For Israeli Hotels, Internet Is No Longer a Pricey Amenity

Charges for wireless have been slashed, but not everywhere.

In Israel on business and need to send off an urgent email from your hotel? Chances are, you’ll find yourself stranded without an Internet connection. A basic service costing less than 100 shekels ($29) a month at home and available for free at a café still costs plenty extra at most hotels.

But over the past two years, as the world has become thoroughly interconnected, many local hotels have come to the realization that they can no longer treat wireless Internet in guest rooms as a premium product and have slashed the price. Some have begun offering the service for free.

The Tel Aviv Hilton and Sheraton, for example, which used to charge 90 shekels ($25.70) and 80 shekels a day, respectively, both now provide the service for free. The Prima Tel Aviv has dropped its daily charge to 35 shekels a day from 60 shekels. In Eilat, the daily charge at the Hilton Queen of Sheba in Eilat has been dropped to 60 shekels from 80 shekels; the Isrotel chain of hotels now charge 40 shekels a day, down from 87 shekels; and the Daniel hotels belonging to the Tamares chain have cut theirs to 58 shekels from 93 shekels. Those offering free guest room WiFi include Israel’s Crowne Plaza and Atlas hotels.

However, there are still many hotels charging much higher rates to connect to the Internet. Also, the access code provided is usually good for only one device, which could pose a problem for couples who need access at the same time or a businessman carrying a laptop and smartphone.

Half-hour free for freeloaders

A survey of hotel Internet connection fees by TheMarker found that the Fattal chain usually charges the most. While Fattal’s Leonardo Basel in Tel Aviv and another of its hotels in Bat Yam provide the service gratis, its Eilat hotels, such as Herods Palace, Leonardo Plaza and U Coral Beach, all charge 80 shekels a day for room access to Internet, as do the chain’s Leonardo and Leonardo Plaza hotels in Jerusalem and Herod’s Tel Aviv. But guests at these hotels unwilling to pay extra can still receive a half an hour of access per day on the house.

At $20 a day, Internet access at the Dan hotel chain doesn’t come cheap either. But members of its e-dan customers club, which is free to join, can enjoy one hour of free WiFi a day in their rooms. Members of the Rimonim hotel chain club receive a similar but better deal: free all-day access.

“We solve the Internet issue for anyone coming on vacation and spending most of the time outside or by the pool by allowing free Internet access in the hotel’s public areas and a free hour of in-room Internet for club members,” says Rafi Baeri, vice president for sales and marketing at the Dan hotel chain. “I don’t think the price we charge is exorbitant. Some guests turn the room into their workspace and need broadband, which we provide through an outside company. The fees we charge are the same we pay the supplier for wiring and 24-hour-a-day support.”

The Fattal chain points out that all of its business hotels provide free Internet in their lounges. “Internet access is supplied by an outside company responsible for its operation and providing guests with service 24/7, so it involves a payment which varies between the hotels,” it says.

Hotels that charge for WiFi claim those providing the service for few adds the cost to the room price. “Nothing comes for free,” says Baeri, explaining that in such cases guests not using Internet likely subsidize those who do.

Ran Balbus, vice president marketing for the Orchid chain of hotels in Israel which offers guests free Internet access disagrees. “In a competitive market like today, price is what counts so it [the cost of providing Internet access] can’t be included in the room price because that would boost the price by 80 shekels a day and we wouldn’t have any guests,” he says. “We view the providing of these services for free as a bonus to customers.”

“Room pricing has nothing to do with Internet, and our working with a system of pricing that changes from day to day attests to this,” says Anat Shilon, marketing manager at Sheraton Tel Aviv. “We’ve decided not to make money off Internet anymore because it became the main source of customer complaints. Half our guests are Americans who are accustomed to having the service provided for free. We aren’t counting on recouping the costs of free Internet but assume that some people will take fast Internet which is provided for a fee.”

40 surfers on each floor

The cost of laying out a wireless network with good reception in a 200 room hotel is estimated by suppliers at several hundred thousand shekels. On top of this are several thousand dollars in monthly costs for providing support services and maintenance.

“Hotels often try to save by using cheaper equipment in order to claim meeting minimal standards, but then network coverage isn’t up to par,” says Boaz Yehuda, CEO at Getter Tech. “While several years ago, on arriving at a hotel, it was important to me to have the possibility of reading my emails and that was enough, today we’re going around with tablets and iPhones and the needs are much higher. I expect to be able to send mail, watch movies on YouTube, and carry on conversations on Skype. This assortment requires larger bandwidth. Moreover, if there were 10 to 30 Internet surfers on average at a hotel in the past, today there could be 30 to 40 per floor surfing on more than one device. This leads to congestion and higher demands on the network.”

Hotel reviews posted on websites like TripAdvisor or Booking.com illustrate the problem. Disappointed customers complain about having to pay for Internet access which turns out to be frustratingly slow and erratic.

“You book a room at a hotel claiming to provide WiFi for free, or even at extra charge, but you have no idea what kind of service you’ll get,” says a supplier of Internet infrastructure to hotels. “Businessmen or companies putting up guests at a hotel specify the bandwidth required, but if you’re a regular private customer nobody asks you about your digital needs. There needs to be a switch to up to $10 for WiFi service and creating a situation where everyone knows what he’s getting, what he’s paying for, and if it will work properly when he tries to connect to Internet in the room using several devices.”

The supplier continues: “I hope the day comes that, just as hotels are ranked according to various criteria, people can order their parcel of digital services according to their needs. An example of this can already be seen at the Sheraton Tel Aviv where they’ve now stopped charging for WiFi in guest rooms and provide the service for free along with Internet service at a larger bandwidth (for $20) to interested customers.”

Hotel phones – same old story

Hotels have long been known to charge an arm and a leg for calls made from the phone sitting by the bedside. Local calls costing of 2 to 5 shekels a minute are a matter of routine, as well as overseas calls at up to 15 shekels a minute. But nowadays when everyone has a cellphone handy, including most tourists, room phones serve little purpose but to gather dust.

“The revenue item for phone use on hotel financial reports is gradually disappearing because everyone is using cellphones,” says Shai Asia, VP sales and marketing at Crowne Plaza Israel. “Telephone services at hotels exist, but in all practicality they don’t exist.”

Why are rates so high?

“It’s not a normal rate because there’s the matter of maintaining switchboards,” he says. “And it’s also a source of profit, but not like it once was. To be honest, I don’t think much thought goes into the rate because it’s a service that’s on its way to becoming extinct. The world is already using mobile.”

The Orchid chain is an exception, offering free phone service along with free Internet access. “Our main focus is providing as many free services to our customers as possible in the belief that guests coming to us aren’t looking for unnecessary charges,” says Balbus. “Telephone and Internet are, in our opinion, basic services. For us the cost is marginal compared to what it provides the customer.”

Phone calls still cost money at the Atlas hotel chain but a year ago the rates were lowered to 50 agorot a minute for local calls to cellphones and 1 shekel a minute overseas. “Until we took this step we charged high prices like everyone but the volume of calls was negligible because people the price was high and understood it was better to buy a local SIM card,” says Pini Natarevich, manager of the chain’s Cinema and Center Chic hotels in Tel Aviv. “It’s not that we’re losing now by charging a shekel a minute on overseas calls, it is simply that (other) hotels charge more and earn more. But the question is how many calls are really made at these rates. While use of the room phone in the past was negligible, since we lowered the rates it has risen considerably. If other hotels calculated the number of calls in terms of the price, they might see that our model is more worthwhile economically.”

Eliyahu Hershkovitz