"I get my Wi-Fi for free at Starbucks. Why do I have to pay for it here?" It's such a common complaint heard by hoteliers, that it has an unofficial name: The Starbucks Conundrum. It's a touchy topic for meeting professionals, too. A March 2015 survey by M&C (bit.ly/1F2DMSW) found planners overwhelmingly agreeing that Wi-Fi should be free, both in guest rooms (92 percent) and meeting spaces (80 percent).
While the big hotel chains are slowly coming around on the first point, don't expect meeting-room Wi-Fi to be free anytime soon, say sources. "Places like Starbucks have, at most, maybe 20 people in their store trying to gain access," says David Smith, vice president of strategic accounts for Arlington Heights, Ill.-based Encore Event Technologies. "If you had even a small event of 100 people, try bringing them to Starbucks and see how well that would work. There are only so many people who can talk to Wi-Fi access points at one time."
In other words, the bandwidth and access provided by your average Starbucks for free (with a $4 latte) are not comparable to what a hotel needs to install in its meeting rooms. This varies by property, of course, but a hotel requires a much larger pipe (the line into the building that determines bandwidth) plus more advanced, more plentiful and more expensive access points. And that doesn't take into account all of the in-wall wiring, monthly costs and on-site labor.
"Planners need to understand that whether it's undertaken by a third party or a hotel, there is a definite cost to installing, maintaining, running and managing Wi-Fi," says James Spellos, CMP, president of Meeting U in New York City.
"If you look at the cost over a three-year period for a midsize hotel -- say, 500 to 700 rooms -- $1 million wouldn't be out of the question."
Imagine, then, the infrastructure expense for large conference hotels. "Some of these buildings are sitting on 100 acres, with a lot of steel and concrete," points out Michael Dominguez, senior vice president and chief sales officer for Las Vegas-based MGM Resorts International. His company recently invested $14 million to install a proprietary platform with Cisco that serves all of MGM's Strip properties. "That's the initial investment," he notes. "The annual cost to maintain can run $3.5 million to $4 million a year. But it's what we needed to allow us to have the flexibility and bandwidth we require for the size groups we have, groups that are now using multiple devices and need bandwidth that's strong enough for streaming video. That's the present and the future we need to accommodate."
Of particular importance to hotel Wi-Fi is the cost of labor. "It's probably the single biggest expense," says Encore's David Smith, whose company provides A/V and Wi-Fi services for all Omni Hotels and other properties. "There is a network operations center, and those folks sit in front of their computer screens and use their software to monitor everything in that network, constantly. If one access point goes down, an alarm goes off that automatically generates an email to the hotel general manager, the hotel IT department and to us, and then we all work together very quickly to eliminate that issue. It might be a simple rebooting of an access point, or it might be necessary to replace that access point.
"This happens across the country every day, with multiple access points that are going down," Smith adds. "Most of them are corrected before a guest or meeting attendee will ever even know it happened."
Additional expertise is required on-site for meetings. "Back in the day, we used to have a phone guy for meetings," Dominguez points out. "This was a person who would connect your line at the registration desk. Today I have to have a whole team of technology people who can get you to your server and fix any issues you're having while you're using the network. That's very expensive for us."
It's also a key differentiator between Wi-Fi in guest rooms vs. meeting spaces, says Smith. "Guest-room support is not on-site," he notes. "It's through an 800 number. Meeting rooms have dedicated technicians; those labor costs are hard costs."
Smith adds, "Meeting-room network and revenue for the Internet supports and pays for the ability to give it away for free to the folks upstairs. If it's free in guest rooms, and it's free in the meeting rooms downstairs, the problem will no longer be price; it will be a question of quality. Because there will be no money to replace the network gear, and none of the bells and whistles will be added. If there is no revenue generated from this and it becomes strictly a cost center, everyone will start looking to trim their costs."
Illustration: @IStockphoto/Alex Belomlinsky