Annoying Internet plans in hotels that cap the downloads

[rechoboam]

US does not have the same data costs as Australia, so comms comparisons are difficult, of course there is also the minor difference in market size as well, along with there being very few backhaul options for competition.

Put the USA to one side. It would cost me say $25 a day to use the internet to check my email for 10 minutes in an Australian hotel. I can buy a yearly plan on Telstra for $120 including 12Gig (last time I checked) of usage. I don't see how market size matters (to this extent). I realise it costs money to retrofit a building, but hundreds of rooms at $25/day for years on end is just ridiculous.

 

[anat0l]

Put the USA to one side. It would cost me say $25 a day to use the internet to check my email for 10 minutes in an Australian hotel. I can buy a yearly plan on Telstra for $120 including 12Gig (last time I checked) of usage. I don't see how market size matters (to this extent). I realise it costs money to retrofit a building, but hundreds of rooms at $25/day for years on end is just ridiculous.

Don't forget the line rental!

But I get your point. In saying that, what are the logistical difficulties in setting up a hotel and going, "Hi Telstra? This is the Holiday Inn Brisbane. Yes, we'd like 400 subscriptions to your Liberty Elite Plus broadband plan, please..."

 

[seanpodge]

Don't forget the line rental!

But I get your point. In saying that, what are the logistical difficulties in setting up a hotel and going, "Hi Telstra? This is the Holiday Inn Brisbane. Yes, we'd like 400 subscriptions to your Liberty Elite Plus broadband plan, please..."

You'd think that they could get themselves a reasonable discount on 400 subs too.

 

[anat0l]

You'd think that they could get themselves a reasonable discount on 400 subs too.

On the contrary - corporate use of services are not necessarily cheaper than residential use.

Besides, the telco knows they will need internet; it's not something that residential people have to choose between carefully, so I'm not sure what the incentive telcos have (apart from competition with each other) to do a good deal with the property.

On top of all that, as we see, the properties rarely interact with the telcos anyway - they have to go through a third party provider (Reivernet for IHG; Docomo for Hilton). Not sure what the whole point of that all is (except that the properties claim that then the internet is not an "in-house" expense, which means you don't get 20% off if you use your Hilton-Macquarie card).

 

[mannej]

Must be like corporate foxtel rates as well - not the cheapest thing in the world...

 

[Ewing]

I realise it costs money to retrofit a building, but hundreds of rooms at $25/day for years on end is just ridiculous.

It's pure cream for the hotel. While people here accept those rates they'll keep charging them. No different to the rates for using the in room telephone.

If the hotel has somehow managed to get an agreement with a supplier and they're not seeing the bulk of that revenue then they're being shafted just as much as the travelling public.

Let's say that a 400 room hotel has a 10% internet utilisation at $25 per day. That's about $30k/month.

In the Sydney CBD let's buy a 20Mbps flat rate link to cover those users. That'll probably set you back about $2000/m including the tail to your carrier if you know where to look.

Once the cost of internal infrastructure has been covered (which isn't much) and you've tied it with your PMS there's a tidy profit of about $340,000 per year.

Now yes some remote regions will have higher costs but that's probably close to accurate for major cities in Australia.

Anyone who thinks its anything but a massive profit centre for the hotel is deluding themselves.

 

[amaroo]

It's similar to those organisations that still charge the old "sundry fee" on their monthly/fortnightly statements.....I.E. rental property managers - even though the postal & photocopying days have been replaced with emails. For a business with a large rent roll those $5.50 add up to a nice number.

 

[markis10]

It's pure cream for the hotel. While people here accept those rates they'll keep charging them. No different to the rates for using the in room telephone.

If the hotel has somehow managed to get an agreement with a supplier and they're not seeing the bulk of that revenue then they're being shafted just as much as the travelling public.

Let's say that a 400 room hotel has a 10% internet utilisation at $25 per day. That's about $30k/month.

In the Sydney CBD let's buy a 20Mbps flat rate link to cover those users. That'll probably set you back about $2000/m including the tail to your carrier if you know where to look.

Once the cost of internal infrastructure has been covered (which isn't much) and you've tied it with your PMS there's a tidy profit of about $340,000 per year.

Now yes some remote regions will have higher costs but that's probably close to accurate for major cities in Australia.

Anyone who thinks its anything but a massive profit centre for the hotel is deluding themselves.

Your figures are a tad wonky, for a start utilization is nowhere near 10%, its more likely 1% during the four business nights of hotel capacity and sub 1% on weekends and holidays. As for infrastructure cost, it's quite a bit, depending on what is being used, for instance a pure Ethernet hard wired port will cost around $300 per room if it can be done, $500 if you need to use two wire technology such as the Motorola private broadband gear formerly provided by tutt systems, then you also need to cover the cost of the help desk which is 24x7x365(6) along with the cost of integrating with the PMS.

As for quoting Sydney CBD rates for tails, that's obviously a best case scenario as well, much more expensive tails exist elsewhere which often are the only option, especially FNQ and Darwin where dark fibre is hard to find, although that is a situation that is getting better.

For the hotels, Internet is much like a phone system, expensive to put in and the revenues promised have not eventuated in many cases (the companies make better money out of the movies etc), however they are starting to see the value of having a network for Internet provision that can also be used for other things, such as CCTV and other IP based services, so at least the infrastructure costs have a lower TCO over time. In the meantime, business travelers will just use their corporate laptops and 3G connections instead, as I do, despite being in a business that supplies 20000-30000 rooms worth of Internet access gear to this very market every month, about the only time I do use the room Internet is when I stay at a radisson or IC which gives it to me for free.