Rethinking The Wi-Fi Strategy of Fine Hotels & Resorts
The hotel industry is the the midst of disruption from startups such as Airbnb who are re-imaging how you can book and experience lodging.
What Airbnb lacks is the hotel industry’s greatest strength: hospitality and consistency. While Airbnb is creating value for their customers, you cannot replace the experience of a true five-star hotel or resort.
A true five-star hotel or resort understands the needs and wants of their guests, but time and time again they tend to overlook Wi-Fi and it’s benefit to the guest experience. A guest booking a room, house or even a treehouse on Airbnb have come to expect unlimited complimentary high-speed Wi-Fi with their stay.
A guest booking a treehouse in Cooper, Alajuela, Costa Rica on Airbnb for $85 per night are offered complimentary Wi-Fi with no bandwidth restrictions. But when staying at most five-star hotels or resorts around the world paying an average rate of $600 per night, guests are limited with their Wi-Fi speeds and their bandwidth consumption is capped.
Airbnb hosts are creating value for their guests by offering complimentary Wi-Fi, while some five-star hotels and resorts are devaluing their brands by not offering complimentary in-room Wi-Fi and limiting the experience. Travelers are used to airlines limiting their bandwidth and blocking services such as HBO Go and Netflix due to the current state of the in-flight wireless infrastructure, but not hotels.
The in-flight wireless infrastructure is currently being upgraded as AT&T announced plans in April to launch a high-speed 4G LTE-based in-flight network in late 2015. The upgraded in-flight wireless infrastructure will come to the relief of 9 out of 10 users globally complain about the current state of in-flight Wi-Fi service being slow and inconsistent according to a Honeywell Wireless Connectivity Survey.
John Stankey, Chief Strategy Officer of AT&T summed up his thoughts on in-flight Wi-Fi by stating; “Everyone wants access to high-speed, reliable mobile Internet wherever they are, including at 35,000 feet”. Mr. Stankey’s comments are correct and they should serve as a guide for owners and operators of five-star hotels and resorts.
The recently announced four-star Virgin Hotels Chicago opening in 2015 is following Mr. Stankey’s lead by offering “the right to faster, free Wi-Fi ” in every single guest room. Virgin Hotels Chicago is not capping the bandwidth, instead they using the no-bandwidth limit as a marketing tool to encourage guests to lodge at the hotel.
Virgin Hotels Chicago property is even taking it two steps further by moving away from the iPad in the room model to a bring your own device, control the room model. The control your room, bring your own device model will save Virgin Hotels Chicago an up-front charge of roughly $124,750 for adding the new iPad Air 2’s to each of the hotels 250 rooms plus monthly software licensing fees.
Another idea that Virgin is attempting to re-invent is the in-room TV experience by allowing guests to “watch your stuff on our TV”. This is a huge step forward as the hotel TV of today is outdated and does not enhance the overall guest experience. A smart TV that a guest can program with their own content will create value for the guests.
The content streamed to the TV will require Wi-Fi which is in-part by why Virgin Hotels Chicago is offering unlimited bandwidth. Industry sources have told me that Virgin Hotels Chicago is going to operate at break-even to build the brand and disrupt the marketplace.
While Virgin Hotels very well might disrupt the market, Airbnb has been a true disrupter to the hotel industry in a good way. Hotel owners and operators should look at Airbnb as a friend rather than a foe as they are encouraging individuals to travel and see the world.
Airbnb can also teach the hotel industry why venture capitalist Marc Andreessen’s theory that “software is eating the world” is correct and why software will only continue eat away at industries. In 2007, Prince Alwaleed bin Talal took a 95% stake in Four Seasons Holdings Inc., owner and operator of Four Seasons Hotels and Resorts with Bill Gates at a valuation of $3.8 billion USD. Today as software has eaten the world, Airbnb has a valuation of $10 billion after a $475 million USD round of financing led by TPG Growth.
Airbnb does not own or operate a single property, but they have 800,000 listings available for rent in over 190 countries. While Four Seasons Hotels and Resorts owns or operates 93 hotels and resorts in 38 countries.
Airbnb was started out of necessity as Joe Gebbia and Brian Chesky were having a hard time paying their rent back in 2007. To fix this issue they hatched an idea of renting out three airbeds on their living-room floor and cooking their guests breakfast and launching airbedandbreakfast.com.
Fast forward seven years to 2014 and Airbnb is a thriving business that is growing daily. The Airbnb story is one that five-star hotels and resorts should take to heart when they are thinking about their Wi-Fi strategy.
Joe Gebbia and Brian Chesky found a way to create value for guests paying $80 a night for a air bed, including breakfast. While Airbnb lacks the overall hospitality and consistency of a five-star hotel or resort, they do offer value. Five-star hotels and resorts can do the same by offering unlimited complimentary high-speed in-room Wi-Fi.
Will five-star hotels and resorts follow the model that is being pioneered by Airbnb and Virgin Hotels or will they continue with the status quo? Only time will tell what decision the owners and operators of the world’s finest hotels and resorts choose to make as it relates to Wi-Fi.
While not every five-star hotel or resort has the budget or flexibility to re-think their Wi-Fi strategies, the ones who do would be creating long-term value for their guests, which in turn would lead to an increase in paid room nights per year.
Travelers have come to expect complimentary Wi-Fi in hotels and public spaces, now it is time for the world’s finest hotels and resorts to not only live up to their guests expectations, but to exceed them in every imaginable way.