The real reason why luxury hotels charge for internet [2015/12/26]

There has been many theories why luxury hotels charge for wi-fi.

Reasons include guest's price insensitivity, perk, avoid cannibalization, and to maintain
reasonable high internet speed.

Perk was a weak theory to begin with because if customers really needed wi-fi, they would just purchase it.

Cannibalization cannot be ruled out but is not a very convincing theory either. Who would just use internet and stay in their room in a luxury hotel? Customers would surely take advantage of the luxuries that the hotel provide instead of being sucked in to Netflix, which they can anywhere else.

Well, today, we are closer to the real reason why they charge for internet. Recently,
Marriott has been fined by FCC for blocking customer's hot spots.

This action rules out price insensitivity and to maintain reasonable high internet speed. If customers were price insensitive then they would just pay for hotel wi-fi. If the hotel cared about internet speed, then they would not care about customers using their own wi-fi.

Hence, what convincing evidence are we left with? Yup, money, money, money...charging for internet makes money and is probably a super high margin business because once you set up the internet, the maintenance is very low cost. That is why Marriott actively banned customer's wi-fi.  It could not lose its cash cow, especially as lodging became more competitive with rise of Airbnb and other innovative lodging.

So in sum, luxury hotels charge for internet because it makes profit!