Postcard from Bishkek

There’s been a lot of discussion on the internet recently about internet provision in hotels and, in my role as General Director of two hotels, I have been following the discussion with interest.

The internet has become an important part of our daily lives, checking emails, and social networking sites, checking the news and following stories that are of interest, researching topics for study and work … and, of course, entertainment.  I know that when we loose internet access, for whatever reason, it causes me considerable strain and anxiety.  I can well understand why travelers away from home want and feel that they need access to the world wide web.

Having said that, only something like a third of our guests in Bishkek actually use the internet whislt they are with us, and in Naryn very few people ask to use it.

There are many people who seem to have come to expect that this access should be freely available and, in particular, that hotels should provide wi-fi services for free.  Personally I am not sure that I see the case for this.  Guests don’t expect for telephone calls or drinks in the minibar to be provided for free … or do they?  If not, then why should internet access be provided, (wi-fi or otherwise), for free?

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There are two issues: 1) wi-fi as opposed to landline and 2) the cost of the service.

First of all I suppose that we have to acknowledge that the situation is not the same the world over.  In places like Korea and Hong Kong, wireless access to the internet is found throughout the country.  In America, however, there are many places where even broadband is not available.  Indeed, I was watching an item on CNN about this just last night and I have seen several news reports that Kyrgyzstan, generally, has better speeds than are available in the US. (a lot depends on the tariff one chooses to pay).  Here in Kyrgyzstan, with its mountainous terrain, wi-fi certainly isn’t available everywhere.  Each enterprise which wants wireless access has to provide it itself.  That’s no big deal in itself in that the equipment is not that expensive, but the quality of service is an issue, speed and integrity of signal, still has to be addressed.  We, for example, spent a long time a couple of years ago in trying to establish a wireless network in our hotel in Bishkek, and it took us quite a while to iron out the technical difficulties so that we could feel confident that we could offer guests a quick and reliable service.  We still offer landline connections in rooms which is sometimes more reliable.

Once the wi-fi provision is established, then there is still the question of access to an Internet Provider service.  This is not provided for free.  It costs.  Typically, here in Kyrgyzstan, there are traffic charges and limits on the amount of the amount of traffic which trigger additional payments and fees if they are exceeded.  My friends from the West, and even from Moscow, are astounded when they hear how much we are charged for internet access, just as I am astounded when I hear how cheap it is for them.  Although, to be fair, those prices are coming down.

What’s more, you might be surprised how many people choose, for example, to download films, which quickly leads to the additional charges being levied.

I have to admit that it is possible to get access with tariffs that offer unlimited traffic, but they tend to be even more expensive, especially for the higher speeds which we would need to offer in the hotel, especially if we have a large number of users logged on at any one time.  We have had times, (during our two revolutions, for example,) when the guests in virtually every room were journalists and in dire need of fast and reliable internet access.

The cost of providing that fast and reliable access is not insignificant, and it has to be met.  As they say, “There’s no such thing as a ‘free lunch’”, and the costs have to be covered somehow.   The only way to do this is to, either hide the charges in the room rate, or for the hotelier to pay it as an administrative expense.  If the cost is within manageable proportions, then the management might well decide to cover the cost themselves and offer the service for free, but if not then they have to charge for it one way or another.  If they do not charge individuals for their actual use, then that means charging everybody whether or not they use service.  I am not sure that this is fair.

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One reason why a hotelier might decide to offer a free service, of course, is to provide an additional service for guests so as to get a competitive advantage over other establishments in the neighbourhood.   That’s why some cafés in Bishkek have chosen to offer free wi-fi access … to draw in the customers.  I am not sure how well it works in practice, however, as I have seen several people sitting, nursing a cup of Cappuccino and occupying a table for an hour or more whilst they surf.  I’m not sure that is good business for the café owner.

Certainly, if it’s at a reasonable cost, then this form of marketing ploy makes sense.

Consider Breakfast, for example.  If there is no such thing as a ‘free lunch’, then, likewise, there is no such thing as a ‘free breakfast’ and the cost is often included in the room rate.  It’s an interesting question, however, whether it is fair for breakfast be included in the price of the accommodation?  Although most of our guests do partake in breakfast, not everyone does and indeed, not everyone eats breakfast as a matter of course … I, for example, tend to have just a cup of coffee and if I eat anything at all it will be just a piece of toast with some Marmite.  Some guests have to leave early in order to catch a flight and so have to depart from the hotel before breakfast is served.  Why should they pay for a breakfast that they don’t eat?  As a result, when we opened the hotel, we originally charged separately for breakfast.  Those that had breakfast paid, those that didn’t avail themselves of the possibility, didn’t.  That seemed fair.  It was the customer’s choice … to have breakfast or not.

