Blog highlights

• Implementing ancillary revenue strategies can help hotels diversify their income streams and enhance profitability.
• Ancillary revenue strategies are essential for hotels to enhance guest experiences, gain a competitive edge, adapt to trends, upsell, personalise services, expand reach, form partnerships, and ensure financial resilience and growth.
• Ancillary revenue strategies should be customized according to the hotel's offerings, target market, and branding.
• Hotels can maximize their ancillary income and thrive in a competitive market by adopting innovative techniques and constantly evolving their revenue generation ideas.

Hotels are always on the lookout for new and better ways to increase profits in today’s highly competitive hospitality market. Using ancillary income techniques is one such method. 

A hotel’s revenue from the sale of extras like spa services, food & beverages, rentals, etc, in addition to the regular room rate, is known as ancillary revenue. The bottom line is that hotels can benefit from these tactics as well, as they improve the overall guest experience and add to their hotel revenue-generating ideas. 

In this blog, we will discuss 10 different ways in which hotels of varying sizes and types can increase their supplementary earnings with hotel ancillary services, with examples of ancillary services in hotels. These tactics can help hotels of all sizes, from quaint inns to sprawling resorts, find new ways to make money and compete in a fluid industry. Let’s discuss the importance of ancillary services in depth.

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What is hotel ancillary revenue?

Ancillary revenue refers to the money a hotel generates from sources other than room rentals. Hotels can increase their ancillary revenue by focusing on providing a complete package that includes recreational activities, facilities, and practical answers.

Ancillary services in tourism are an important part of the hospitality industry’s future plans post-pandemic. Whether you’re in charge of a small inn or a sprawling resort, implementing an ancillary revenue strategy will help you make more money. 

You may improve your resort’s ancillary revenue by getting to know your guests, monitoring the market, and thinking outside the box to come up with fresh hotel revenue opportunities that complement your resort’s image and service.

To give you an idea, experts predict that ancillary income will amount to between $80 billion and $130 billion worldwide in 2021. This shows the importance of ancillary services and how important it is for your hotel to develop a profitable ancillary revenue strategy.

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What are ancillary services in hotels? 

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Ancillary services in hotels refer to additional products, services, or experiences offered to guests beyond the core accommodation. The hotel’s ancillary services in the tourism industry enhance the guest experience, provide convenience, and generate additional hotel revenue. Here is a list of common examples of ancillary services in hotels and all the ancillary departments in hotels:

• Food and Beverage - This includes on-site restaurants, bars, room service, catering services, and specialty dining experiences like themed dinners or chef’s tables.
• ‍Spa and wellness - Hotels often offer spa facilities, wellness centers, massage services, fitness centers, yoga classes, and other wellness-oriented amenities.‍
• Business and Conference Facilities - Many hotels provide meeting rooms, conference spaces, and business centers equipped with audiovisual technology, high-speed internet, and other amenities for corporate events and gatherings.‍
• Transportation and Airport Transfers - Hotels may offer shuttle services, airport transfers, or partnerships with transportation providers to facilitate guest travel to and from the hotel.‍
• Leisure and Recreational Activities: Hotels may provide leisure facilities like pools, tennis, golf, water sports, bike rentals, and guided tours.‍
• In-Room Amenities - Upselling additional amenities in guest rooms such as minibars, in-room entertainment systems, premium toiletries, bathrobes, or personalized welcome gifts.‍
• Retail Shops - Some hotels have on-site retail shops offering a range of products such as souvenirs, clothing, accessories, local crafts, or specialty items.‍
• Childcare Services - Hotels may provide babysitting or childcare services, kids’ clubs, or family-oriented amenities to cater to the needs of families traveling with children.‍
• Special Events and Celebrations - Hotels often organize special events, celebrations, or themed nights, such as gala dinners, live entertainment, holiday festivities, or seasonal events.‍
• Additional Services - Other hotel ancillary services can include laundry and dry-cleaning services, pet-friendly amenities, valet parking, luggage storage, ticket booking assistance, or rental services like bicycles, cars, or equipment. These ancillary departments in hotels are beneficiaries of the hotel’s revenue.

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10 hotel ancillary revenue strategies

Partner collaborations

Collaborate with local businesses or attractions to create joint promotional offers. For instance, a beachfront hotel could partner with a water sports company to offer discounted rates on activities like snorkeling, surfing lessons, or jet ski rentals. Another ancillary revenue example is partnering with a local theater to offer guests discounted tickets or exclusive access to pre-show events.

Local experiences and tours

Offer curated local experiences and tours that highlight the unique attractions and activities in the area. This could include organizing guided tours to popular landmarks, arranging culinary or wine-tasting tours, or facilitating outdoor adventures like hiking or biking excursions. Collaborate with local tour operators or create your own branded experiences to provide guests with unforgettable memories.

