A tier pricing strategy for hotel Wi-Fi
Monday, April 21, 2014
When was the last time you made a hotel reservation? Did you look at how much a hotel charged for Wi-Fi? I did. In fact, it turned out a hotel’s pricing strategy on Wi-Fi had become the determining factor for my decision on a future hotel stay.
I was recently planning a trip to Hong Kong for The 2014 Global Tourism and Hospitality Conference and Asia Tourism Forum. I reviewed three hotels that were nearby the conference venue.
They were all upper-upscale hotels that looked alike in pictures. They also offered similar conference rates during my stay. It seemed like I had a difficult choice to make, that is until I saw their pricing structures for the Wi-Fi service.
- Hotel A asked me to pay about $15 per device per day for Wi-Fi.
- Hotel B would charge me a flat rate per day, regardless how many devices I have.
- Hotel C provides free Wi-Fi service.
I never consider myself a geek of any sort, but I usually carry an iPhone, iPad and iBook when traveling.
Therefore, even if I travel by myself, I will easily end up having three gadgets that need Wi-Fi connection. If I travel with a tech-savvy friend, who usually carries more gadgets than I do, we would have to pay over $100 per night for the Wi-Fi service alone using Hotel A’s pricing structure. Is that right?
Indeed, it is not cheap to build the infrastructure for Wi-Fi service in a hotel. Maintaining a reliable connection also costs money. That’s probably why many luxury and upper-upscale hotels still charge a fee for Wi-Fi connection. The Wi-Fi fees can be used to cover the costs for the service and possibly add more revenue to the hotel.
However, there is no way for any hotel to get around the shifting customer demands. Today, 87 percent of travelers have considered Wi-Fi as a free amenity in hotels.
On top of that, creating more footprints on the Internet has become crucial in digital marketing. So, what is the solution? I suggest hotels to make the following considerations:
- To offer free Wi-Fi in public areas to both in-house and nonhotel guests so they can check in at the hotel with updates and pictures.
- To offer free Wi-Fi service in guestrooms to the hotel’s most loyal customers (e.g., those with platinum or gold status in a hotel’s loyalty program).
- To provide a variety of options for Wi-Fi service in guestrooms based on data usage (not the number of devices). For instance, free for 1GB or less per day; $5.99 for a usage between 1GB and 5GB; $9.99 for a usage between 5GB and 10GB; $12.99 for unlimited usage.
Some hotel chains have begun testing a similar tier pricing strategy for Wi-Fi service. What do you think about my suggestions? Will this tier pricing strategy work? What other recommendations would you make?
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