WiFi: Free or not ? That is the question!
Published on Mon 19 Apr 2010
With REVPAR continuing to fall across the industry, hotels are looking to new money making and saving techniques as a means to stay profitable.
In a digital age where the internet is never far away, it’s not surprising that WiFi provision is a key consideration for travellers of all kinds when choosing accommodation. Hoteliers are finding it increasingly difficult to decide whether WiFi should be a complimentary guest service or one that’s paid for.
So what are the implications for hoteliers, and their guests, if moving to a free model?
Dean Wilkinson, sales director of Airangel, a specialist in wired and wireless guest internet access, believes that many hoteliers are unaware of hidden costs to their business.
Dean said: “Offering free WiFi might seem like another way of attracting and retaining guests, but there are definitely hidden costs attached to this, not just financially, but to a hotel’s reputation.
“Aside from giving away revenue, free WiFi results in a heightened demand on the service which, in turn, puts pressure on bandwidth and leads to a reduced quality of service.
Dean said: “Typically, a hotel will have an 8meg ADSL line, the same as most people have in their homes. As guests will be more likely to use free WiFi, this puts greater strain on bandwidth leading to a slow service or one that may ‘crash’.
“Not investing in sufficient bandwidth is also likely to cost your business more in the long run. To increase bandwidth you will need to initially invest in a new kit. If a hotel doesn’t, they may spend more in rectifying network issues and dealing with complaints and, more often than not, end up making the bandwidth upgrade.
“Whether it’s free or paid for, it has to work. For example, you may offer complimentary tea and coffee in your hotel rooms, but if the kettle is broken you will get complaints. The same with WiFi, especially as business travellers often rely on it.
“Your hotel’s reputation is at stake if things don’t work and this could result in reduced repeat business.”
Some hotels are turning to a hybrid pricing model to address the issue. They offer ‘free’ WiFi for a short period of time but if guests want to use it for longer they must pay a charge.
Airangel, which works with clients such as Malmaison, Radisson Blu and De Vere, is noting an increase in hotels adopting this model. Dean said: “It seems to be working for many hotels. Those who want to send a quick email can do, but guests who want to download or watch online content will have to pay for the privilege.
“It means hotels can still advertise ‘free’ WiFi but for extensive use they can generate additional revenue, have the money to invest in decent bandwidth and minimise maintenance costs and complaints.”
Dean recommends that a hotel demands flexibility in its contract with any WiFi supplier. He said: “Hotels shouldn’t be tied into any contract that may not make financial sense for them if the economy changes. Hotels must be able to respond to the local market and remain competitive, particularly if other local hotels change their WiFi price points.
“Make sure you have the flexibility in your contract to change to different models, helping to ensure the stability of your business and protect your brand.”
Hoteliers that choose to invest in WiFi can use internet portals as additional revenue generators. Dean said: “Savvy hoteliers are using their WiFi welcome pages to display up-to-date information about the hotel, its facilities and special offers, thereby increasing dialogue with guests and building brand loyalty. Equally, there’s scope to use WiFi portals as a means to earn advertising revenues from external companies.
“WiFi can provide a hotelier with a competitive edge, whether it is free or not, as long as it works for guests and the hotel.”
