Thursday, February 15, 2007

Free Internet as Hotel Amenity?

Free Internet access, already a standard across many major U.S. midprice brands, slowly is beginning to creep into upscale properties. So far, only Omni, Radisson and Kimpton have embraced that standard brandwide, but several individual upscale properties also have done so.

The most recent convert was the Hilton San Francisco Financial District, which recently completed a $45 million renovation project. At the beginning of the year, the property announced that both its wired and wireless Internet access would no longer carry a charge, a decision based on conversations with hotel guests.

"They all love the new hotel layout and fresh d├ęcor but had a complaint about upscale hotels in general," according to Mark Everton, the property's general manager. "We kept hearing variations of the same question: 'How can upscale hotels in San Francisco that charge between $200 and $400 a night charge for high-speed Internet access, when many of the limited-service hotels offer it for free?'"

Maria Chevalier, vice president of global business intelligence for BCD Travel's Advito consulting division, liked that line of thinking and said she wouldn't be surprised to see more properties in the tier making the same decision. "I agree with their strategy of saying 'enough' on the rate," she said. "When you evaluate your cost of stay, it does make a difference."

Free or with a charge, wireless or wired, Internet access no longer is optional for chains wishing to do business with corporate travelers. "It's the number-one business amenity, and people are expecting it," said John Flack, Hilton's vice president of hotel broadband technologies.

The San Francisco property's move does not signal an overall shift in Hilton Hotels Corp.'s upscale properties. The vast majority still charge for Internet access, although Hilton midprice properties Hilton Garden Inn and Hampton Inn offer it for free, said Flack. Following permission from the brand, however, individual upscale properties may make a similar decision.

"Some of the hotels that are in a competitive market do provide it complimentary," Flack said, "but that is the exception to the rule."

Marriott International is largely the same, providing free Internet access in its midprice brands—Courtyard by Marriott and SpringHill by Marriott—while still charging for the service in its upscale brands, said Lou Paladeau, the company's vice president of operations technology. Fees also apply at Hyatt Hotels & Resorts' upscale properties.

A study by the American Hotel & Lodging Association last August showed that 18 percent of hotels are charging for Internet access, a drop of four percentage points from two years prior. Those charging were largely skewed to the higher tiers, with about three-quarters of deluxe and upper upscale properties imposing a fee.

The financial impact of switching to free Internet access is by no means scant. At the Hilton San Francisco Financial District alone, Everton said a conservative estimate was that the move would cost $350,000 in annual revenue.

Despite this, some upscale properties have made it a more brandwide initiative. Omni Hotels was among the first in its tier to make free wireless Internet access a brand standard, with an announced initiative four years ago (BTNonline, Feb. 3, 2003). The free access is most prevalent in Omni lobbies. It also is available in the rooms of some properties, although guests largely must use wired Ethernet for room access.

Carlson Hotels Worldwide's Radisson Hotels & Resorts also was a pioneer provider of free wireless Internet access in upscale hotels, first phasing in the service as an in-room amenity in 2005. In January, Radisson announced that the service had been expanded into Latin America and now is available in all 206 managed and franchised hotels in the United States, Canada, Mexico, South America, Central America and the Caribbean. In addition, the service allows guests to print from their rooms to a hotel printing station.

"It's impossible for a hotel brand to successfully and profitably operate today without offering high-speed Internet access at its properties," Nancy Johnson, executive vice president of full service hotels for Carlson Hotels Worldwide said in a prepared statement. "Our point of difference is that we've opted to provide it free of charge in all our guest rooms throughout the Americas."

Free Internet access in public spaces is not a standard for Radisson. Some franchised hotels offer it free, but use can cost from $7 to $15 per day for individual use.

Upscale extended stay brands, on the other hand, have more ubiquitous free Internet offerings. InterContinental Hotels Group's Staybridge Suites plans to make a free wireless service available to customers beginning in March.

"It will be in the suites and in the public areas," according to Robert Radomski, vice president of brand management for Staybridge Suites. "We believe that we are going to be the first hotel brand in the category to introduce free wireless Internet throughout the brand."

Hilton's Homewood Suites, in addition, offers free high-speed Internet connectivity in its rooms, as does Marriott's Residence Inn and TownePlace Suites.

Advito's Chevalier said free Internet access could become even more common as the hotel market begins to shift in the coming years. With high demand, hotels have little incentive to throw away the revenue generated from Internet service fees when sometimes even finding a room in some markets is a difficulty. Once demand begins to ebb with increased supply, upscale hotels could turn to free Internet access as a competitive advantage in a buyers' market. Even then, however, the trickle-up will stop at the upscale level, she said.

"I don't think the luxury market will ever do it," Chevalier said.

Outside of the charge, hoteliers are looking at other ways to make their Internet service more appealing. Hilton is in the process of implementing a new high-speed initiative that will make its service more consistent throughout the brand, Flack said. Called Stay Connected @ Hilton, the program will bring the management and customer service aspects of Internet service in-house through the end of 2008.

"We had allowed our hotels to go out and find vendors, so what we're doing today is becoming our own vendor," said Laurel Bailey, vice president of marketing for OnQ, Hilton's technology platform. "Working with the preferred vendors on a transition plan, we've converted almost 36,000 guest rooms."

Starwood Hotels & Resorts Worldwide is using its wireless network to tie in other services, such as checkout, food and beverage sales and the room minibars, said Brennan Gildersleeve, Starwood's director of broadband services.

"It's bringing the traditional back office up front and leveraging the wireless network," he said. "Instead of building two, you're building one network that's secure."

In addition, both Hilton and Marriott have set up their public-area Internet access so that guests who are already paying for room access do not have to pay extra.

The August AHLA study indicated that more than 96 percent of hotels in the midprice tier and higher had high-speed Internet access, and 82 percent of hotel rooms overall—compared with 35 percent in 2004—had wireless capability.

This expansion largely has come following a push from corporate travel managers. A few years ago, for example, Intel's global corporate travel manager Sy Price made a push for hotels in his travel program and saw the percentage of its hotels with wireless capabilities increase from 9 percent to 85 percent in 18 months. Still, the growth of wireless capabilities does not mean that hotels will be abandoning wired options.

"We survey our guests a lot, and 60 percent said they prefer wireless today," said Starwood's Gildersleeve. "It's a smaller percentage that preferred wired, but there's still a group out there that wants it, so it's nice to have two connection options."

Source : eHotelier
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