One of the ironies of business travel is that many of the higher end hotels that businessmen and businesswomen stay at charge an additional fee for Wi-Fi. The reason why this is ironic is because a backpacker who stays at an eight dollar a night hostel is likely to have free high-speed Internet included in their stay.

Supply and Demand

Many business travelers have asked why. Why is it that some hotels charges for Wi-Fi, while others that are usually on the lower end of the spectrum, give it to their guests for free?

One of the arguments that have been made is that business travelers need Internet. For them, it is not a luxury. So even if a hotel charges for it, the business traveler will pay. However, a backpacker may be just as content walking down to the local Internet café and paying a few dollars to be connected to the Internet for an hour or so.

Another argument is that business travelers can claim the Internet as an expense. It goes against their taxes. In most cases, business travelers are not fronting the expense for their hotel stay anyway, so why not charge them for a service they are going to use?

Why Some Hotels Charge for Internet

If you think back 15 years ago before the popularity of the Internet, the mobile phone, and voice over IP calling, what were some of the ways that hotels were able to make additional money from their guests? One way was to charge their guests exorbitant rates to make phone calls. In most hotels, the policy was that a guest would pay one or two dollars to initiate the call, and then they would pay $.25-$.30 per minute to make the call. However, thanks to mobile phones, free roaming, and Internet calls, this stream of revenue has all but dried up.

Another way that hotels would make their money would be via pay per view movies. But realistically, most people who have access to video-on-demand, Netflix, and a whole host of Internet streaming options really don’t use pay-per-view in hotels. This leaves charging for Internet as the last source of attaining additional revenue from their guests.

And, let’s not kid ourselves; charging for Internet brings in revenue. If you were to look at the trends for hotel occupancy during a calendar year for a hotel with 250 rooms, you’ll see that if they on average charge their guests $15 per day, they would take in $200,000 annually just on Internet fees.

That’s a lot of money. However, some hotels argue that the installation of the Internet wiring and the monthly fee for Internet needs to be paid by someone, and that someone is the customer. Although this is a valid argument, some holes in this argument begin to appear when one compares the cost of installation and maintenance to the amount of revenue brought in from charging for the Internet.

If we were looking at the same hotel we mentioned earlier with 250 rooms, it is going to cost on average between $125,000 and $135,000 to install Internet wiring. Add on to that $5,000 a month for the Internet service and in just the first year of Internet installation a hotel will recoup their investment and make somewhere around $60,000 in profit.

The Multi-Tier Wi-Fi Payment System

There are many hotels that advertise free Wi-Fi; however, there is a catch. Usually, this free Wi-Fi is only available in common areas or in the lobby. More often than not, this free Wi-Fi is so slow that it can only be used for the most basic Internet connection. A person may be able to use this to check email, visit a simple website, and to chat via messaging programs. And as anyone who has desperately needed to connect to the Internet for work or some other important task knows, often times, slow Internet is worse than no Internet at all.

Interestingly, hotels have capitalized on this idea. Many are offering their guests “free Wi-Fi” at a speed that is so slow it makes a tortoise seem like the Flash. The hope of the hotel is that their guests will pay money for the next tier of Internet, which is considerably faster. And, it is a scheme that works.

Some hotels have gone as far as creating a three-tier system. The first tier is very slow and free. The second tier is acceptable with a charge. The third tier is very fast and very expensive. Once again, the business traveler who needs to be connected constantly will opt to pay for that high tier Internet.

When You Pay for What You Don’t Get

Something that can be exceptionally frustrating for travelers is arriving at a hotel and paying the $20 a night for Internet, only to find that the Internet speed that is available is dismally slow. At some hotels, paying for Internet does not guarantee that the Internet will be consistent, nor does it guarantee that the Wi-Fi will be fast.

So what can the traveler do? They complain to the person at the front desk, but the individual at the front desk has no control of Internet speed. They might find a 1-800 number, but that telephone number is not going to lead to anyone who can provide practical help. Guests are left in limbo. They paid for a service, their money will likely be refunded, and they’re still left searching for other sources of connectivity.

So the Question Remains: Should Hotel Wi-Fi Be Free?

The answer to that question is going to depend on whom you ask. Looking at the trend that is developing in US hotels, it seems like more and more people are saying yes. A report done in 2012 shows that in the United States at least 60 percent of hotels offered free Wi-Fi, while the other 40 percent had either a flat rate or a tier-based system. Interestingly, this 60 percent represented a 20 percent increase from 2011.

This marked increase in free Wi-Fi is due in part to a change in attitudes of customers. Many feel that Wi-Fi should be thought of like all other amenities in the hotel. It should be something that is rolled into the price of the stay, and not an extra that guests are charged for.

Wi-Fi has gone from being a luxury to being a necessity. It is on the same lines as a telephone line, electricity, and water. Having Wi-Fi adds to the comfort of a guest and is a great way to ensure that guests will return.

So, what do you think? Should hotels charge their guest for Wi-Fi? Or should Wi-Fi be seen as any other utility offered for free? Tell us your ideas, comments, and experience below in the comments section.