By Barry D. Lapides and Marc Stephen Shuster
Benjamin Franklin is quoted as saying, “in this world nothing can be said to be certain, except death and taxes.” If Benjamin Franklin were born in 1985, he might have said, “in this world nothing can be said to be certain, except death, taxes, and free Internet access.”
Many budget and limited service hotels get this philosophy and provide Internet access as part of their room rates. However, many resort and luxury hotels are still charging for, what many people believe, is their given right to always be wired. What is driving this trend, which is clearly not just limited to the hotel industry? One word: millennials.
As most know, millennials, otherwise known as Generation Y, are individuals who generally reached adulthood around the turn of the 21st century. According to an October 2014 report by The Council of Economic Advisors for the President of the United States (the “Report”), they comprise the largest and most diverse segment in the U.S. population and will continue to be a sizable part of the population for many years. They are the first generation to have had Internet access during their entire lifetime and they grew up in an electronics-filled and socially-networked world. Due to this, millennials expect instantaneous connection of all of their devices to the Internet. This is why forward thinking hotels are addressing the issue and not being “penny wise and pound foolish.”
Millennials expect free (and high speed) Internet access. Consequently, if a hotel does not provide free Internet service (something which today is becoming increasingly aberrational) and that Hotel is lucky enough to attract a Millennial, chances are better than not that millennials will simply congregate someplace that does have free Internet service (e.g., the local Starbucks) and spend their money elsewhere. That’s why according to The Wall Street Journal, most budget and limited service hotels provide free Internet service. Instead of providing free Internet service, a hybrid approach is seen with the likes of InterContinental Hotels, Marriott, and Starwood, which are using free Internet service as a loyalty inducement. Provided the customer is in the hotel’s loyalty rewards program, that customer will receive a certain level of free Internet service.
Other certain luxury and resort hotels are still, perhaps, using Internet service as an additional revenue source. Even more egregious, The Wall Street Journal recently reported that the Federal Trade Commission fined a hotel operator for using electronic jamming equipment to block outgoing signals from personal hotspots in convention meeting rooms to force people to pay for the hotel’s Wi-Fi service. This type of behavior may cost the hotel operators money in fines, and may not induce brand loyalty among millennials, which, according to the Report, “will shape our economy for decades to come.”
The general point here cannot be overemphasized: millennials demand free and easy Internet access. There are even significant movements afoot to disband with cellphone carriers and go completely off of Wi-Fi, wherever so located, or even go the Google route with their new Nexus 6 smartphone which is designed to switch between Wi-Fi and cellular networks. And although the demise of cellular carriers may be somewhat unrealistic for now, why is this notion important? Because millennials value socialization (think about their connectivity online) and hotels that do not have free Internet access are bound to lose out to millennials spending money in the hotel. For instance, Caesars Entertainment is repositioning and renovating the recently renovated Quad Hotel and Casino in Las Vegas into the LINQ Hotel with millennials in mind. Tariq Shaukat, Executive Vice President and Chief Commercial Officer of Caesars Entertainment, is quoted as saying “The resort will provide guests with a highly social and connected environment, with all of the great restaurants, shops and experiences available at the LINQ Promenade right at their fingertips.” The phrase “highly social and connected environment” is directed at exactly what millennials want and expect out of their Hotels.
Given that millennials are the largest segment of the U.S. population and their purchasing power will continue to grow with time, most hotels are recognizing these trends and trying to capture this audience. However, those that do not provide millennials what they deem to be a given right could be considered a losing proposition.
