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October 12, 2005

NY Times v. Wall St. Journal on Hotel Internet Fees

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.


I had to spend a couple of months in Berlin for work and I was glad to find that Radisson SAS hotels offer free wired/wireless Internet to their guests (you only have to provide your name and room number at a logon screen when you connect).
Consider booking a room in one of these hotels when you travel and meybe we can "force" other chains to follow :)

Hi, I'm a sysadmin at a five stars residential resort ( and have decided to give free internet access in the hotel rooms, lobby, bars, swimming-pool areas, etc, for the same reason as explained in this article: the higher the lever of the hotel, more things sould already been paid for (like internet connection), as you are already paying more for the room. So we are giving WIFI access to a 2 megs pipe (100% bandwidth upload/download) for free. It should be the same everywhere. Great Article!

What's really irritating in Europe at least, is that the EU offers subsidies/assistance in setting up free Wi-Fi spots for any business, hotels included. It's completely free to the hotel to install the equipment --here's the page from the Greek program which at least had some deployment before the 2004 Olympics.

Try the cheaper hotels along the road; red roof inns, holiday inns, confort inns, hampton inns,....all have free wifi. What an eyeopener when I retired after 25 years on the road paying for access.

The problem in most hotels is the increasing demand for broadband use.

Back in 2000 when I first started seeing hotel build outs the average number of users PER NIGHT was six to seven users. Now that has swelled to anywhere from 30 to 50 users at anyone time, especially in convention or conference hotels.

Bandwidth of 1.5 to 2 megs is great if you're the only person on, but without the idea of Bandwidth on Demand, we're basically getting dial up like speeds sometimes.

I've found that my Verizon EvDO card is a lifesaver when I end up in a hotel in the USA that has an overloaded network.

The funny thing is that I never experience bad bandwidth in a T-Mobile property. I was in Miami at the Hyatt Regency earlier this year and the coverage was so good I held a Skype call while walking from my room, into the elevator and then down to the main lobby. Now that's a great install.

[Editor's note: T-Mobile says that they install at least a T-1 line, no substitutes, in all of their hotspot locations. This isn't true for all other properties, especially free ones. I know that Wayport uses various technology, but typically to offer more bandwidth, not less--gf.]

What neither piece addresses is the change in mentality of a user and the hotel itself when HSIA goes from a pay for service to an amenity. The user expects the same exact service, which now has gone from a revenue generator to a cost center.

By giving it away for free, you garner a higher use rate, which in turn increases the average bandwidth you use. An example of this was a stay I had at a hotel that gave Internet Access away for free... During the day (it had no meeting rooms, so no one was around to use the network) the bandwidth was ample to watch streaming video, but at night when all the rooms were full, I could not even listen to a 96kbps Shoutcast stream.

So, you add more bandwidth... That free network is now really starting to cost; single T1s are inherently cheaper than multiple T1s... So, a free bandwidth hotel either has to increase their rates, or eat the costs...

With HSIA as a revenue generator, the hotels are able to justify the increase in bandwith, because revenue is increasing.

Going back to the attitude change, when a user has a poor experience with their free internet, they will demand a refund. When that comes out of their nightly room rate instead of a refund of the fee they paid, I think most hotels start becoming very wary of this "amenity". Also, who is going to support this network? Most hotels do not have an IT director per hotel, perhaps there is one for the entire chain, so it will fall on the front desk and the Engineer? For most chains, the engineer is responsible for plumbing, electrical, and other handyman roles, so now you're going to make them MCSEs? For free?


Its all part of the cycle.

Hotels add free amenities to attract customers.

"TV!" ~1950?
"Color TV!" ~1970
"Cable TV!" ~1980

"Internet" is just the latest of these.

I recently attended a symposium at the Anaheim Marriott where we spent 8 hours a day in the hotel conference rooms. Since the symposium organizers did not purchase the wireless package for all in attendance, I asked the front desk what it would cost for me to pay for wireless access on my own. Their IT guy came down from his office and showed me the price list: for one person to get wireless access in the conference room it would cost over $700 per day!

I literally thought he was kidding. When I asked why it cost so much for one person to use their network for one day, he said that it is the business rate because it is assumed that I would be doing business-related work in the conference room. I told him that was true, but I was also doing business related work in my hotel room for $9.95. He just shrugged and said that the symposium should have bought the wireless package. Unfortunately, I did not think to ask him how much that package would have cost.

Thankfully, there was a Hilton across the street that had a strong (and free) wireless signal, so I could sit in the Marriott lobby and tap into the Hilton network. At least they know what their customers want.

Working for the airlines I stay in many different hotels. I commented to a friend how all the high level hotels charge for access. Meanwhile, most all mid level offer internet as a courtesy to their guest. My conclusion was that the guest at the higher end hotels are expensing it. The hotels know this and take advantage of that.

I'll agree with a couple of others that mid-range to low-end hotels now seem to be offering "Free Internet" in very much the same way that they all use to offer "Free Cable TV" a number of years ago. It has, however, changed my preferences in that I am now much more likely to look for a Best Western (for instance) than I was previously, primarily because they pretty much offer free Internet and I've generally found the bandwidth to be adequate.
Also, as to the article side note, I haven't used a hotel phone or a cell phone in many months when staying at hotels with free HSIA. For business usage, I've just nailed up a VPN back to our corporate network and then used my softphone connected back to our IP-PBX. For personal usage I've been using Skype with SkypeIn/SkypeOut. In both cases the voice quality has been fine, even at busy periods.

