IHG Moves The Needle On Internet Fees

Some hotel analysts long have speculated that the clock is ticking on in-room Internet charges. InterContinental Hotels Group's announcement yesterday that it soon will eliminate those charges for loyalty club members is another sign that their end might be with a whimper, not a bang.

Beginning in 2014, anyone who signs up for IHG's Priority Club will not have to pay Internet fees at any IHG property. As of July 2013, that move first will apply to Priority Club's Elite members, bringing IHG's policy to parity with many of its top competitors__Marriott, Hilton and Starwood, to name a few__before leapfrogging them six months later.

IHG is not the first hotel company to offer such a perk just for joining a rewards program. Omni Hotels & Resorts, for example, gives guests free Wi-Fi at the entry level of its Select Guest program. Carlson in 2011 adapted its rewards program to do the same for Radisson hotels globally, although free Internet access previously was a brand standard across Radisson in North America.

However, IHG, which has more rooms than any other hotel company in the world, certainly is the largest hotel company to do so. Sure, its largest brands__Holiday Inn and Holiday Inn Express__already have free Internet, but the higher-tier InterContinental and Crowne Plaza brands do not, and those together comprise about a quarter of IHG's global room portfolio.

IHG also took the extra step of guaranteeing that Priority Club members can access the Internet for free in hotels even if they are not staying there__if they come in for a quick coffee and meeting with a colleague, for example.

As such, this will be hard to ignore for other hotel companies that want to keep their loyalty programs competitive. In its announcement, IHG cited a survey conducted by YouGov that found 43 percent of more than 8,000 adult respondents would avoid staying in hotels that charge for Internet use. In the United States and United Kingdom, Internet fees ranked below only noisy neighbors as a top hotel pet peeve.

One hardly needs a survey to figure that out. Anyone who ever has attended a conference at one of the big box hotels could tell you that grumbling about a $20 per-day Internet-access charge is as common as grumbling about the weather or rubber chicken. Here at The Beat, free Internet often is a mandate from on high when we're looking for our own rooms to book.

Of course, just because more loopholes are being created to help travelers avoid Internet fees does not mean the fees themselves are going away. The most recent American Hotel & Lodging Association/STR hotel survey showed Internet charges have become more prevalent during the past few years; about 80 percent of luxury and upper upscale properties charge for in-room Internet.

Analysts have suggested that tiered Internet pricing__charging less or nothing for basic access to check email while charging more for video streaming and other high-bandwidth activities__also will become more common in the coming years. Loews chief investment officer Troy Furbay recently said that is something his company is considering. Should that become prevalent among the larger brands, it could add a new set of headaches__or, perhaps, opportunities__for buyers setting policies.

Regardless, for the large multibrand companies, building loyalty membership might be worth more than the incremental revenue from Internet charges. As booking entry points and distribution become more disparate, loyalty programs often are cited as a way for hotels to gain "ownership" of guests, regardless of whether they book through a corporate tool, the hotel's website, an opaque online travel agency or the latest booking app.

If both trends continue, ultimately we could end up with a proliferation of Internet fees that no one has to pay, at least among the major brands. Travel buyers would have one fewer item to haggle about in negotiations, provided they could convince all their travelers to join the slate of loyalty programs that cover their preferred hotels (or refuse to reimburse Internet fees for those who won't). Eventually, whether a big box hotel charges for basic Internet use could become about as relevant as whether it charges for local calls.