The Fate of HSIA in Hotels

By Cihan Cobanoglu | December 10, 2009

There was one common question on everybody's mind during the International Hotel, Motel and Restaurant Show in New York this November. How should hoteliers handle high speed Internet access (HSIA) pricing? Should we charge our guests for it? Should we give it away for free? Or should we use a tiered pricing approach? There is still huge confusion among guests and hoteliers about high speed Internet access (HSIA) in hotels.
 
First of all, hotel guests are puzzled by the HSIA pricing paradox. Under normal circumstances, if you follow the logic of traditional pricing points, the more you pay the more you should receive in terms of extra services and products at no additional cost. When you fly First Class, you do not pay $20 to check your baggage. Nor do airlines charge travelers additional money for the meals that they are served during flights. However, in the hotel industry, the more upscale you get, the more money guests are charged for high speed Internet access. Yet when you go to economy or even budget hotels, Internet access is often free. This frustrates hotel guests.

When I reported the results of the 2009 Hotel Guest Technology Study in the October issue of Hospitality Technology, you may remember that one of the few determinants of overall guest satisfaction in a hotel is the availability of HSIA in guest rooms and in public spaces. In other words, if you do not do a good job in offering reliable and fast Internet access in the hotel, your guests will not return to your hotel and/or brand. Guests want reliable HSIA connectivity in guest rooms regardless of whether they pay or not, and offering complimentary HSIA does not give hoteliers a pass to do a poor job.

In our teaching hotel at the University of Delaware, we used to have one T-1 line for internal and external guests. However, at 6 p.m., when guests came back to their rooms, they all wanted to check e-mail, surf the Web, download music and videos, or watch their local cable TV via Slingbox (a device that lets users access their local cable TV content over the Web). This caused a bottleneck for the entire network, which resulted in a huge increase in complaints. Hotel management had to add another T-1 line to make sure that guests received a stable Internet connection at all times. Furthermore, the hotel is using this as a marketing and differentiation tool ("The highest Internet access in town").

Fee or free?
The Hotel Guest Technology Study asked travelers to identify the fairest HSIA model in hotels. What we heard was simple: a tiered approach. A tiered approach allows the hotel to offer up to a certain speed (such as 768 kbps) free of charge to the guest for casual surfing and e-mail. If the guest wants more powerful access for higher bandwidth, static IP for Virtual Private Network sessions, or video streaming, then they agree to pay a fee for Internet access. This enables hoteliers to control bandwidth usage by preventing several users from downloading bandwidth-hungry applications that slow the connection speeds for the rest of your guests.

The future of HSIA
Although tiered bandwidth is a possible solution to the HSIA free-or-fee debate, a bigger question remains about what will happen to HSIA in hotels in the future. You will remember that about a decade ago, all hotel companies were making two-line telephones a chain standard so that guests could use Internet dial-up freely. Then hotels started investing thousands, if not millions of dollars, to wire their rooms for wired HSIA (Cat 5 and Cat5e cables).

Today, most hotels offer wireless HSIA, but the trend is that in the next five years there will be no need for HSIA in hotels for guest use. This is because Generation 3 (3G) cellular technology is becoming a mainstream technology in the U.S. today. 3G networks typically offer between 768 kilo bits per second (kbps) and 3 mega bits per second (Mbps). What more, 4G networks are now in the works by many carriers. Many laptops and smart phones already support 3G and 4G technology.

The adoption of 4G networks by consumers will be seamless and fast. When they become a mainstream technology in the next five years, guests will have less of a need for HSIA in their hotels. Not only will guests bring their own HSIA into the hotel, but they will also bring their own in-room movies and games with them. All that hotels will have to do at that point is to offer a connectivity panel in guest rooms that will enable guests to connect their devices to the high definition TV. In addition, hoteliers will have to install distributed antenna systems in their hotels to ensure that cellular coverage is strong in every part of the hotel. In this scenario, HSIA use will shift from the guest to that of the hotel and its staff. Most of the devices in the hotel room, such as the energy management system, the electronic locking system, electronic minibars, and safety and fire alarm systems, will be run over Internet Protocol (IP) which will continue to need a fast Internet connection.

Personally, I agree that HSIA is here to stay. So, get on it.

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