Skift Take

Traveler demand for, and use of, Internet connection services is soaring, creating a dilemma for travel brands that must walk a precarious tightrope between charging for access and risking customer anger over unreliable free service.

Recently we launched a new report in our Skift Trends Reports service, The State of Wi-Fi for Travelers in 2016.

Below is an extract. Get the full report here to stay ahead of this trend.

In contrast to the challenges of other travel sectors, where Internet providers must deliver service aboard moving boats and airplanes, the hotel industry would seem to have it relatively easy when it comes to Wi-Fi. Connection options at the major hotel chains are improving significantly, with basically-free Internet service at virtually every major chain.

But given this perception that providing Internet service is easier for hotels to provide, customers are much more likely to get angry when that service doesn’t work as expected or costs too much money. According to a recent survey of most requested hotel amenities by Resonance Consultancy, 66% of travelers ranked free Internet access as either “extremely important” or “very important,” higher than any other amenity that was mentioned.

Many of the major hotel chains have responded to this very issue in recent years by granting free, if limited, Internet access to all guests. As the American Hotel and Lodging Association discovered in a 2014 survey, only 11% of properties studied charged for Wi-Fi, down from around 25% who charged for access in 2012. According to another January 2015 analysis by USA Today, Intercontinental Hotels Group, Hyatt, Marriott, Hilton and Starwood all offer some variation on free Wi-Fi.

Wi-Fi Policies at Major Hotel Chains
Wyndham: Free at most brands, with the exception of Wyndham and Wyndham Grand properties
IHG: Free for all Rewards Club members
Hyatt: Free for all guests. Premium Wi-Fi available for a fee
Marriott: Free for all Rewards members. Premium Wi-Fi available for a fee
Hilton: Free Wi-Fi for direct booking, plus all Hilton HHonors Gold and Diamond members
Starwood: Free Wi-Fi for all Starwood Preferred Guest members
Four Seasons: Free for all guests

However, as more and more hotels switch to some form of free Wi-Fi service, it’s not without caveats. There are often additional steps required of consumers in order to access these connections, such as joining the hotel chain’s loyalty program. On top of this, the bandwidth offered is often restricted to the simplest of Internet tasks like checking email.

Anything that requires a more robust connection is only available to elite loyalty program members or for an additional fee. Hyatt, Marriott and Starwood, for instance, offer premium Wi-Fi for free to loyalty members who hold elite status, while Hilton charges on a tiered pricing system for premium Wi-Fi service.

In the eyes of many outside hotel industry experts and company executives, these policies are still too restrictive. “The hotel industry is finally dealing with a significant problem that they themselves helped create,” said Robert Cole, founder of RockCheetah, a travel consulting firm, speaking with USA Today. “If McDonald’s or Starbucks could offer Wi-Fi for free, why couldn’t a hotel?”

Others in the hotel industry note the challenge today is not so much offering free access but providing fast, reliable service. For many hoteliers, the solution has been to enforce a minimum bandwidth speed at all properties. “What we’ve done to help meet those needs [is create minimum standards]. Up until two years ago, we just said the hotels had to have Internet access,” said Preferred Hotels’ Woodley. “Then we added in they had to have wireless Internet access. And now we say that have to have a minimum bandwidth of 2 megabytes/second.”

Others in the industry confirm this 1-2 megabyte/second connection speed, though this is still slow in comparison to the average of 11.7 Mbps found in many U.S. homes. “We’ve raised the minimum bandwidth to 1.5 megabytes,” said Scott Taber, senior vice president of rooms for Four Seasons Hotels and Resorts in an October 2015 interview with Skift.

But beyond simply offering a minimum standard of free service, how are other hospitality brands looking at the future of their Wi-Fi offerings? One trend seeing more traction is properties that go beyond free Wi-Fi service to provide guests with free mobile wireless hotspots. This is particularly true of hotels outside the US, where properties try to help guests avoid hefty international roaming charges. The Mira Hong Kong for instance, now offers each guest a complimentary 4G mobile hotspot they can use throughout the city.

And what about the future of those paid premium Internet offerings? There still seem to be some holdouts in the world of luxury properties, where affluent leisure travelers and business travelers with expense accounts seem less sensitive to the policy.

However, many executives believe hotels will eventually give in to the competitive pressures of free Wi-Fi from other industries. “We see some hotels starting to ‘tier up.’ Maybe with [a loyalty program] or even as part of a regular room inclusion they’re getting the access to Wi-Fi. But then they’re charging a premium for broader access. I’ve only seen that tiered structure in a couple hotels, and I don’t think it’s going to last real long,” said Preferred Hotels’ Woodley.

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Tags: hilton, hyatt, ihg, marriott, research reports, starwood, wifi, wyndham

Photo credit: Expectation of free Wi-Fi in hotel rooms has reached the level of free water in hotel rooms. Nishimuraya Kinosaki Onsen / Flickr

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