Adoption of WLANs in the Hotel Industry: A Theoretical Cost-Analytic Framework

Article excerpt

As many hotels have started implementing wireless networks to support a wide variety of business processes, others have followed suit in order to match the competitor's service offerings. Thus, although the adoption of wireless technologies is in many instances based on a bandwagon effect (Wolff, 2003), there are a number of factors potentially influencing the decision of whether or not to implement wireless technologies in hotel properties. This article provides an overview of the use of this technology in the hotel industry, identifies social, technical, and organisational factors influencing adoption decisions, and establishes a cost-theoretic model to analyse adoption decisions. The cost-analytic framework extends the theoretical underpinnings by creating a decision schedule to map the direct and indirect (non-linear) effects surrounding the evolving trend towards introducing wireless Internet access in hotels. The framework allows managers to objectively trace the economic net-present-value of their technology investment decisions. The cost-analytic model implicates adoption thresholds related to technology costs and setup-indirect effects that can mar direct positive effects of technical, organisational, and social antecedents.


Over the past decades, Internet usage has seen a tremendous growth; since the release of the World Wide Web in 1992, the number of worldwide Internet users has grown to almost 1 billion in 2005 (Internetworldstats, 2005). Internet technologies have greatly helped to enhance business processes, while at the same time enabling users to be connected in a wide variety of places; for business travellers, being online while on the road has almost become a necessity (Wolff, 2003). In order to enhance internal as well as external business processes, and to provide this feature to their guests, hotels have to decide which technologies best serve their needs. Wireless Internet or Wi-Fi, a wireless local area network (henceforth referred to as WLAN) that allows wireless connectivity for hotel residents, is one technology that is gaining popularity due to its wide array of potential uses (Wrolstad, 2004). As for other businesses, hotels can benefit in a variety of ways from the adoption of new technologies, however, the overall rate of adoption of new technologies in hotels has lagged behind that of other industries for many years (Namasivayam, Enz, & Siguaw, 2000).

Thus, many hotels used slow modern connections (i.e., connections using traditional phone lines) for data networking (Namasivayam et al., 2000), in an attempt to be able to offer connectivity without having to invest in new telecommunications infrastructure. However, with increasing demand for bandwidth, hotel consulting companies argue that providing high-speed Internet access is 'no longer "optional"' for hotels (Hartmann, 2004, p. 1). Hotels that had not yet provided high-speed Internet access, for various reasons (e.g., having to upgrade the current telecommunications infrastructure) are finding themselves reluctant participants in a data communications infrastructure upgrade.

The dawn of wireless data communications ushered in a welcome opportunity to utilise the benefits of connectivity without having to rewire entire hotel properties. For hotels, faster wireless networks can open the door for a wide range of innovative uses aimed at increasing revenue, increasing efficiency, and enhancing customer service (Namasivayam et al., 2000). The following brief scenario of a hotel that has not yet implemented a Wi-Fi infrastructure helps to illustrate how wireless technologies can be used for different purposes:

   Scenario: Every year, the beauty consultants of a
   large international cosmetics company meet in
   Dallas, TX, to learn about new product lines,
   sales strategies, and marketing opportunities, and
   to celebrate successes of the past year. The
   meeting is organised to last over several weeks;
   during this time, beauty consultants from all over
   the US come to attend seminars for a few days. …