This post was originally posted by TheHipmunk on Hipmunk’s Tailwind blog on January 8, 2016.
Have you ever wondered why you can land at a seedy hostel filled with backpackers and count on 24/7 access to free Wi-Fi, but when your car service drops you at the glass palace downtown, you’re informed that Wi-Fi access comes with hefty fees? It’s counterintuitive, but there are historical reasons for these charges.
Wireline Phones Are Going the Way of the Dinosaurs
Remember when everyone relied on hotel room phones? Now every traveler has a smartphone, and those wireline phones that used to bring hotels plenty of add-on fees now just gather dust. Likewise, The Wall Street Journal reports that fewer travelers are paying for movies from the hotel’s media system because they can stream them onto their own devices. Even minibar usage has dropped. The outcome of these changes is that Internet fees are now the biggest add-on charges that hotels levy; WSJ calls it the equivalent to airline fees for checked baggage.
Wi-Fi Charges Reflect Room Rates
The more expensive the hotel room, the more likely you are to see Wi-Fi charges on your bill. This is due partly to the fact that business travelers don’t usually pay their own hotel bills and partly to the hotels’ belief that top-tier travelers are less sensitive to auxiliary charges.
One of the most infamous examples of extreme charges is a Cannes hotel that charges customers 300 Euros (about $336) for 24-hour access to their fastest Internet service. When challenged by a customer, the hotel claimed that some guests want the super-fast connection speed so they can stream movies, but the hotel also admitted that guests are often surprised to find these charges on their bills. It’s worth noting that the guest reporting this incident had no trouble talking the hotel into accepting 9 Euros ($10) instead. If you do end up being charged an exorbitant fee for Internet access that doesn’t match what you expect, it’s worth disputing the charge with hotel managers.
While most hotels don’t indulge in such excessive fees, it’s not uncommon to see Wi-Fi charges of $15 to $20 per day at some of the luxury hotel chains. NYU hospitality researcher Brian Hanson explains that this is partly due to the fact that high-end hotels are operated by brand management companies, which earn more by charging extra fees. Budget hotels, by contrast, are usually franchises that earn their income through room rates alone.
What Do the Hotels Say?
It may be hard to imagine exactly how high-end hotels justify their Internet charges, when the budget motel by a freeway off-ramp offers free Internet in every room. The luxury hotels classify Wi-Fi as a consumable item like room-service food rather than as a basic necessity like sheets and towels. Daniel Connolly, a hospitality specialist at the University of Denver’s Daniels College of Business, points out that bandwidth demand is rising rapidly as hotel guests all show up with multiple devices. He points out that it’s very expensive for large hotels to establish the infrastructure needed for rapid online access given the amount of data now being used. “I don’t think anyone is really making money on Wi-Fi, even if they’re charging for it,” he says in an interview in International Business Times.
What to Watch Out for
As hotels try different policies to adjust to these changing consumer expectations, there are inevitably a few who experiment with some bait-and-switch tactics. In some cases, you may see a sign for “Free Wi-Fi” and then discover that it’s only free for the first 30 minutes. After that, there are steep charges. Another ploy that unscrupulous hotels have been known to try on guests is to offer several tiers of Wi-Fi, including a free access option. That option, however, is often unstable and slow, dropping the signal frequently and providing service that’s too poky to be useful. One hotel chain even resorted to blocking its guests’ cell phone data signals so that they were unable to use their mobile hot spots and were forced to pay for the hotel’s own Wi-Fi service. The FCC levied a $600,000 fine, and the hotel disconnected its blocking equipment.
Use Your Power as a Consumer
In this era of social media and customer reviews, consumers have more power over the behavior of businesses than ever before. Even travelers seeking luxury accommodations are frustrated with being charged for a utility that feels as essential to their lives as air and water. A recent survey published in International Business Times notes that in-room Wi-Fi access is the amenity given the highest priority by travelers.
One response to customer resistance to Wi-Fi fees is for higher-end hotels to bundle Wi-Fi together with a package of other services and (like Hilton Hawaiian Village Waikiki Beach Resort in Honolulu) simply add a daily resort charge. This charge covers Internet access, but it also includes a bundle of many other perks such as an audio tour, exercise classes and Hawaiian cultural activities. The Wall Street Journal reports that the Hyatt Regency Century Plaza in Los Angeles recently broke ranks with other high-end hotels by making its Wi-Fi free.