Hyatt Hotels Corp.'s announcement in June that it is partnering with T-Mobile Corp. to install wireless high-speed Internet access in all of its U.S. hotels was the latest salvo in an ongoing high-speed access battle among major hotel companies to gain a competitive advantage.
The original skirmish was about providing HSIA in a wired solution. However, as a number of hotel companies in 2002 and 2003 established a beachhead there, the focus in 2004 has shifted to the wireless arena. Yet, in some instances, hotels only committed to installing wireless capability in their public areas, leaving guest rooms with wired access.
Travel buyers continue to report that travelers cite high-speed Internet access as the most important feature they look for in a hotel after location and physical comfort. Travel buyers, however, remain mixed as to whether a wired or wireless solution is the most reliable and efficient. Some are happy with either format, while others cite security issues with wireless. Some brand managers also are ambivalent about wireless.
Most travel buyers opt for their preferred hotels to provide the service complimentary, building any costs into the room rate. Barring that, buyers would like to be able to bargain any charges away as part of their annual rate negotiations. With hotels' negotiating positions strengthening, however, the chances of most buyers prevailing in this have become slimmer. Midprice brands, mostly, have taken the lead in offering HSIA free to guests
(BTN, April 26) as full-service chains have tended to charge a daily fee for unlimited usage. Though the tradition in the midprice sector has been that a single rate covers various extras, a more à la carte pricing approach has been the rule in the full-service category.
With the T-Mobile agreement, Hyatt expects wireless access to be installed in each U.S. hotel by the end of the second quarter of 2005. "Hotels that currently are wired can go ahead and become wireless as well," said Gary Dollens, Hyatt Hotels Corp. vice president of operations. This includes wireless in the guest rooms. "The trends we see and research we conduct indicate that wireless is where it's going to be," Dollens said. "Consequently, Hyatt is getting ahead of the game and moving in that direction."
The pricing model will be $9.95 per day for wired or wireless. "Our research said that was the price point we should be at," Dollens said. Those fees are waived, however, for existing T-Mobile subscribers, who simply use their T-Mobile identification number to log on to the system.
Likewise, Wingate Inn International, which is part of the Cendant Hotels Group, this year adopted a wireless strategy to stay ahead of traveler demand—and its competitive set. Wingate, however, chose to make the service complimentary. "We were pioneers in 1999 when we began to provide free HSIA, and we're pioneers again as the first brand in our segment to offer both free wired and wireless service in every hotel," said president Keith Pierce. "It's proven to be a huge competitive point of difference." Wireless is available in guest rooms and public spaces and will be fully installed by Labor Day.
Omni Hotels, an upscale brand, adopted a complimentary wireless strategy, one of the few full-service chains to go this route. "It set Omni apart from other hotels. As a brand, we want to be known for providing travelers with these kinds of tools," said Paul Dietzler, senior vice president for finance and technology. While the high-speed connection itself is complimentary, Omni charges a small fee for wireless adaptors needed by travelers whose laptops are not yet wireless-friendly.
With more than 2,700 hotels, Marriott International is pursuing a two-pronged strategy—wired HSIA continues to be deployed in guest rooms at the same time the company is installing wireless access in lobbies, meeting rooms and public spaces. At the end of the second quarter, nearly 2,200 hotels across all of its brands were HSIA-equipped in one or both formats. Marriott expects all U.S. hotels to be HSIA-enabled by year-end. Consistent with industry pricing, such Marriott midprice brands as Courtyard and SpringHill Suites provide the service for free, while such full-service brands as the core Marriott and Renaissance charge a daily fee.
Anticipating price resistance, however, Marriott last year introduced a bundled approach at the full-service hotels. For $9.95 per day, travelers receive wired and/or wireless access, as well as unlimited local and long-distance domestic telephone calls. According to Lou Paladeau, vice president for technology business development, the bundled pricing has been well-received. "Travelers at full-service hotels are used to paying for extras, if they feel the charge represents value," he said.
Best Western International hedged its bets as well, not so much in terms of a wired versus wireless deployment, but in the number of guest rooms at a property that would be outfitted. Considering Best Western is a membership association, owners have to agree before such an initiative becomes a brand standard. In this case, owners agreed to deploy HSIA in a minimum of 15 percent of rooms, "though they have the option to do a more thorough installation, depending on demand," said Tom Higgins, outgoing president and CEO. "Typically, the decision depends on the amount of business travel a property does, business travelers being the primary users."
A Clear PreferenceDespite the general enthusiasm for wireless, however, doubts have been raised about its efficacy. "HSIA is the critical amenity for our travelers, no question, and up to now we've been successful in getting fees waived in a number of our top 25 cities, but travelers have a clear preference for wired," said Peggy Lee, global travel and meeting manager for Network Appliance in Sunnyvale, Calif. "The connection tends to be more stable. Wireless is not always the most secure and the connection can be hit or miss. In large cities, at big convention hotels in particular, travelers report having trouble hanging on to a wireless connection. They're dropping every few minutes because of the number of people trying to use the system."
Privacy of data is uppermost on the mind of Frank Melesky, travel commodity manager for hotels, meetings and groups at Lockheed Martin Corp. in San Jose, Calif. "We haven't embraced wireless at this point. Much of the work we do is defense-related, so we have concerns there, but there also are matters of travelers' personal information. We're concerned about inadvertently releasing this kind of information."
Intruders can tap into a wireless connection more easily than a wired one. "This becomes a more prevalent problem as hotels install wireless connections in ground-floor restaurants, by the pool, etc. It becomes easier for someone to hack into what you're doing," said attorney Diana Barber, president of LodgeLaw, a firm specializing in hospitality law. Barber cautions travelers not to assume wireless hookups are secure and to avoid using them to divulge personal financial information. She also cautions hotels to take the necessary steps with their third-party providers to protect themselves from liability.
Hotels acknowledge that some vendors' systems may be flawed, but, on the whole, wireless works. Many of the glitches have been fixed. "The security is there today, the technology is there," Hyatt's Dollens said.
Adrian Kurre, senior vice president of brand management for Hilton Hotels Corp.'s midprice Hilton Garden Inn, agreed that "hard-wired solutions right now are much more secure than wireless." This notwithstanding, Hilton Garden Inn this year completed the deployment of complimentary wired and wireless high-speed Internet access in all guest rooms systemwide.
Kurre said he is taking the longer-term view. "Somewhere in the next year, the industry will start solving these security issues, and we want to be ready."
The point is to give buyers and travelers choices. "A lot has to do with the comfort level of travelers and their companies with these potential security lapses," Kurre said. "We provide a third Internet room option: modem hook-ups for travelers who prefer dial-up."