Event hosting

Utilize the available event spaces within the hotel to host conferences, weddings, or corporate events. Provide comprehensive event planning services, including catering options, audiovisual equipment, and room blocks for attendees. Showcase your venue’s unique features and offer customizable event packages to attract event organizers.

Restaurant and bar promotion

Promote your hotel’s on-site restaurant and bar to both guests and external customers. Offer promotions such as happy hour deals, themed dining events, live music performances, or chef’s tasting menus. Collaborate with local food and beverage influencers or organize culinary workshops to attract a wider audience.

Loyalty programs 

Implementing a loyalty program to encourage repeat visits and enhance guest satisfaction is a successful hotel ancillary service strategy. Offer exclusive perks to program members, such as free Wi-Fi, room upgrades, late check-out, or access to exclusive events. Consider partnering with airlines, car rental companies, or credit card providers to offer members additional benefits or opportunities to earn points.

Package deals

Create enticing bundled packages that combine the hotel stay with other services or experiences. As an ancillary revenue example, a hotel near a golf course could offer a “Golf Getaway” package that includes a discounted room rate, rounds of golf, golf club rentals, and access to exclusive amenities like a golf concierge.

Spa and wellness services

Develop a spa and wellness program within the hotel to cater to guests seeking relaxation and rejuvenation. Offer a range of hotel ancillary services, such as massages, facials, body treatments, yoga classes, and fitness facilities. Partner with luxury beauty brands or wellness experts to provide unique experiences like customized wellness retreats or workshops.

In-room amenities

Enhance the in-room amenities and services to provide a more luxurious and convenient experience for guests. Offer premium minibar selections, gourmet coffee machines, luxury bath products, or personalized concierge services. Consider incorporating smart room technology for personalized climate control, lighting preferences, and entertainment options.

Business and corporate services

Cater to business travelers by offering tailored amenities and services. Provide well-equipped meeting rooms, business center facilities, and high-speed internet access. Offer corporate rates and packages that include benefits like express check-in and check-out, complimentary breakfast, access to executive lounges, or shuttle services to nearby business districts.

Upselling and cross-selling

Upselling involves offering guests a higher-priced option or upgrade, while cross-selling involves suggesting additional services or amenities. For instance, a hotel can offer guests the opportunity to upgrade their room to a suite with enhanced amenities such as a separate living area, a jacuzzi, or a panoramic view. Cross-selling could involve offering guests add-ons like spa packages, city tours, or tickets to local attractions.

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Why do hotels need hotel ancillary revenue strategies?

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Hotels need hotel ancillary revenue strategies for several compelling reasons. Let’s explore some of the key motivations behind the necessity of these strategies:

Diversify revenue streams

Relying solely on room revenue can be limiting for hotels. By implementing ancillary revenue strategies, hotels can diversify their income streams and reduce their dependence on room rates. This allows them to tap into additional hotel revenue sources and create a more sustainable business model.

Enhance profitability

Ancillary revenue strategies provide hotels with opportunities to maximize their profitability. By offering supplementary products, services, and experiences, hotels can generate incremental revenue that goes straight to their bottom line. These strategies help optimize hotel revenue and boost overall profitability.

Offset operating costs

Operating a hotel involves various expenses, including staffing, utilities, and maintenance. Ancillary revenue can offset these costs and contribute to the financial health of the property. It allows hotels to generate additional income that can reinvest in the business or improve guest offerings.

Improve guest experience

Ancillary revenue strategies, when implemented thoughtfully, can enhance the guest experience. By offering add-on services or amenities that align with guest preferences, hotels can provide a more personalized and memorable stay. This leads to higher guest satisfaction, increased loyalty, and positive word-of-mouth recommendations.

Competitive advantage

In a highly competitive hospitality industry, hotels need to differentiate themselves. Ancillary revenue strategies can be a powerful tool for hotels to stand out from the competition. By offering unique and enticing ancillary products or experiences, hotels can attract more guests and position themselves as a preferred choice in the market.

Adapt to market trends

Consumer demands and preferences are constantly evolving. Ancillary revenue strategies enable hotels to adapt to changing market trends and cater to the evolving needs of guests. By identifying new opportunities for hotel revenue generation, hotels can stay relevant, capture emerging market segments, and ensure long-term success.

Upsell and cross-sell opportunities

Ancillary revenue strategies allow hotels to upsell and cross-sell additional products and services to guests. By offering upgrades, premium amenities, or bundled packages, hotels can increase the average spend per guest and maximize revenue potential.

