Last month Hilton removed the benefit promise of ‘high speed’ internet for elites from its terms and conditions. And now we know why.
Hilton is going to introduce two-tiered internet access at its Hampton Inn, Hilton Garden Inn, Homewood Suites, and Home 2 Suites brands. Basic internet will be free, but high speed access will be ~ $3.95 a day. And elites will have to pay if they want higher tiered access.
If this was going to be higher speed than currently offered, while maintaining current free offerings, that would be fine — pay more to get more than you already receive. But I’m skeptical, why invest in what’s free when failing to do so becomes a revenue opportunity?
As a guest I need access to internet wherever I go, and I bring my own as a backup to ensure it (although traveling outside the US I have fewer options without jumping through more hoops). I don’t stream video often, so in theory basic internet should be fine, but when it crawls even just downloading email and reading blogs I’ll pay for access…. once. (Cue: Johnny Dangerously.) Then I’ll write the hotel off for good, because providing reliable internet is, for me, like providing a clean room and heating and air conditioning.
Joe Brancatelli‘s column this week has good stats on internet use and the cost of providing it for hotels.
In a day when an average iPad is connected to iPass, it consumes 110 megabytes of data over 122 minutes. Connected iPhones use 41 megabytes over 88 minutes. Android devices use 46 megabytes over 118 minutes and laptops connected to Ipass consume 78 megabytes over an average of 97 minutes.
Usage is growing substantially. And it turns out that ‘the old 80/20 rule’ applies, with a minority of guests consuming a substantial majority of bandwidth. To the extent that servicing that bandwidth has costs, rationing on the basis of costs might make sense. Put another way, bundling unlimited high speed access into the room rate is seen as a subsidy from the majority of low usage guests to the small number of high usage and high cost guests.
Generally speaking, it costs about $1,000 per room to wire an average-sized hotel for Internet. And while bandwidth costs are often bundled with in-room telephone and even television service, the various parties I’ve spoken with agree current bandwidth costs work out to at least $20 a room a month. But that figure is rising fast as demand increases and hotels buy more bandwidth and do new hardware installations to keep up with consumption.
Against this cost currently is about $1 a day in revenue, so telecommunications, so providing service is a slight money losing proposition now. Although, if broken out separately, so is providing soap. And yet that’s baked into the room rate, so it’s unclear why a net $2 a month cost wouldn’t be.
The real issue here, it seems to me, is the quality of the basic internet service that is offered for free, at least to elites. If it’s truly serviceable, then this strikes me as a non-issue and a modest fee for heavy streaming ability can be seen as a net improvement (especially since many connections make that challenging now).
Similarly, if ‘high speed’ is going to come at a cost, then they need to be able to deliver high speed. It needs to come with real service guarantees.
I’m just skeptical enough, though, to expect that ‘high speed’ will come to mean ‘serviceable’ and free will come to mean ‘can barely connect’ — at least to the extent that other guests continue to try to stream media without paying the premium for speed, and the free systems (which won’t see the loving care and investment of high speed) becomes overloaded.
On net I’d expect this to be a negative development, though the introduction of true high speed streaming holds the potential to greatly improve the lodging experience.
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I said the same thing on Lucky’s blog yesterday – I’m skeptical that the free “basic” Internet will turn out to be more or less unusable (love the Johnny Dangerously reference)
I’m with you – I don’t typically stream tons of things while I’m in a hotel, but I do need basic Internet access, and if what they provide as “basic” does that, then I agree that it’s not really a big issue.
The Johnny Dangerously comment was worthy of a comment here. Well done.
I am sad to see it won’t be free for diamonds. they’re really going out of their way to make me wonder why I have diamond.
Although the individual properties have been inconsistent at enforcing it, this is in effect what has been rolling out at Hyatt for the past year or so… a slower “basic” tier that only allows for a few devices and that is offered to all guests for a charge, with elites getting it for free, and a “faster” tier that allows for more devices that is more expensive, with elites getting an option to pay for the upgrade.
(Now, many have reported that elites have chosen the faster tier and gotten the front desk to waive it.)
I am not sure that this is a good trend, however Hilton would be idiotic not to make the highest speed free to its Diamond tier customers. Hilton doesn’t really have that much to differentiate Diamond from Gold.
What a silly argument: you’re also advocating pay for hit water in all rooms, as bundling unlimited hot water into the room rate is seen as a subsidy from the majority of low usage guests to the small number of high usage and high cost guests who take long showers or fill a tub with it.
Is the imbecilic Paris now in charge of the namesake chain? With all of the ridiculous gutting and affronts to their loyalty members over the last year+, I can only so imagine. Or maybe yet another example of crooked banksters (redundant) pillaging a company, to the detriment of their employees and customers?
