The hospitality industry thrives upon creating exceptional guest experiences, but in today’s competitive landscape, offering comfortable rooms is not enough. Hotels that flourish understand the power of hotel ancillary revenue – the revenue generated beyond room rates. Developing an ancillary revenue strategy can help you diversify risk, increase guest spend and maximise your hotel’s profitability, whist improving guest satisfaction.
In this article, I explain what hotel ancillary revenue is, if your hotel needs an ancillary revenue strategy, provide 6 ways to grow your hotel ancillary revenue and explain the key mistakes to avoid with hotel ancillary services.
What Is Hotel Ancillary Revenue?
Hotel ancillary revenue encompasses all the revenue generated from products or services that differ from or enhance the main product line(s) or services of a hotel – essentially, the income a hotel generates beyond that which derives from sales of rooms.
This diverse category includes a wide range of products and services, such as:
Activities & Experiences: Cooking classes, guided tours, tickets to local attractions and/or wine tastings.
Food & Beverage (F&B): Bars, mini bars, restaurants and room service.
Guest Services: Airport transfers, car rentals, laundry services, luggage storage and parking.
Packages & Upsells: Early check-in, late check-out, room upgrades and themed packages (family fun and/or romantic getaways)
Retail: Convenience items, gift shops and travel essentials.
Spa & Wellness Services: Facials, gyms, massages, saunas and steam rooms.
Does Your Hotel Need An Ancillary Service Revenue Strategy?
If you’re looking to increase revenues at your property, creating a well-defined hotel ancillary revenue strategy can provide your hotel with several key advantages:
Boosted Profitability: Ancillary revenue diversifies and increases your number of revenue streams – reducing any sole reliance on revenue deriving from room rates. This flexibility enables you to have greater control over your pricing strategies and will also help your hotel withstand any economic fluctuations.
Enhanced Guest Experience: Offering a variety of services helps cater to a diverse range of the needs and preferences of target customers and create a more enjoyable and memorable stay for your guests. Furthermore, guests who find value in your ancillary products and/or services are more likely both to leave positive reviews and to spend more with you.
Improved Customer Loyalty: Guests who find value in your ancillary services are also more likely to become a repeat customer and to recommend your hotel to others. A strong loyalty program that incentivises guest spending on ancillary products and/or services should also strengthen your relationship with your customers.
6 Ways To Grow Your Ancillary Revenue
In the hotel industry, guest-centric service and innovative technology can be a powerful combination. Let’s explore how this dynamic duo can boost ancillary revenue and unlock new revenue streams:
Master the Art of Upselling and Packaging:
- Package Deals: Create enticing packages that bundle accommodation with popular ancillary services like golf, meals and/or spa treatments at a discounted price. This encourages guests to spend more whilst providing them with a sense of value.
- Pre-Arrival Upselling: Target upcoming guests with personalised email campaigns. Offer early check-in and late check-out options, experiential packages (romantic getaways, spa packages) and/or room upgrades. Leverage guest data to personalise these offers and highlight features your guests may potentially be interested in.
- In-Stay Upselling: Utilise digital signage in strategic locations like lifts or pool areas to showcase available products and/or services and entice your guests to indulge. Welcome packages with a QR code that links to a dedicated ancillary product and/or service booking page is another great option.
Technology: Your Partner in Streamlining Guest Experiences:
- Implement self-service kiosks to streamline processes such as checking in for spa treatments or ordering food by the side of the pool, which provides guests with a convenient option and frees up staff time.
- Integrate online booking platforms for ancillary services like restaurant reservations and/or spa appointments. Consider offering online reservation incentives like a complimentary glass of wine for pre-booking a table in your restaurant and/or a discount for pre-booking a spa treatment.
- Utilise a user-friendly mobile application for easy booking of activities (cooking demonstrations, fitness classes), ordering room service and requesting guest services (extra towels or laundry pick-up, for example).
Additional Tip! Maximise hotel ancillary revenue from existing spaces by reimagining underutilised common areas for revenue generation. Convert lobbies into co-working spaces with charging stations and flexible working options, host pop-up shops showcasing local art and crafts or offer meditation classes with stunning city views.
The Key Mistakes To Avoid With Hotel Ancillary Services
Whilst hotel ancillary revenue offers significant benefits, implementing a successful ancillary revenue strategy requires avoiding some common pitfalls:
Aggressive Upselling: Pushing unnecessary services or upgrades can backfire. Focus on offering relevant products and/or services that genuinely enhance the guest experience.
Hidden Fees: Transparency is key. Clearly communicate all associated costs of ancillary services to avoid any nasty surprises for guests. This includes any gratuities, minimum spending requirements and taxes.
Limited-Service Availability: Inconsistent service quality across ancillary offerings will reflect poorly on your hotel. Ensure appropriate staffing levels and consistently high service standards in all departments.
Neglecting Guest Feedback: Actively solicit guest feedback on your ancillary services through one-to-one interactions, in post-stay reviews and/or surveys. Use this feedback to identify areas for improvement and to better tailor your offerings for your guests.
Outdated Technology: Technology can empower a seamless guest experience. Utilise online booking platforms and mobile applications for easy access and convenience when it comes to booking spa treatments, ordering room service or requesting guest services.
Partner With A Hotel Revenue Consultant:
At MavREV, we specialise in providing outsourced revenue management expertise remotely at a fraction of the cost associated with employing a full-time revenue manager. We maximise RevPAR using MavPERFORM RMS, an algorithm-powered, cloud-based and responsively designed RMS And Price Optimiser that saves valuable costs and time!
Interested? Get in touch to book your free 1-2-1 consultation now!