We got a lot of comments from people, however, that they didn’t like this arrangement, as they saw Breakfast as part and parcel of a night’s stay.  It was also true that this system caused us additional work and accounting.  So, we listened to what we were being told, and we decided to include the price of breakfast into the room rate.  For those who had to leave early, (for example, to catch an early morning flight, or to start a tour), and wouldn’t be able to eat breakfast in the dining room, we offered the possibility of having Breakfast delivered to their room as room service, (at no cost), or having a “packed breakfast” provided which they could take with them.

In this case, the costs were such that we couldn’t “swallow” them, (no pun intended), and so the cost of breakfast was included in the cost of the accommodation which was duly increased to make sure that we covered our costs.

To take another example, consider the use of the hotel saunas.  We had two of these built into the hotel as a feature, and charged a fee for their use when guests chose to use them.  Despite the fee, they proved to be quite popular.  On the other hand, the authorities decided in a crackdown on “unofficial saunas” in the shadow economy, to change the way that they were taxed.  All owners of saunas which were hired out to members of the public were required to take out special “patents” and pay the appropriate fee.  I have no problem with that, except that we weren’t operating a sauna as our main source of income.  They were part of a complex of services which we offered as part of our main activity … running a hotel.  The income from the saunas was included in our reports and the taxes paid.   The calculations on which the fees were based assumed that the sauna was the sole operation and, even though the saunas were quite popular, the fees were more than we were receiving from guests.  We were given a choice: purchase the patent or close the sauna.  We obviously didn’t want to lose the facility and so we chose a third option, to the chagrin of the tax authorities.  When we looked at the calculations, we decided that the cost of operating the saunas was not excessive and that we could afford to cover it as an administrative expense and so they were offered to guests as a complimentary service.

To be fair, given a choice between complimentary saunas and internet access, personally, I would prefer free internet access.  Remember, I am also a client at times and I do understand the feelings However, it’s not an either/or choice.  We felt that we could offer the use of the saunas as a complimentary service, but have problems when it comes to offering complimentary internet access as one.

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We faced a similar issue when it came to providing transfers to and from Manas airport on arrival and departure.  Of course, we could charge for these but we offer them as a complimentary service to our guests and we were the first hotel in Bishkek to do so.  Many of our guests do arrive and depart through the airport and most, but not all, of the flights are timetabled in the early hours of the morning and having to cope with arranging taxis at these times is not the easiest or most desirable tasks for travelers.  As it happens, we employ a driver for other reasons, and it was the case that they were normally under employed at these times.  When we did the calculations it appeared that although it would cost us something to offer a transfer service, it would not be excessive and we felt that we could afford to meet this as an administrative expense.

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When we consider the cost of providing internet access, however, the costs are not insignificant and, (as a result of the limits on traffic), are open ended.  As a result we felt that we couldn’t meet the costs ourselves and so have to cover the cost by charging clients.

Unlike the situation with Breakfast, where virtually everyone takes breakfast, (apart from when we have a lot of international journalists covering a revolution), only about a third of our guests currently use the internet, so it seems unfair to spread this across all guests by including it in the room rate.  Hence we decided to charge a separate fee.

It is important, of course, that the charges are fair and reasonable.  One of the complaints that I hear over and over again, about hotels all around the world, is about the exorbitant level of those charges.  We take the view that our main business is providing accommodation and the other features of the hotel are services for the guests.  Where we feel that we can meet the cost of those services from our own resources, (such as in the case of the saunas and airport transfers), then we do so, but where we consider that the cost is too great or unpredictable, then we levy a fee.  Although it would be nice for these services to raise a profit, the most important thing to us is that, where we do feel that we have to levy a fee. that any fees should cover the costs incurred in providing the service, (oh, and yes … also the taxes that are payable).

Now, as it happens, because new tariffs are being introduced and the costs of providing internet access are actually falling, we have been able to take a fresh look at the fees we charge and we have decided that, whilst maintaining the existing quality, (signal strength and speed), that we are going to be able to reduce the fees that we charge.

I know that this won’t satisfy everyone who thinks that internet access is a “basic human right” and should be freely available on demand, but I feel that it’s the best that we can offer at the moment.  I agree, of course, that it would be nice to be able to offer “free” internet access and I hope that one day we will be able to do so and, in the meantime, we will keep the situation under review to see if and when it will be possible.

Tags: Business, Expat, Hotels, internet, Tourism