The two big papers duke it out over paying for Wi-Fi in hotels: On Sept. 27, New York Times business travel columnist Joe Sharkey wrote about the tendency for big hotels to charge big bucks for in-room and public space Wi-Fi and wired broadband. Two weeks later, he followed up with responses from readers who have found all kinds of ways to avoid those charges, from using nearby free Wi-Fi at places like Panera to parking at nearby hotels to get work done. One hotelier in London at the Dorchester said that subsidizing Internet access would lead to a rise in all room rates.
Now we all know that's not true. The cost of providing Internet access is roughly a fixed expense, although some Internet providers who help hotels offer no-fee access charge based on usage plus fixed rates. The Dorchester charges £18.50 per day for high-speed access ($33), according to Sharkey's second column. Their likely depreciation and hard costs per month are almost certainly no more than $3,000 to $4,000--or 100-odd room nights' worth of Wi-Fi.
What Wyndham Hotels and Resorts along with other hotel chains found is that if you make Internet access free you go from "the needs of the minority" as the Dorchester technology director described it to the needs of the majority: Wyndham saw usage quadruple when they made Internet access free to members of their no-cost affinity club.
In that scenario, Internet access fees spread across all rooms aren't a penalty to be borne by those who don't use it. Rather, it's an expected amenity that a traveler may or may not use. I honestly don't always take a Jacuzzi bath when there's one in my hotel room.
Over at the Wall Street Journal tomorrow, reporter Avery Johnson files the obverse piece noting that the majority of hotels offering Internet access now charge nothing for it. He looks at the bottom and middle on up. The irony has been for the last couple of years that the cheaper the hotel you stay in the more likely that Internet service is an amenity like crummy soap than an extra charge. There's an excellent chart at the bottom of the article examining major chains.
A few years ago now, John Yunker (when he was at Pyramid Research) got grief for suggesting that the trend was for more and more hotels to offer service at no charge as the ramp-up from a few Internet-equipped hotels moved to most Internet-equipped hotels. I thought that a captive audience might not be the best one to make threats, but it turns out that enough competitors decided to not add the complexity of charging for access and there's enough free service around in cafes that hotels can use free access as an advantage. (Some say that charging for Internet service doesn't make you more in the end because you're really trying as a hotel to get more people staying and the more full you are, the less you have to discount.)
Journal reporter Johnson points out that the average room night has risen to its highest level since 2000, so the hoteliers have a little more money to throw around on extra amenities. A great statistic is worked into the story, too: we all know that hotels used to suck money from guests for telecom charges. Cell phones have killed that business: 55 percent of the telecom revenue was lost between 2000 and 2004.
One thing not mentioned in either article is that the spread of 3G cellular data networks means a further demise in Internet fees at hotels. I've been waiting for this to really hit home, and it will probably be by mid-2006 that it slams hotels entirely. With EVDO prices already down to $60/month (2-year commitment, voice subscription required), a business traveler who otherwise doesn't need EVDO data has to make the simple calculation that four nights of Internet access more or less pays for their EVDO subscription each month.
Now hotels often have one or more T-1 lines or the equivalent and EVDO speeds are far below T-1. But for all practical purposes, EVDO is a fine replacement technology for hotel Internet. The big difference is that if you're an Internet pusher--moving data back to the home office--the 50 to 100 Kbps upstream speed on EVDO is inadequate compared to 1.5 Mbps on a T-1 line.
Great travelers think alike, too, obviously:
WSJ: Some travelers are perplexed by the disparity. "What really irritates me is that at the lower level of hotels, Internet will be free, while at the highest end, it can be as much as $15 a day. I have no idea why," says Arthur York, a 70-year-old retired executive who lives in Villanova, Pa.
NY Times: Eric D. Horodas, the president of Greystone Hospitality, a San Francisco hotel company, was not buying that. "I am very annoyed when I check into a high-end hotel and find I have to pay extra to connect to the Internet," he said. Business travelers, he said, should "demand complimentary Internet access."
Interesting side point to the Internet access: if you have free Internet access, you can very easily use Internet telephony. Some hotels may block this just as they block outgoing email. Enter corporate VPN, Google VPN, or VPN-for-rent services: it imposes a little load, but it enables VoIP and Internet calling.
Perhaps in response, some hotels bundle in unlimited domestic calling (local, long distance, and toll free) as part of a nightly data fee, a resort fee, or as part of the free service they offer to affinity club members. Given that hotels can now get the same advantage of paying practically nothing for long distance, free calling is just another amenity, too.