In the hospitality industry, there is always going to be outrageous prices from the $40 for a gallon of freshly squeezed orange juice to the $250 for high speed internet access in a meeting function. This is fairly standard pricing but the problem is, the demand for broadband internet access is becoming much higher and the need is much more common than in the past. In addition, not only is bandwidth demand much higher so is usage demands. These are dilemmas that network companies such as Wayport, iBahn, Swisscom, Guest Tek, Lodgenet, etc. all face day to day.
These companies are in a battle because they charge a premium for their services. The service is basically broadband high speed internet access; whether it be in the guest room, lobby areas or conference space. The problem arises because the basic service is so expensive in order to cover the costs needed to build out the necessary infrastructure and network needed to meet demands from the simple to the complex. Installation of these networks can go as high into the hundreds of thousands of dollars.
In order for the companies to make this money back, is to charge the hotel monthly fees as well as considering a revenue agreement on the broadband internet access component in the meeting spaces. About five years ago, it was common to charge anywhere between $250 to $500 for a single hardwire connection in the meeting rooms per day. Not only was it common, meeting planners had no problem shelling out for this. It used to be only large conference hotels had the capacity and network capable of delivering these types of usage demands with their T1 lines. Nowadays, meeting planners are much more keen to the pricing. Truth be told, $250 is too much to charge to access a couple T1 lines bundled together. The kicker is your actually tapping into this bandwidth that is typically shared between the hotel’s admin offices and guestrooms. No wonder there are numerous complaints of how slow the network is at times, especially if your paying for a premium.
The difficult part for both parties is to justify how much to charge the clients utilizing the network. Whether a client uses the network or not, there will be fixed costs to running this network. However, in order to prevent this service from being depreciated, there has to be a bottom pricing. A client may just want to check his or her email or conduct a presentation that shows a couple internet links; but are forced to pay the premium. Like ordering cookies, you pay for a dozen even if only half of them are eaten. However, clients may end up just doing without and no body will get a dime. That is a lost opportunity and revenue.
A trend I envision moving forward is hotels taking this component and bringing it in-house. Fact is, networking is becoming much more common. You probably have a home network set up whether it is wired or wireless. You may even be sharing media from your PC to a TV. The concept is the same but on a much more industrial enterprise level. I am not at all surprised that hotels are beginning to see this and rather than outsource this component, bringing it back in-house. This will always be a cycle, the technology gets to a certain comfortable level and it just makes financial sense to not outsource any more.
Thus, the hotel broadband dilemma may be solved, for awhile. Until a new technolog is deployed and engineered and a need to outsource to a professional company specializing in the new technology is necessary. In the end, its just tough to charge $250 for accessing the internet; especially in this economy.