16Nov

Maximize Ancillary Revenue With Advanced Revenue Management

Author: Avanti Joglekar

The competition for guest revenue is more challenging than ever.  OTAs and direct bookings are often neck-in-neck with each other during the guest’s booking process.  The revenue competition comes to a halt, however, the second the guest walks through your hotel’s doors.  Once they’re on your property, there are endless possibilities to upsell and upgrade to your guests.  

Considering the extremely low acquisition costs for ancillary revenue, it’s a potential boon to your bottom line.  In their report “Ancillary Revenues in the Hospitality Industry,” Eye for Travel found that over half of hotels that they surveyed saw that ancillary revenue contributed at least 10% to their bottom line, and a third reported that ancillary revenues made up 25% of their bottom line.  

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Despite the enormous potential for profits from ancillary revenue, the report found that only 35% of the hotels they surveyed were tracking their ancillary revenues with their RMS.  With so much effort directed at using their RMS to drive occupancy and room rates, it only makes sense to use the power of data and analytics to gather information and maximize earnings for ancillary departments as well.  Here are three practical ways that you can use your RMS to supercharge your ancillary profits.

Make Each Team Part of Your United Revenue Approach

In every hotel, each department has their own revenue goals.  However, when those goals are completely disparate from each other, your property loses the ability for cross-departmental collaboration.  It can feel like each department is a separate entity rather than a component of the total picture.  If your segments are all on different reporting systems, it’s impossible to track, much less analyze and forecast for their performance without a significant amount of manual work.  When you have an RMS that can collect and analyze data across departments, you’ll have a much better idea of how to integrate them into your overall strategy.  You‘ll also see opportunities for collaborative revenue generating initiatives.

Measure ALL of Your Ancillary Spending, not just F&B

Food and beverage is almost always the highest percentage of a property’s ancillary revenue.  That doesn’t mean that the rest should be ignored!  Your spa, on-site activities, and even childcare should all be implemented into your total ancillary revenue approach.  Don’t forget to track spending from your group business outside of banquets either, since they have countless opportunities for on-site spending.

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Listen to What the Numbers are Saying

Not only will a robust RMS report on ancillary revenue performance, they’ll also guide you towards future opportunities.  You’ll be able to track the spending habits of your guests with transactional data that’s sorted by calendar period and guest segment.  That way, you’ll  identify chances for future promotions and cross-selling campaigns.  You can take the information you gather from your RMS even further by testing different ancillary spending promotions to the same segments to determine which campaign was more effective.

To truly maximize the earning potential of your ancillary departments, you must have an RMS that can adequately track and analyze the performance of those segments.  Rainmaker has one of the only RMS systems on the market today that has the power and agility to spot trends in ancillary spending and assist you in determining how to capitalize on your guests’ spending habits.  Interested in learning more about how Rainmaker can boost your ancillary profits?  Download our whitepaper, “The 2017 Smart Decision Guide to Hospitality Revenue Management” and see how we can help you get the most out of your ancillary revenue segments.

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