If the airlines can and your competition is too, shouldn’t more hotels be exploiting the abundant opportunities to drive fresh revenues?
The one area where hotels do still have the competitive edge over online travel agents is when the customer walks through the door. It’s here, when the guest is immersed in the hotel experience, that hoteliers have a chance to upsell everything from innovative in-room services like childcare to spa treatments, tours and activities, a cocktail in the bar or a shuttle to the airport.
Yet a new report from EyeforTravel - Ancillary Revenues in the Hospitality Industry – finds that many hotels are not yet grasping the opportunities. In fact, just 20% of the 218 hotel and resort revenue managers who were surveyed for the report have implemented a revenue management system (RMS). More troubling still, is the fact that food and beverage - what RMSs account for most effectively – is only measured in 35% of hotels.
The goods news, however, is that over 50% of hotels are making ancillary revenues a priority for 2015, a case not hard to justify:
- 60% of hotels are already seeing ancillaries contributing 10% to total revenues, and;
- Nearly a third are seeing 25% added to the bottom line
Lessons in ancillary success have come from the airlines. A recent report by consultancy IdeaWorks and CarTrawler, a car distribution system, says ancillary revenues are up 121% since 2010 to $49.9 billion in 2014. Take Hungarian low-cost carrier Wizz Air, one of the detailed case studies outlined in the report, where this year ancillaries contributed nearly 35% to total revenue after the group offered more flexibility options to loyal passengers.
Going forward, hotels will undoubtedly need to be flexible and relevant, taking at data driven approach that is based on customer need.
On that note here are five recommendations from the +40 page report.
1. Scrutinise loyalty data and combine that with transactional data about previous consumer spend for a powerful edge against the OTAs
2. Consider mobile upsell technology providers to help identify which goods to sell at the right time
3. Apply A-B testing to analyse click stream data and price more accurately
4. Measure more than food & beverage – there are so many other possible revenue streams (meetings, conferencing, room upgrades, personal training, tours & activities, cycle hire, limousine pick-up – the list is endless)
5. Take a holistic approach. It’s not just about in-room revenues but managing inventories across the hotel and a on every channel
6. Don’t ignore the corporate travellers, specifically the growing number of millennials willing to tag on a leisure journey at the end of a business trip
7. Align your staff requirements with growing ancillary offers and train accordingly
8. Take lessons from APAC: it’s hotel market is the most developed when it comes to offering ancillaries thanks to a boom in new builds
9. Use social media to distribute last-minute ancillary offers
10. Beware of overcharging for what may be perceived to be essential items – like WiFi