Jan. 31, 2013 at 10:08 AM ET
Free Wi-Fi. You can get it while sipping a double tall latte at Starbucks, eating a Big Mac at McDonald’s or waiting for your flight at an increasing number of airports.
While relaxing at your hotel once you arrive? Maybe not as hotels continue to buck the free Internet trend in pursuit of millions of dollars in daily fees. According to the latest survey from PKF Hospitality Research, U.S. hotels took in $269 in telecommunications revenue per available room in 2011, an increase of 51 percent from two years earlier.
It’s safe to say that precious few of those dollars were earned from people using their guestroom phone.
“We believe it is an increase in the monies collected from Internet connections that is driving the growth in telecommunications revenue,” said Robert Mandelbaum, the company’s director of research information services.
Some of the increase, says Mandelbaum, is to be expected as the economy has rebounded and more people are traveling again. But many hotels are further boosting the bottom line by resisting the trend to provide free Internet access to everyone.
“There’s a lot of institutional ownership of properties and they’re very aggressive about the return on their investment,” said consultant Ted Mandigo of TR Mandigo & Co. “They’ve watched the airlines nickel and dime people for features and extra services and the hotel industry has adopted that as an approach.”
Exacerbating the issue, hotel owners face two challenges the airlines don’t: Patrons who carry multiple, bandwidth-hogging devices and old infrastructure that often requires expensive retrofitting to accommodate them.
“When people were using the Internet to send e-mail or use it for office purposes, (the bandwidth) worked fine,” Mandigo told NBC News. “Now, people come in with iPads and they want to Skype and stream movies and there isn’t enough.”
The problem is especially severe in older hotels that were built before the Internet was a gleam in Vint Cerf’s eye. “Hotels like the Palmer House (in Chicago) were built with expanded steel lath,” said Mandigo. “That sucks up signal like a sponge.”
As a result, hotels can either invest big bucks in upgrading their Internet service — according to Mandigo, retrofitting can cost as much as $1.5 million for a large hotel — or charge customers for using it.
Some are opting for a third way, implementing a tiered-service plan, in which guests can access basic service — slower but sufficient for surfing the web and sending e-mail — for free while those who carry multiple devices or want to stream movies are charged a fee.
At the Four Seasons Hotel Chicago, for example, basic Internet service (384 kbps) is free while high-speed access (30 MBps) costs $11 per day, per device. Marriott, Carlson and InterContinental have all experimented with or now offer tiered programs, with Marriott spokesman Jeff Flaherty telling NBC News that guests were “appreciative of the choices offered and our approach for improving their experience in accessing the Internet.”
Those guests were apparently not among those that participated in J.D. Power’s most recent hotel guest satisfaction survey (July 2012), which, like others before it, lists paying for Internet service as one of hotel guests’ biggest pet peeves.
When asked to rate their satisfaction with overall costs and fees, guests who were charged for Internet access reported a score of 688 (on a 1,000-point scale), 76 index points lower than those who weren’t charged a fee.
“They absolutely hate it with a passion,” said Mandigo. “Why does the industry do things their customers hate?”
The good news is that the trend of charging for Internet access remains limited to higher-end hotels as most mid-scale and budget hotels will continue to offer free Internet access due to the competitive demands of such price-sensitive markets.
And Mandigo believes higher-end hotels will eventually see the light, if not by offering completely free Internet — no amenity is truly free, after all — then at least by eliminating those annoying daily charges.
“My expectation is that in three to five years, hotel performance will have improved enough that rather than nickel and dime people on fees, they’ll just roll it into the room rate,” he said. “If it’s $5 on a $285 room, just charge $290.”
Rob Lovitt is a longtime travel writer who still believes the journey is as important as the destination. Follow him at Twitter.