When thinking of ways to increase revenues, most revenue managers focus on the room and look for ways to increase revenues by offering early check-in, late check-out, upgrades to suites and other room types, as well as generating no-show revenue.
NB: This is an article from RealTime Reservation
Although occupancy rates and room revenues projection are now approaching 2019 levels, the outlook for ancillary revenue is expected to lag behind due to business travel, meetings, and a slower return of group bookings. A Global Business Travel Association (GBTA) report estimated a full recovery of global business travel by 2026 – a result of many factors such as the Russian-Ukraine conflict causing inflation, high energy prices, labor shortages, supply chain, and frequent lockdowns in the world’s largest nation, China.
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Although, in 2021 business travel reached $697 billion, the number is considerably lower than 2019 pre-pandemic spend levels at $1.4 trillion. With four years of continued challenges to consider, hoteliers are looking to additional revenue streams to encourage and boost spending.
To stay ahead of the competition and help your business recover faster than those hotels that rely only on one revenue stream, it is prudent to create a well-formatted ancillary revenue strategy. For example, walk your property and identify under-used areas, i.e., gardens, lobby, and board rooms. Ask the team if this space could generate revenues by offering food & beverage delivery such as picnic baskets or special occasion dinners, celebrations outside of catering, identifying communal workspace, or promoting outside guest passes to the local community. With meeting rooms available and unused, properties have more opportunities to engage with its customers by repurposing spaces with new activities.
We all know the saying, “what gets measured gets done”, starting with charging the basics and identifying how these are posted, who is auditing, who is accountable, and how it is tracked. These basics include fees for no show, early departure, early check-in, late check-out, pet fees, cancellation fees, rollaway, mini-bar, room upsells, and most recently, resort or facility fees. Other areas to look at beyond room upgrades, include standards such as dining, golf, and spa to the non-traditional parking, rooftop space, pools, cabanas, beach rentals, community workspace, food & beverage, and activities. Having set procedures and audits in place will automatically increase these ancillary revenues and the result will flow to the bottom line.
With the leisure customer looking for unique experiences, hotels are able to be creative and innovative while enhancing the guest’s journey. This is also an opportunity for teams and departments to work together, brainstorm the “right” activations for their hotel, and increase brand awareness and values. Additionally, new data products provide comprehensive reporting on guest’s preferences and their go-to amenities they book during their stay. Management can recognize and identify offerings and revenue streams that work for their property and which ones do not. By eliminating service amenities and activities that are not requested and that do not generate significant revenue, resources can be reallocated elsewhere on the property. The goal is to increase revenues and create memorable experiences for your guests.
The following outlines some general ideas that are easy to implement:
- For hotels that have a Fitness center, add the sale of water and juices. Use QR codes to open refrigerator units and capture payment. Utilize unused meeting rooms and partner with local fitness instructors to design workout programs for guests and locals.
- Re-imagine the pool deck, cabanas, day beds, and pool chair rentals. Treat pool and beach cabanas as a room, yield weekend vs. weekday and half-day vs. full-day. Create sunset evenings by the pool and beach and add dining experiences. Customize the offerings or amenities by adding games, such as PlayStation or Xbox. Stock suntan lotions and drinks. Develop innovative packages, such as girls day by the pool, special occasion, bachelor, or bachelorette packages. Most importantly, empower the guest to personalize and reserve in advance.
- Make amenities available so anyone can seamlessly purchase and send a thoughtful gift to their friends or family staying at the hotel, or even to themself. Merchandise birthday celebrations, anniversaries, romance nights. Allow operations to establish and customize offerings based on your property, develop lead times, and automate tasks where possible. Design a section of the website to display offerings and create booking links with photography for a more visual appeal. These suggestions increase pre-arrival orders, capture payment in real-time to ensure no lost revenue, while exciting the customer for their upcoming visit. These small changes allow you to take advantage of current conditions and challenges that your property is facing so that you can transform it into a positive outcome for both the hotel and its guest.
More ideas may include the following:
- Consider packaging the airport shuttle with property parking, special events with photography services, and waivers with activities, all incentivizing guests to take advantage of both offerings at once.
- Activate your lobby, unused meeting rooms to create day use, co-working spaces, and private rooms attracting the work-from-home clientele. Based on availability, manage areas by yielding by the hour or by half-day vs. full-day. Establish an easy-to-deliver menu; use QR codes in spaces for food & beverage ordering. Utilize room service for delivery. Customize the offerings or amenities- including AV equipment, conference phone, pads & pens. Create packages for the size of groups or single users, which might include coffee, light bites, flip charts, and AV.
- Developing ancillary strategies is not just for resorts but can be applied to select and limited-service hotels. Many of these hotels have small lobby marketplaces. By using QR codes on the key packet and in the room, the property can create an in-room grocery shopping experience where guests can order snacks and beverages from the market on their phones. Through integration with the POS and credit card interface, attendants or front desk bags the order and guest pick up. This makes for a flawless exchange between the guest and management.
- Don’t forget about your group customer. Just like your leisure customer, the guest that is part of a group is also looking for unique experiences. As companies are looking to engage their work from home employees, meeting and group business is slowly returning to the hotels. To cater to this market segment, hotels must think outside the box and develop unique events that enhance the group’s time together. By developing these activities, you keep them onsite and increase additional spend. Internally, it would be best practice to incentivize your sales team on selling ancillary revenue. By looking at all sales market segments and identifying ancillary contributions, the overall financial performance will be impacted.
As you and the team identify customized revenue opportunities, you must remove roadblocks by allowing guests to do things digitally pre-arrival and during their stay. Be sure to engage your marketing team. Track what channels, rate codes, and demographics have the highest ancillary spend. Update your website to promote and book all ancillary opportunities. Let potential guests learn about your amenities and reserve and customize their stay.
In summary, the good news is although ancillary revenue levels have not returned to levels seen since the prior to the pandemic, the industry is turning to technologies that provide guests with the opportunity to engage in extra activities during their stay. Hoteliers are realizing that to maximize revenues and enhance the guest experience, one must embrace a comprehensive revenue management strategy that looks beyond the room rate and extends to total revenue management.
That said, use technology that empowers the guest to book and pay for dynamic packages, activities, cabanas, and 24/7 food & beverage, all from their personal devices. These technologies also ensure there are no missed opportunities with both leisure travelers and business travelers. Include links and QR codes in confirmation letters and pre-arrival Letters, calling out the properties offerings during the guests stay. Upon arrival, prepare the key packet to include a link and QR code to the list of activities as well as provide a text message after check-in and during the stay.
By making such QR codes and links accessible and easily available to guests, they become more likely to engage with the technology and book additional amenities and services. By promoting these marketing techniques prior and during the guest stay, the hotel is using technology for its advantage.
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Originally posted by the Hotel Business Review with permission from www.HotelExecutive.com