Case Study: Wi-Fi is free in cheaper hotels
But the luxury hotels like to charge for it.
By Eric Lai, Computerworld | Computerworld UK | Published: 01:00, 20 October 2005
Led by Wi-Fi deployment in midrange hotels in North America, the number of hotels offering broadband Internet access in guest rooms is expected to more than triple between 2004 and 2009 to nearly 54,000 properties worldwide, said a report on Tuesday.
But experts warn travellers that while low- to midrange hotels are already making broadband Internet a standard guest amenity, like free coffee or breakfast, most higher-end hotels that cater to business travellers will fight dropping the charge.
"At a two- or three-star hotel, breakfast is usually free. But there's no such thing as a free meal at a four- or five-star hotel. Broadband access is kind of along the same lines," said Amy Cravens, an analyst at research firm In-Stat.
Best Western International has installed free Wi-Fi service in at least 15 percent of the rooms in all 2,300 of its hotels in North America and the Caribbean. All Clarion Hotels and Comfort Inns and Suites also have free Wi-Fi. But InterContinental Hotels Group, which offers high-speed Internet at 2,700 North American hotels, offers the service for free only at its Holiday Inns and other low- to midrange brands, not at its deluxe hotels.
"(Higher-end) hotels have always nickel-and-dimed guests. I just don't see that going away," said David Blumenfeld, vice president of marketing at JiWire, a San Francisco company that offers a Web-based directory of Wi-Fi hot spots.
Hotels are losing fat phone revenue
One reason is that hotels, especially high-end ones, have lost the easy, high-margin revenue from charging guests for local and long-distance calls because of the ubiquity of cell phones. Atlanta-based research firm PKFConsulting estimates that hotel revenue from guest phone call charges fell by an average of one-half between 2000 and 2003.
Charging business travellers, who can expense the typical US$10-per-day fee for Internet access, has helped cushion the financial blow at higher-end hotels, asserts Blumenfeld.
Another reason is that installing broadband, especially wired access in older hotels with aging phone lines, can cost on average $100 more per room than installing wireless access, Cravens said. Even Wi-Fi deployments take at least a year to pay for themselves, he said, which is why more than two-thirds of hotels today are choosing Wi-Fi, with many also opting to outsource setup and management to specialised wireless service providers, splitting the financial rewards and risks.
While some individual high-end hotels are making broadband access free to guests, the only high-end chain to announce plans to do so is Radisson SAS, which has already made Wi-Fi free to guests in Europe, Africa and the Middle East and will do so in the US by Jan 1. Cravens expects Radisson to remain the exception for a while.
Hotel Wi-Fi is growing fast
There are now more than 20,000 hotels worldwide equipped with Wi-Fi, and Blumenfeld expects that number to rise by 50 percent this year. More than 5,500 of the hotels with Wi-Fi are in the US, according to JiWire, and there are more hotels with Wi-Fi than there are unwired cafes or restaurants.
In-Stat, counting both wired and wireless broadband access, expects 26,000 North American hotels to have broadband in 2009, up from 9,500 last year. Despite the fast growth, only 11.4 percent of roughly half a million hotels worldwide will have broadband access by 2009, up from 3.4 percent in 2004, predicts In-Stat.
But that's fast enough for Cravens to predict that many traditional hotel business centres will be rendered extinct, she said. "Apart from being a place where you can pick up things you printed on your laptop in your room, I just don't see a whole lot of demand for them," she said.
Meanwhile, demand from business travellers is still rising. A Gartner study last month found that just 25 percent of US business travellers and 17 percent of UK business travellers use Wi-Fi hot spots. Blumenfeld blames the slow uptake on the lingering perception among many IT managers that Wi-Fi creates security headaches.