A guest blog post by Grayson Brulte
The hotel industry is the the midst of disruption from startups such as Airbnb, who are reimagining how you can book and experience lodging. What Airbnb lacks most is the level of consistency and culture of hospitality that have become the hotel industry’s greatest strength over years of experience. What Airbnb excels at, however, is providing unmatched variety and creating value for their customers.
Despite that, they have yet to replace the experience of a true five-star hotel or resort. The funny thing is that as well as these five-star institutions understand the needs and wants of their guests, they overlook WiFi and it’s benefit to the guest experience time and time again. Meanwhile, a guest booking a room, house or even a treehouse on Airbnb have come to expect unlimited (and receive) complimentary high-speed WiFi with their stay.
For example, guests booking a treehouse in Cooper, Alajuela, Costa Rica on AirBnb for $85 per night are offered complimentary WiFi with no bandwidth restrictions. Alternatively, guests staying at most five-star hotel or resorts around the world paying an average rate of $600 per night with limitations on their WiFi speeds and capped bandwidth consumption. Which would you choose?
Airbnb hosts are creating value for their guests by offering complimentary WiFi, while some five-star hotels and resorts are devaluing their brands by not offering complimentary in-room WiFi 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 at 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 WiFi 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 WiFi by stating this:
“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.
— Virgin Hotels (@virginhotels) November 3, 2014
The recently announced four-star Virgin Hotels Chicago opening in 2015 is following Mr. Stankey’s lead by offering “the right to faster, free WiFi” 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 WiFi, 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. As software continues to “eat the world”, Airbnb is currently valued at $10 billion after a $475 million USD round of financing led by TPG Growth.
Airbnb does not own or operate a single property.
What they do have is 800,000+ listings available for rent in over 190 countries. The Four Seasons Hotels and Resorts owns or operates 93 hotels and resorts in 38 countries…and worth 250% less than Airbnb.
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 to 2014 and Airbnb is a thriving business that grows larger every day. The Airbnb story is one that five-star hotels and resorts should take to heart when they are thinking about their WiFi 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 WiFi.
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? While not every five-star hotel or resort has the budget or flexibility to re-think their WiFi 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 WiFi in hotels and public spaces. In my opinion, now is the 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.
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 WiFi.
Grayson Brulte is the Co-Founder & President of Brulte & Company, an innovation advisory and consulting company that designs innovation and technology strategies for a global marketplace. Follow Grayson on Twitter and check out his previous post on our blog.
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