Travelers sometimes compare Wi-Fi to hot water, electricity or air — and when wireless access at a hotel shows up as a line item on their bill, they tend to make a few other comparisons as well.
“I imagine the Wi-Fi fee has to be what phones were 30 years ago and what baggage fees are to the airlines,” Brian Watkins, chief executive of the jewelry company Ritani, said. “It’s found money.”
Watkins has taken to bringing along a mobile Wi-Fi hot spot to avoid daily charges of up to $25 for wireless access on business trips.
“The nicer the hotel, the more expensive the Wi-Fi is,” he said. “I expect at that price point, some things are going to be included.”
For years, free Internet access has been a standard perk at limited-service hotels more likely to offer a vending machine than 24-hour room service. But at their high-end flagship brands, hotel companies have watched a growing parade of laptops, smartphones and tablets chip away at the revenue they earned from in-room telephones and entertainment.
These days, travelers accustomed to free Wi-Fi nearly everywhere, including airports and fast-food restaurants, are less willing to pay for the growing amount of bandwidth their devices demand.
“The public’s expectation switched from ‘It’s nice when you have Wi-Fi’ to ‘You must have Wi-Fi,’” said Max Rayner, a partner at the travel consulting company Hudson Crossing. “That evolution is a problem for hotels,” he said, because, just like airlines, hotels are discovering that charges for extra services may account for much of their profit margins.
Surcharges and fees at hotels in the United States were on track to reach a record $2.25 billion in 2014, up from $2.1 billion in 2013, according to research published last year by the New York University Tisch Center for Hospitality and Tourism.
Some major hotel brands are turning complimentary connectivity into a carrot, promising free Wi-Fi for guests who sign up for their loyalty programs and book rooms directly through the hotel.
“Now you couldn’t imagine being at home or traveling or in the airport or a restaurant and not having access to the Internet,” said Lara Hernandez, vice president for digital, loyalty and partner marketing for the Americas at the InterContinental Hotels Group. “It’s a traveler expectation.”
In July 2013, InterContinental announced it would offer free Internet to its loyalty program members, a perk it added across its portfolio last year.
Others are following InterContinental’s lead. In recent months, Marriott International, Starwood Hotels & Resorts and Hilton Hotels and Resorts have introduced such plans. Hyatt Hotels began offering free Wi-Fi to all guests, whether or not they were loyalty members and regardless of how they booked, in February.
In many cases, hotels still charge for a faster tier of Internet access, suitable more for streaming movies or playing online video games than for email or Web surfing, although this, too, may be waived for a hotel’s best customers.
“It’s to a point today where the expectations are that Wi-Fi is expected” just as much as a clean room, running water and a comfortable bed are, said Jeff Bzdawka, Hyatt’s senior vice president for global hotel operations. “The comments through all of the channels have been very positive” since fees for access were eliminated, he said. “We were able to remove an immediate pain point.”
Data backs up travelers’ anecdotes of annoyance at paying for Wi-Fi. In the J.D. Power 2014 North America Hotel Guest Satisfaction Index Study, guests at luxury hotels registered a 65-point drop in satisfaction with costs and fees when they had to pay for Internet access. On a 1,000-point scale, that is a significant difference, said Jennifer Corwin, who helps run the company’s travel practice.
“It’s the value, really, not the cost,” she said. “A lot of times people just don’t like that feeling of being nickel and dimed.”
Bruce Claxton, a former design executive at Motorola, now a professor at the Savannah College of Art and Design who also does consulting work, said, “I resented it because I felt this to be a baseline feature.”
He said he “felt kind of forced into it,” when he found out Wi-Fi was not included in the room rate on a recent business trip to a high-end hotel in Alexandria, Va.
Frequent travelers say they have a number of tactics to avoid paying for Internet access.
“If I’m at a hotel that’s going to charge for the Wi-Fi, I’ll skip it and go to a Starbucks,” Claxton said. Seeking out a coffee shop where Wi-Fi can be had for the price of an espresso is one common solution. Other travelers just complain at the front desk and get the fee waived. Many, like Watkins, bring portable routers like the MiFi to create a wireless hot spot.
Last year, the Federal Communications Commissions investigated claims that Marriott International had used technology to block personal Wi-Fi transmissions at a Nashville convention center hotel, while charging exhibitors and others at a conference $250 to $1,000 per device to use the hotel’s Wi-Fi. Last fall, the company agreed to pay a penalty of $600,000 to resolve the investigation.
“We will not block Wi-Fi signals at any hotel we manage for any reason,” the company said in a statement on its website.
Most hotel companies have avoided public relations headaches of this magnitude, but industry specialists say that bad word of mouth, magnified on travel review sites, can damage a high-end brand.
According to Loews Hotels & Resorts, Wi-Fi charges were the top guest complaint before the brand eliminated them at its North American hotels at the beginning of 2014. Subsequently, guest satisfaction has risen, the hotel chain said.
“This has got to be part of the basic package,” said Chekitan Dev, a marketing professor at the Cornell University School of Hotel Administration. He said hotels should scrap the two-speed system most are embracing, arguing that the next generation of traveler will not make the distinction between text and high-definition video.
“Given millennials’ voracious appetite for Internet content 24/7, in real time, the only suitable answer is free, fast and uninterrupted,” he said.
Free Wi-Fi makes for more satisfied customers, Dev said, which generates repeat business and referrals. And tying free Wi-Fi to participation in a loyalty program is smart because loyal customers are likelier to book multiple stays and to be receptive to buying extra services.
“There’s money to be made, but the money is to be made in a nonobvious way,” he said.