Free Wi-Fi Means More Profits: InterContinental Hotels Group CEO
Travelers often complain bitterly about paying extra for Internet access when staying in hotels, and now the big brands are beginning to respond.
InterContinental Hotels Group, which owns several hotel brands, including Holiday Inn, Crowne Plaza and InterContinental, is promising free Internet access worldwide to 71 million members of its loyalty program.
"We've done a survey that showed 43 percent of guests say that they won't stay in a hotel if it doesn't offer free Wi-Fi, so we know it's an issue and we know it for ourselves," CEO Richard Solomons told "Squawk on the Street" on Wednesday.
Solomons said while not charging for Internet service means potentially missing out on revenue, customers will want to stay at IHG hotels more — with the free amenity. "Being able to offer something consistently across the world actually means that we'll be able to attract more guests," Solomons said. "We absolutely see a net revenue upside from this."
(Read more: Should Hotel Wi-Fi Always Be Free?)
IHG also has a number of properties on the market, which are estimated to be worth $1.5 billion. CEO Solomons said his company has "a lot of interest" from buyers of key properties, with a refurbishment plan for the InterContinental Barclay in New York in hopes of selling it. The company is looking to move forward with a sale later this year, he said.
Free Wi-Fi: Industry First
IHG's free Wi-fi makes the global hotel chain the first to offer the perk to all loyalty program members, including those without elite status. Other hotel chains do offer free Internet service but only to its elite customers.
IHG will begin offering free Internet service to its Gold and Platinum elite members in July, and to all members beginning in 2014. And the service will be free even if you're not a guest at the hotel and simply there for a meeting or other function. IHG properties include InterContinental Hotels, Crowne Plaza and Holiday Inn.
(Read more: InterContinental Hotels Group Upgrades Mobile Apps)
The move comes as IHG announced it will be enhancing and renaming its Priority Club Rewards loyalty program as IHG Rewards Club. The chain also released survey results showing the importance of hotel Internet connectivity to travelers.
Importance of Free Internet to Travelers
More than 8,000 adults were surveyed earlier this month in a study by YouGov Plc, commissioned by IHG. Among the findings:
- Forty-three percent of respondents said they would choose not to stay in a hotel that charged for Internet.
- Twenty-three percent said that free Internet in rooms and throughout the hotel is the most important amenity when staying in a hotel for business, compared to seven percent who chose room service.
- Travelers from the UK (18 percent) and the U.S. (14 percent) both listed paying for Internet as the second most annoying thing when staying at a hotel after noisy guests (22 percent and 24 percent respectively).
Loyalty Program Upgrades
Beginning in July, benefits of the new IHG Rewards Club include:
- Free Internet for elite status members, with all members receiving the perk in 2014.
- The ability to earn elite status faster by staying in three or more of IHG's hotel brands during a calendar year.
- Free night stays will count toward earning elite status.
- Platinum elite members will be able to roll over night credits to the following program year if they've already achieved the required nights for Platinum status in the current year.
For more information on the new IHG Rewards Club, click here.
— CNBC's Darren Booth and Paul Toscano