While it’s obvious that selling hotel rooms provides the primary source of income for hoteliers, an EyeforTravel report, Ancillary Revenues in the Hospitality Industry, revealed that nearly one third of hotels see a 25 percent boost in their bottom line from ancillary sales. And the total global hospitality market for ancillaries is worth more than $100 billion annually. Despite this, there are many hotels who have yet to embrace the significant revenue opportunities available through ancillary sales.
At the core, ancillary revenue is generated from selling products and services – upgraded amenities, personalized experiences and premium services – in addition to the hotel rooms you book each day. And the secret to maximizing ancillary revenues is to present offers at optimal touch points along the guest’s journey, when they’re most likely to respond favorably and most willing to pay for them. Let’s take a closer look at how hoteliers can boost ancillary sales at three key points in the travel cycle: pre, during, and post stay.
An ideal time to offer ancillary products and services to guests is before they even set foot in your hotel. Entice customers still in the “dream” phase of trip planning by bundling extras into attractive packages. A romance package may include flowers, champagne, and a couple’s massage, and tickets to a local family-friendly attraction may be part of a family package.
In addition to offering packages, you can also promote add-ons within the booking process. Offer services such as childcare, shuttles to and from the airport, and breakfast, which often represents more than 50 percent of total ancillary revenues.
If your hotel doesn’t have an on-site spa, fitness center, or restaurant, consider partnering with local businesses that complement your brand. Increase ancillary revenue within the booking process by letting guests reserve rounds of golf at a nearby course, a session with a personal trainer at a health club, or a cooking lesson with a local chef.
You can also boost ancillary revenues by presenting offers to guests during their stay, starting with the moment they arrive. Empower your hotel staff or even incentivize them to offer room upgrades at check-in. And add-ons such as dining offers or tickets to tours that may be snapped up by eager travelers looking to enhance their vacation experience.
Leisure travelers may book in-room entertainment such as on-demand movies and games, while business travelers may need meeting space, or hot coffee along with grab-and-go breakfast options delivered to their room each morning. You can improve guest satisfaction and boosting ancillary revenue by selling toiletry items guests often forget to pack. Or sell branded hotel products such as clothing, mugs, and novelty items. Even late check-out can attract additional sales.
Post-stay Promotions…and Beyond
Communicating with guests post stay also provides great opportunities for ancillary sales. Email marketing drives customer retention. And with an average return of $38 for every $1 you spend, email marketing offers one of the best ROI for hotel operators. Send guests customized “thank you for staying” emails along with a feedback form and promotional incentives for return visits, or invite them to join your loyalty program.
Beyond presenting offerings to your guests, savvy hoteliers with an on-site restaurant or spa can increase revenue by marketing these services to locals and non-guests. Create a separate website for your restaurant or spa, then cross-promote it with your hotel website to generate lucrative ancillary sales.
Whether you’re focusing on pre-stay, on-site or post-stay ancillary sales, always bear in mind that each product and service can be revenue managed for optimal results. Review your product range and identify products or services that would appeal to your guests or help them personalize their stay. And most importantly tap relevant data sets to put relevant ancillary offers in front of guests at the right time. Hoteliers with a clear understanding of their guests and competitive differentiators can enhance their guests’ experience while simultaneously generating significant streams of ancillary revenue.
Finally, as the revenue management landscape for hoteliers matures, almost on a daily basis, add-on services or products can be managed in the same manner you would manage room rates. Keep this in mind as you begin to explore your most profitable untapped opportunities. For more on the topic, read our blog on how to leverage advanced revenue management to maximize ancillary spend.