As we look ahead to post-pandemic travel, ancillary revenue is a crucial component of the hospitality industry. Whether you manage a boutique property or a large resort, employing an ancillary revenue strategy will expand the income generated from the basic sale of rooms and suites. Just to give you an idea, the total ancillary revenue worldwide is estimated to be between $80 billion and $130 billion, in 2021. This highlights the value and the need of implementing a successful Ancillary Revenue strategy in your hotel.
What is ancillary revenue?
Ancillary revenue is when you take income from additional services or products offered at your hotel. In order to optimise this, you need to think of your resort as more than rooms, but rather a full package incorporating leisure, amenities, and practical solutions.
Fostering ancillary revenue in the hospitality industry
In order to protect your brand, all decisions relating to ancillary revenue should place the needs of your customers at the core. Raise your profits and grow your identity with our spotlight on the future of ancillary revenue in hotels.
Upselling services
Upselling is one of the most effective ways to supercharge the ancillary revenue at your hotel or resort. This tool is the act of offering your guests a number of add-on services to elevate their stay. Examples of upselling in the hospitality world include room upgrades, automated check-in, car rental, and airport transfers.
You can devise a strategy that proposes enhancements and add-ons to your guest throughout the booking journey. Conceive a timeline from the time of reservation through to the days ahead of check-in to maximise your upselling potential.
Consider your brand and your clients
When it comes to extra revenue, it is vital to employ measures that are in sync with your brand and your clients. Evaluate your typical and target client and strategise an upsell program that reflects this.
For example, a resort that caters to families with younger children can upsell room upgrades that reflect the needs of parents. Consider adjoining rooms, childminding services, and admission tickets to kid-friendly attractions.
A couple on their honeymoon will likely be tempted by upgrades, spa deals, fine restaurants, and special touches in the room.
If car rental is part of your upsell offering, partner with a firm that reflects your brand’s stance on sustainability and environmental policies.
Think local
Consumer behaviour has shifted in light of recent years with an emphasis placed on supporting independent businesses. Where can you establish partnerships with local enterprises in your region?
If your resort has a gift shop, source stock and merchandise from local craftspeople and artisans. Consider where you source coffee and ingredients. Patrons are more likely to spend when they are confident their money is going to good hands.
Staying ahead of the curve
Keeping abreast with the latest developments and trends in travel technology will only hike the profitability of your business.
Chekin functions to increase your income and profit while improving the experience of your guests. Automating the registration process takes the weight off the shoulders of your workforce while streamlining your guests’ arrival.
Learning from the example set by airlines, online check-in is a cost-effective and time-efficient solution. Once this procedure is in place, you will save hours every year.
Tactics to generate ancillary revenue in your hotel
But how do you develop an effective ancillary revenue strategy? It is important to determine what your hotel is already doing well and to exploit this added value by developing the current offerings. At the same time, you have to identify areas where you are currently lagging behind your competitors and look to close the gap. Here are some of our recommendations, and tactics to generate Ancillary Revenue:
- Turn your existing free room upgrades into paid upsells: Instead of offering free room upgrades that are not contributing to your revenue, you can provide upgrades at a lower price.
- Create a gift shop. Your guests will be excited to take home souvenirs and memories to remind them of their holiday experience. Use that to your advantage by setting up a gift shop that sells tourism merchandise.
- Host events and conferences: You should consider all your common areas, outdoor spaces and event rooms as revenue generating opportunities. Hosting events and renting out your unused spaces will allow you to generate income and occupy your non-active areas.
- Form partnerships with local businesses: By associating with local businesses, you can expand your portfolio of services, providing a variety of up-selling opportunities.
- Create cross-selling offers: You can offer your customers extra products or services based on their interests and previous buying history. If you can cross-sell in a tailored way, it can stimulate them to spend more.
- Create up-sell deals and offers: Design deals that harness the power of up-selling to motivate your customers to spend more than they expect.
