Sanjay is a Technologist and founder of Vervotech, a SaaS-based accommodation data provider. He also founded techspian.
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Every good hotel revenue strategy should accommodate the potential of active seasons and off-seasons. This helps move the business away from stagnancy, but it’s not possible without incorporating a solid ancillary strategy these days. Hoteliers pull the lion’s share of revenue through lodging and boarding, but the two should never be your only revenue streams. Ancillary revenue must support your existing revenue model.
What is ancillary revenue?
Ancillary revenue is all the revenue that does not come from a company’s principal offerings (products and services). It is the additional income generated by a company selling goods and services that do not comprise its primary offerings. One example is an ad-supported news channel whose primary work is to gather, produce and broadcast news. The channel shows ads in between its news broadcast; this is its primary source of revenue. If the channel decides to have sponsored programs during non-primetime hours where it plugs various promotional products and services, the earnings from sponsored programs qualify as ancillary revenue.
Hotels nowadays generate ancillary revenue through selling or upselling add-on services like custom offers and special packages, which include food and beverage deals, beauty treatments, spas, guided tours, transfers, etc. You will find most of these in almost all upmarket hotels.
Previously, I’ve discussed standard hotel ancillary revenue strategies. However, in this article, I aim to shed light on all-weather hotel ancillary revenue strategies that can support your hotel business through the financial cycle. And this concept doesn’t stop at hotel businesses. All industries can learn from these strategies, especially the tech-focused ones.
Leverage local tourist attractions.
Is your hotel situated near a historical site, museum or other points of interest? Most of these venues are more than willing to create a mutually beneficial partnership with hotels. All you need to do is to feature these attractions on your hotel website or app or send an email to your customer mentioning these attractions and the customized packages they offer. Your staff refers these venues to your guests, and you can easily earn commissions through each of these referrals.
Also, you have an added advantage if your property is around sports facilities and nature trails. It is not easy today to fly with oversized sporting equipment due to rising carrier fees. So, you have an excellent opportunity right there to rent sports equipment and make solid money out of it.
Upsell smart rooms.
People today are crazy about technology. They are making their homes smarter with IoT, and they expect similar experiences in their hotel stays, as well. This particular “consumer behavior” is prevalent in new age travelers, especially Gen-Z and millennials.
You can use similar IoT technology to introduce smart keys, smart check-in, smart check-out and menus to offer a more digital-savvy experience to these travelers. Then top it off with smart lighting, air conditioning and entertainment. Package it well, and you have all the ingredients ready to upsell the room as a “smart room.”
Host in-house events.
Food and beverage is a primary ancillary revenue source for hotels. But how do you maximize its potential? Hosting in-house events could be the answer to it. Your hotel can host a range of events, yet you need to identify a set of activities that pull a quality crowd to your events.
You can give space to famous musicians, comedians and authors who have a decent following. Use social media and PR platforms to amplify the message. Also, hire professional photographers and videographers to capture these moments. Very soon, you will have enough marketing material to market future events and, of course, your hotel brand.
Sell exclusive room services.
Most hotels are still absorbed in providing conventional room services, but today’s traveler expects more than your evening minibar setup. You can cut off the chase and rise well above your competition if you look at in-room services as an ancillary revenue opportunity. Start selling exclusive room services. There’s no better way to do it than understanding customers’ pain points.
Offer yoga classes, exclusive gym access or personal training. Offer the option to decorate their room for birthdays, anniversaries or any other celebrations. Busy professionals love these services.
Offer luxury pet services.
Pets like dogs and cats are emotional companions, and it is difficult for pet parents to leave their animals behind in boarding situations.
This poses an opportunity for hotels. You can ask customers to pay more by offering pet-friendly accommodation. Also, you can sell luxury pet care services, grooming and spa treatments. This shows that you care for not only the comfort of your guests but also their emotional companions.
Conclusion
Ancillary revenue for hotels is crucial for profitability and offers you extra elbow room to maximize the potential of your hotel property. These initiatives can cement your hotel brand.
Using these methods—or comparable ones in other industries—you are well on your way to adding income to your balance sheet and differentiating your business from the competition.
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