastructure, the MRC for the bandwidth, even employee time for helping the guest getting connected. The day has come where a vast majority of the traveling public will not check into a hotel without internet access. It’s like checking into a hotel without a bathtub or shower. One of the first questions that a guest asks during a reservation is “do you have internet access?” The next question is, “is there a cost for the internet”? When booking a room online the first area that the guest is interested in is location. The second area is the availability of HSIA.

No-one needs to be reminded that a hotel room not rented tonight cannot be put on the shelf for a later sale. An empty room night is lost revenue. A lost room night is a perishable product. Overcharging for HSIA will reduce occupancy. Remember the lesson we learned so well from overcharging for telephone service, driving most all guests to abandon use of our expensive switches. Let’s not – as an industry or as individuals – make the identical mistake again, not learning from the past.

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