Great article. An EVDO card will save you more than just hotel fees and possible pay for itself with 4 nights of hotel internet fees You also get the convenience of bringing your high speed internet with you. Available while waiting in airports. While commuting in taxis & limos. Being able to use it at remote locations, client's offices or any other place where you can sit down.

In the UK, BT's Openzone brand pops up at many hotels, however, it's usually only available in the immediate lobby area - how useful's that? At a local hotel where I was facilitating a customer solution workshop it transpired that BT actually piggybacked their Openzone hot spot on the hotel's ADSL line which the hotel contracted from another ISP. I was dumbfounded.

This article is very accurate. It really burns me that as a government employee (I teach at a public university in the U.S.), I am billing the taxpayers of my state for this overpriced Internet access when I attend a conference and stay at the conference hotel -- which is usually a Marriott, Hilton, etc. Some of the hotels have free wireless in the lobby, but almost all of these big hotels require you to pay for access in the room. I'm staying in touch with my students and even sometimes conducting a class online while I'm at the conference, so it is part of my job to be connected. They are already charging $200 and up for the room, plus taxes. The only reason to make me pay $10 a day for Internet access is because they are greedy. The business center fees in the hotels are even more outrageous.

Up until now, I haven't stayed in many hotels, at least not in the UK and Europe. I was recently in Tanzania visiting relatives in Dar-es-Salaam. When we decided to go to Zanzibar for the weekend, I foolishly bowed to pressure and left my laptop behind 'to make things easier travelling'. I am partially sighted, and therefore probably rely on computers and the internet more than most. I'm also rather keen when it comes to checking e-mail, communicating with friends through VoIP and IM, and also keeping up-to-date with the world around me. Anyway, I wasn't expecting much of the place, but was pleasantly surprised when we got to the hotel. It had proper air conditioning, tv, telephone (though no direct outside line, you had to go through the operator), and joy of joys, a phone socket for connecting laptop computers. DAMN! If only I'd brought my laptop. Now, I don't know if there was a charge for the internet, but I suspect it would have been free and was included in the room cost. This is Zanzibar, and without being derogatory, I suspect it would have been dialup, or 128k at the most. So it's really not that big of a deal.

I'm currently in the donrit sofitel in Amsterdam, and have free access via Wi-Fi there. The signal quality and speed are perfectly acceptable, and indeed about the same as that which i get on my home wireless network with a 1mb connection attached. The hotel has it's own internet, but once my wi-fi detector (The Kensington one is great) picked up a strong, unsecured signal, I saw no point in requesting the details for the hotel's internet and just used that which I found.

Now, in this case I'm probably lucky and it's probably co-incidence that there's another wi-fi nearby. I know this could open up a whole can of worms about whether it's morally right to use free wi-fi whenever we want and whenever it's available (is it right to be sitting on a high street bench and to just tap into the shop next door's network to check your mail or hold a voip call? Or even someone's home network that they haven't secured because they didn't have the knowledge?) But I won't go there. My personal opinion is that it is okay, I've done it myself. It's not as though they're being charged by the minute, they had the idea to set up the network, and they're probably not losing anything as a result of my access. I keep my mouse out of wherever it shouldn't be and stick with the bare internet access. Fine.

But getting back to the point about free net access in hotels, I think the net is now no longer a luxury, or a utility, but a commodity - something that can be added to or subtracted from. Bandwidth can be moved around, different people are constantly grabbing what they need and then relinquishing it once they're done. The net, no matter how it's accessed, mobile, pc, pda, is now a fundamental part of modern-day life. Scrap the charging per night or by GB. It's now just as important as food, drink, or health and safety. So why not just charge for it like you would those? Just add it as a standard part of the standard room rate per night. That keeps costs down, and avoids the surcharging that's making a lot of people disgruntled at the moment. The solution as far as I'm concerned is really quite simple, not to mention fair, as the majority of ppl now rely on the net in some form or other. Enough said.



Being a hotel owner - I understand both points of view.

In my area, charging for High Speed Internet Acces (HSIA) would kill our percentage of filled rooms. However - the fact that it is free invites "good" and "bad" users alike.

If the gateway device isn't capable of monitoring the end users bandwidth or limit users sessions - it could very well be "taken advantage of". Dont forget if the user is not technically savvy - i.e. wrong TCP/IP settings (which can be fixed by nomadix patented DAT), wireless device switch turned off (hard to see any APs if your card is turned off), must connect to work VPN or cant get on. This has resulted in one of the most expensive requirements - 24 hr tech support which is required by many franchises. Yes - this is still under the clause of "free" to customers. I cant recall how many times I stay at a "cheaper" hotel, and the access that is advertised as free is pretty close to non-existent.

I can understand why hotels charge - and can imagine in the future when everyone is sucking bandwidth, using the internet - it will be exactly that, pay to play.

BTW: Our pipe coming in is 6.5mbit/1mbit which feeds 100 hotel rooms/conference center/meeting rooms and offices. We limit snmp, bandwidth, and sessions on the public side. However no one but spammers or peer2peer abusers would notice.

What the world needs is for Expedia,, Orbitz, and the other travel sites to *list the internet fees*. I would "vote with my feet" (sometimes perhaps choosing a hotel with fees if necessary) if I could just get the information on the costs!

Without the information on the costs, prices will never come down.