Charging For Internet Access Endangers Loyalty

Some hotel companies are going to have to decide which way they're going in the unstoppable move to keeping their guests connected at all times.

On the one hand, even the most standardized of hotel brands are moving to more communal space in their lobbies -- where travelers can sit by themselves or in small groups and access their computers and devices. Almost inevitably, these lobbies provide complimentary WiFi Internet access. But -- in a situation that astounds many people in the hotel business -- many upscale chains continue to charge, and charge significantly, for Internet access in the rooms.

One hotel general manager visiting from Canada and staying in a legendary New York hotel was astounded to find that he had to pay separately for his laptop and his iPad Internet access. Every survey shows that Internet access ranks with cleanliness as among the most important attributes of a hotel.

And the same surveys show that the most annoying aspect of any hotel bill is charges for Internet access. A review of a major new luxury hotel in downtown Chicago in The New York Times recently said that while WiFi was free in the lobby, there was a charge of $14.95 a day in the room.



It's true that some luxury hotels have made it a differentiating marketing point that they do not "nickel and dime" guests by charging for Internet. And while, a traveler might not switch hotels simply because of Internet charges, the experience of paying them will not engender loyalty to that brand.

Hotel companies have several arguments for continuing to charge for Internet access.

1) With the loss of lucrative telephone revenues, they have to compensate by charging for other amenities and services. Yes, that has been a painful loss for hotels but is no excuse for antagonizing guests.

2) Some managers say that guests really like to pay only for what they use -- so why build Internet access into the room rate for those who are not going to use it. That's pure spin -- at this point, it's hard to imagine many travelers who do not want Internet access -- especially at an upscale hotel. 3) Finally, brand executives maintain that hotel owners regularly overrule them by insisting on this revenue stream. It's true that owners are the ones who ultimately call the shots on many operational decisions, but it seems most could be easily convinced of the efficacy of complimentary WiFi.

Think about how people travel these days. They check into their room, get online on their laptops or iPads, move down to the lobby for coffee or a drink -- maintaining their connection -- then back to their rooms to watch movies or play games.

It seems counter-productive to interrupt this flow with a hefty charge that most agree will be going away in the not too distant future. Meanwhile, those who go first in eliminating the charges will gain some marketing points -- and perhaps the loyalty of travelers when their competitors finally -- and inevitably -- cave on the connection issue.

7 comments about "Charging For Internet Access Endangers Loyalty ".
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  1. Susan Breslow from Writing That Sells, May 16, 2011 at 10:28 a.m.

    This was the first time I've heard hoteliers' rationale for charging for this essential service. Doesn't hold much water, though. When the cheapest hotels offer wi-fi free, there's no excuse for upper-end brands to position it as a premium add-on.

  2. Kirk Ackerson from AAFP, May 16, 2011 at 11:07 a.m.

    Charging for Internet access arguably hits the hotel in terms of bookings before loyalty is even considered. When traveling for business, having wi-fi in the room is a prerequisite. Due to the need to justify business expenses down to the tiniest line item, it makes little sense to stay at a hotel charging for access versus one that might not be as convenient or nice but is cheaper and satisfies basic traveling needs. It appears that hotels that charge for wi-fi are missing the forest for the trees.

  3. Kate Baumgart Hogenson from Metzner Schneider Associates, May 16, 2011 at 11:22 a.m.

    Hotels charging for internet ultimately drives more guests to purchase "all you can eat" data from phone companies--and yes, negatively affecting hotel loyalty & brand trust. Another case of a short term revenue hit not producing sustainable profit--in our practice, we've found that the most respected brands run longer term financials that drive better decision making by catching this kind of trade-off.

  4. Brennan Dell from Dell, May 16, 2011 at 11:53 a.m.

    Ditto from me on the previous posts regarding low and mid tier hotels offering wifi for free. Having 'luxury' hotels charge for this service is unconscionable. Building in a small fee to cover the cost of broadband to all rooms would pay for the service at the volume of rooms sold per night. How about offering a slower speed free with higher speed being an upcharge? Or add a splash page with an ad for a local business to subsidize the cost. And if the hotel does charge, the service should be speedy, secure, and hassle free.

  5. Mickey Lonchar from Quisenberry, May 16, 2011 at 12:02 p.m.

    Unfortunately, this is not a story about charging for Internet access. It is a story about not listening to the needs of the customer.

    Interestingly, the product categories that score lowest on customer satisfaction surveys are also notorious for this practice of 'nickel-and-diming.' You can read more about how this practice of 'non-transparent pricing' affects the stories people tell about brands in this Marketing Daily article from last year:

  6. Patricia Friedlander from Word-Up!, May 16, 2011 at 12:35 p.m.

    And let's not forget the rampant greed that drives 'luxury brand' hotels to block 3g/4g wireless connections provided through devices such as the Sprint Overdrive.

  7. Khalid Low from Gotham Direct, Inc, May 17, 2011 at 10:02 a.m.

    Corporate America will continue to charge people whatever they want and we will pay for it and whine at the same time. Airlines have consistently tacked on charges for things that should be free (food, pillow, luggage, carry-on bags et al) and in many cases taxes alone can match the cost of the actual airline ticket.

    What did customers do? NOTHING! They complained for a couple of days and then it was business as usual so while we all agree that it is ridiculous to charge for internet access, it is also a FACT that this story will disappear into the blues within a couple of days and we will all just deal with it.

    If people were to unite in massive numbers, we could boycott a specific hotel or airline or a phone company and I guarantee you all these frivolous charges will disappear, but that will NEVER happen and life goes on. And I hardly think I am a pessimist, these are just hard FACTS and we all know it.

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