Who has the right internet pricing strategy?
There is a passionate debate raging amongst the top hospitality companies on what the right internet pricing strategy should be.
On one side, you have companies suggesting it’s a ‘must’ to provide this service on complimentary basis to all clients, by covering all guest rooms and public areas. Either they want to put across a modern / high-tech message to the clientele that says “we know what you need and we provide it for free” or simply they use this marketing tool to undercut the competition with free added value which corporate clients deem critical, and can be a major reasons to choose one hotel over another.
On the other side, you have companies who charge fees. Internet revenue covers the cost of the hardware investment, the monthly broadband fee, the related annual maintenance contract , and in some cases, the extra collected above the breakeven point covers the loss monitored over the past years on telephone revenue (since most clients use mobile phones or peer-to-peer communication software). A few brands have combined both positions by announcing a free WIFI, but building an internet allocation fee into the rates (common practices especially for corporate rates).
Others have tried to provide basic internet free of charge, with an option to receive high speed broadband connection at an additional charge. The proverb says ‘You can run, you can’t hide’; operating hotels with poor WIFI coverage will end up with a lot of complaints and maybe their customers will leave. Corporate clients need an efficient signal to be able to read their e-mails and connect their smartphone from any place in your hotel during their stay. But not just them: the whole family wants to be able to connect their tablets and smartphones to chat online, watch videos, share photos, and update their blogs. When we look at the cost of cabling a brand new building to provide internet inclusive of: servers, firewalls, licenses and maintenance costs, the question must be asked about whether this service will be charged to the guest or not?
Will all these e-set-up costs simply be considered as an extra expense to include in the cost of the room when building the hotel? Or should they be considered as an investment to generate revenue, if possible? A few indicators already show that the average time spent per individual on the web is growing year after year, High Definition files are more and more available, most of the newspapers are losing market shares against e-channels, and television manufacturer are trying to integrate internet into their next generation products (Smart TVs). The revolution is ongoing and obviously nothing can stop the e-tsunami.
But the question remains the same: do you want your guest to pay for access to the largest communication tool in the world?