As travel demand evolves, hotels are being called to reimagine their revenue strategies more thoughtfully. For example, with international arrivals slowing in key destinations, domestic travel has thrown a much-needed life raft to the industry, sparking creative strategies that seek to engage this segment.
NB: This is an article from SiteMinder, one of our Expert Partners
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The changing travel landscape has also prompted hotels to revisit loyalty programs, once built around long-term accumulation. There is now a growing push for instant rewards to allow guests to redeem points during their stay for high-value ancillary services like F&B or spa treatments.
The shift from discounting to hotel ancillary
Indeed, value has become the name of the game for the guests tightening their budgets, but still in search of a meaningful experience. For hotels, however, that doesn’t have to mean lowering room rates, which can be a perilous road to take. Discounting often sets off a vicious cycle: one property lowers its rates, prompting others to do the same, risking a downward spiral of price cuts that are hard to recover from.
Discounts, once the default, no longer hold the same appeal. According to Christopher Ellison, Vice President of Revenue at Brittain Resorts and Hotels, the focus has shifted – not on spending less, but on getting more for what guests are already willing to spend. “Everyone became so accustomed to seeing a discount that people are now less concerned about the percentage and more focused on the total value. What’s the total cost of the room? What am I getting? Is it just a room, or does it include breakfast? Is it a better view?” says Ellison.
Enter: ancillary services. In today’s experience economy, these non-room offerings are increasingly stepping out of the shadows as revenue management moves towards profitability. The growing appeal of hotel F&B among younger generations – perhaps the main attraction of hotel ancillary – is a clear example, owing to social media’s influence. As Pablo Torres, hospitality consultant, explains, “Younger people tend to… dedicate more of their budget to enjoying [life]. They might not own a house. They might not own a car. But they go on holidays three, four times a year and they spend heavily on F&B because they want to enjoy… It’s an Instagrammable experience.”
Torres adds that relying too heavily on room revenue, particularly when occupancy is moderate, limits a hotel’s potential. “If you offer different experiences throughout the day, it can add extra revenue to your business,” he says.
Hotel ancillary is becoming an experimental space for adopting new revenue streams as guest expectations change. Ellison suggests that these offerings can include even basic hotel services, which no longer need to be built into the room rate. Instead, they should be reimagined as flexible components of the guest journey – still tailored to what travellers value, but offered as optional based on their preferences – whether it’s opting out of daily housekeeping or introducing a flexible cancellation add-on.
