Views, Balconies, Red Wine: How to Increase Your Hotel Ancillary Revenues

Author: Ellis Connolly

Airlines and cruise lines have been doing it very profitably for years. Now hotels are finally recognizing the lucrative potential of ancillary revenue opportunities. A study from Cornell shows that revenue management systems (RMS) are moving beyond techniques focused solely on room rate optimization. And today’s cloud-based RMS allow hotel operators to apply the same RM principles to non-room revenue sources. However, with half of hotels still not measuring any type of ancillary revenue, its beneficial to examine specific ways hoteliers can tap into this lucrative revenue stream.

Maximize Room Features

Guests often place higher value on certain room features such as balconies, ocean views, floor level and room location. Use your RMS to optimize pricing for rooms with more in-demand features. You can also increase upsells within the booking process by featuring side-by-side room comparisons with incremental pricing. For example, promoting a junior suite as just “$45 more” sounds more appealing than stating it’s “$425 per night.”

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Pre-stay Promotions

Once your guest has booked their reservation, send a pre-stay email offering relevant value add-ons. A business traveler may appreciate the offer of a limousine pickup, families may desire family-oriented activity packages, and many guests will gladly pay a nominal fee for an early check-in/late checkout bundle. A personalized pre-arrival email removes any guesswork by directly asking guests if they have any specific needs during their stay.

On-site Offerings

Once on-site, satisfy your guests’ need for instant gratification and capitalize on impulse purchases by presenting offers via mobile technology. With the swipe of a fingertip parents can book a hotel-provided babysitting service and make dinner reservations for two. Or individuals can book a session with a personal trainer. You can also send mobile notifications about added value items such as revenue-lifting breakfast offers or spa treatments. Once at their destination, travelers are equally motivated to make purchases for products and services.  The chart below from Phocuswright serves as a good reference for ancillary revenue opportunities before, during and after the stay.

Before the stay

During the stay

After the stay

• Inspiration and planning
• Booking
• Departure

• Check-in/check-out
• Concierge services
• In-room services
• Services offered inside and outside the establishment 

• Feedback form
• Loyalty program
• Customized email promotions 

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Local Love

Get creative by decorating your hotel and guestrooms with paintings, sculptures and pottery by local artists. Make the pieces available for purchase and receive a percentage of the selling price. Think beyond your guests and leverage offers to attract local non-guests to your property. Host special events such as a murder mystery evening, live music performances, or comedy shows to bring in additional revenue.

Make it Personal

Whether a guest has a penchant for cycling, love of historic sites, or is a passionate foodie, tailoring ancillary offers to your guests’ personal preferences enhances their experience at your hotel and generates revenue. Scrutinize data gathered from previous stays to create targeted offers in future months. If you know a couple is celebrating an anniversary, offer a bottle of wine in the room, and a private romantic dinner experience. Or if a previous guest is an art lover, offer tickets to a popular new art exhibit.

Productive Partnerships

What if you don’t have a spa, restaurant, or health facility on-site? Consider mutually beneficial partnerships with a local day spa, fitness club, or nearby restaurants. Team up with third-party vendors to offer special tours and one-of-a-kind experiences your guests will treasure (along with adding treasure to your bottom line).

Whether it’s small personalized touches or larger offerings, the key to capturing more share of wallet and boosting your ancillary revenue lies in knowing your customer – anticipating what they want and offering it before they even know they want it. And even more crucial, learn to apply RMS practices to ancillary revenue sources to start adding valuable revenue to your bottom line.

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