Open note to Amex: you know those high-priced faux-metal cards you whore out (not to be confused with the aforementioned heiress’ whoreishness)? Yeah, this is one of the major reasons why I just cancelled mine rather than pay the annual fees which contribute to this pathetic money grab (not to mention the much bigger issue of totally stopping the use of them after the laughably massive devaluation last year). Good riddance to them both.
What annoys me even more is that some of the “basic” access offered for free is for one device only. Not one device at a time, but only the same device that you initially logged in with. So if you initially accessed your email with your phone and later need internet for your PC you are forced to upgrade so that you can use more than one device.
Fairmont started this a while ago, as did some of the accor hotels. Sofitel brands. They put the free down to 250kps in some places, maybe 500kps in others. If you want more than 1MB (for say streaming or no waiting to download files) you have to pay up above what they give elites for free.
I work in the Telecom Industry, specifically selling Internet Bandwidth to companies like the Hilton. I am also a Diamond member of HIlton. Folks bandwidth pricing continues to drop over 40%-50% year over year. Today Hilton can buy in bulk and pay a rate that the Internet should be Free for everyones use. People we are losing our benefit while Hiltons costs for Bandwidth continue to go down. This is just a way for Hilton to collect Revenue in an area from people who think we are stupid. For example who would pay $4-$5 for a bottle of spring water when we know a case is less than $10. Same here but in actuality for someone to use 100mb over 1 night this price comes out to be pennies – cost. And for Hilton and others to have the nerve to charge for this when the Telecom prices continue to tumble for Internet Service is unreasonable
Just stayed at the Weston Seattle and they had three tiers of bandwidth and only the first tier was free to me as a platinum. The top tier was $29.99 a day, but only 5mbps bandwidth, 10% of my home service. Seems ridiculous and very anti-customer.
This stopped being a major concern of mine when I started tethering my laptop to my mobile phone. The hotel speeds have always been crap and a hotspot connected to 4G will always outperform.
I try to get even, not mad, when faced with this. I just keep all lights on (sticking a dummy card into the key card slot for power, even when I am not in the room) and keep the hot water running in the bath and the sink. I know it is a waste of resources, but I feel better in knowing that the hotel is paying for it.
Interesting post PJ Thank You
like I need another reason not to stay at Hilton hotels?
The self destruction of the program over the past 5 years continues to shock me
My 50 stays a year for over ten years with them is now down to 2 or 3 times a year
I hope they continue to go down the toilet as the Hilton point currency makes the Peso look like a strong currency
Which is why Hilton and Delta make great partners they know how to screw customers and have some of them come back for more screwing
I’ve moved on the changes at Hilton are 99% of the time negative. How long does it take to get the message folks?
Bong
The waster of water in states like California where we may have to ration soon is very hurtful to us
It hurts we residents far more than the hotels
If you seek revenge fine I support you
On the other hand I ask you to rethink this one in particular
I’d also ask you to re think your loyalty and just move on as I have. Its a negative relationship and Hilton is at fault for hemorrhaging their best customers relentlessly
Hey D
I am with you as a Diamond I am now ditching Hiltons too the program gets worse every year. I’m trying to get a room at a Hilton in Houston for M-F there is a convention in town but there are actually rooms available for Mon through the normal website and rooms available if I book Tues – Sat. I can book them but if I leave on Friday they will charge me a day for Saturday.
I had the Hilton Reservation call the hotel and they wouldn’t let me book even as a diamond.
Perhaps they have done u a favor
I’ve had to fight in the past to get a bed type with these bozos
Gary, has Hilton said that Gold/Diamond will have to pay for the higher tier, or is your statement that elites will have to pay for the higher tier based off the T&C change from last month?
You mentioned in the article that you carry your own internet access ‘backup’. Can you provide specifics? Most hotels in which I stay these days have unusable WiFi after about 6pm. No big deal for an iPad/iPhone with LTE but makes it tough to work on my laptop. Thanks in advance.
@CD – Verizon Mifi
Yep they have going to stick with Starwood and Marriott. Was able to book a room at the Marriott for the week.
I don’t really see the problem with this trend. If you’re in a major city (which you probably are if you’re staying at one of these properties), then chances are that you can tether to your phone. T-Mobile offers pretty good deals on that.
That said, I gave up on elite programs and just use hotels.com and bring my own internet along. Unless you’re scoring suites all the time, I don’t really see the benefit. With the money I save, I can happily provide myself with a “free” breakfast and internet if I can’t use my phone.
> “Just stayed at the Weston Seattle”
It’s funny that they’re pinching pennies on internet there. The Westin in Seattle operates one of the main ISP points of presence for the area, so they should have tons of cheap internet options. Though I suppose it’s treated like free bottled water, as has been pointed out above.
Having wired several rooms in my house for internet, there’s no way it costs a hotel $1K/room (even if they did have multiple jacks + a router). That figure is inflated by a a factor of a few.