Guest customization and personalization

Ancillary revenue strategies allow hotels to offer personalized options to guests. By providing choices such as room customizations, personalized amenities, or tailored experiences, hotels can cater to individual guest preferences. This customization enhances guest satisfaction, fosters loyalty, and encourages repeat bookings.

Expanding market reach

Ancillary revenue strategies can help hotels expand their market reach by targeting different guest segments or niche markets. By diversifying their offerings, hotels can attract new customer segments, such as business travelers, families, or wellness enthusiasts. This expansion broadens the customer base and opens doors to untapped hotel revenue potential.

Partnership and collaboration opportunities

Implementing ancillary revenue strategies often involves forming partnerships or collaborations with local businesses or service providers. These partnerships can create mutually beneficial opportunities for cross-promotion, shared marketing efforts, and revenue sharing. Hotels can leverage these partnerships to enhance guest experiences and unlock additional revenue streams.

Financial resilience and future growth

Developing ancillary revenue strategies fosters financial resilience for hotels. By reducing their dependency on room revenue alone, hotels can better withstand market fluctuations, economic downturns, or unexpected events. Moreover, a well-executed ancillary revenue strategy can position hotels for future growth and expansion, as revenue diversification strengthens the overall financial foundation.

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Top hotel upselling softwares in 2023

1. Quoality

Increase your revenue by up to 3x with dynamic ancillary upsells. The only digital platform you will ever need to increase guest satisfaction and maximize revenue is the most affordable upselling software for your hotel. 

The only end-to-end suite to transform your hotel and brand. Quoality contributes to increased profits for your hotel. The ultimate hospitality guest experience platform for -

• Increased guest satisfaction
• Revenue growth
• Improving staff efficiency

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Key Features - 

‍Easy customization of the ancillary menu 

Quoality enables hotels to easily tailor the ancillary menu and upselling options to their specific offerings. This allows hotels to tailor upselling opportunities to their particular services, amenities, and packages.

Send personalized offers to guests 

Quoality enables hotels to send visitors personalized offers based on their preferences, booking information, or previous interactions. 

Accept guest request on the go 

It provides a convenient platform for hotel personnel to take requests for upselling offers from guests while on the move, thereby improving efficiency and customer satisfaction.

Increase hotel revenue 

Quoality seeks to increase the overall revenue per visitor's stay by presenting customized offers and promoting upselling opportunities.

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2. Oaky

Popular hotel upselling software, Oaky, allows establishments to increase earnings by tailoring upsells to individual visitors. 

Key Features - 

• Customized and personalised upselling offers
• Automates the upselling process 
• Direct communication with guests via in-app messaging
• Analytics and reporting capabilities 

3. Duve

Duve is a revolutionary upselling platform for hotels that aims to increase both guest happiness and earnings. 

Key Features -

• Customized upselling to increase guest satisfaction and revenue.
• Direct interaction with guests
• Real-time data and analytics on upsell performance
• Integration with multiple property management systems (PMS)

4. Easy Way

Easy Way is an all-inclusive upselling solution for hotels that enables establishments to boost earnings by providing appropriate upsell choices to hotel visitors. 

Key Features -

• Comprehensive upselling solution 
• Variety of upselling options
• Tracks passenger behaviour and preferences
• Reporting and Performance Analysis

5. Canary Technologies 

Canary Technologies provides a variety of tech services for hotels, including an upselling system. 

Key Features -

• Upselling System 
• Customize upselling offers
• Integrates with a variety of hotel systems

6. Roomdex 

Roomdex is a hotel upselling platform that helps increase income through upsells and other means. 

Key Features -

• Revenue Optimization
• Upsell Automation
• Dynamic pricing
• Analytics and Reporting tools

7. Aeroguest 

Aeroguest provides a platform for interacting with customers that allows for upselling. 

Key Features -

• Platform for hotels to interact with their visitors
• Enables hotels to send targeted upsell notifications 
• Integrates with hotel systems 

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Conclusion

Given the dynamic nature of the hospitality sector, it is imperative that hoteliers remain flexible and open to new revenue opportunities. The potential for boosting visitor satisfaction and profits through the use of ancillary revenue sources is substantial. 

Hotel owners may win over customers and increase profits by applying the ten methods outlined in this blog post. There is a wide range of options to investigate, including the improvement of food and drink selections, the use of technology, and the formation of strategic alliances. 

It’s important to note that the availability of ancillary services in hotels may vary depending on the hotel’s location, size, and target market. Additionally, hotels may offer unique or specialized services based on their specific branding or positioning in the market.

So, be proactive and modify your techniques and hotel revenues generating ideas to meet the specific requirements to see your ancillary income skyrocket. Take advantage of the opportunity, maintain your hotel’s commitment to innovation, and set yourself up for long-term success in an increasingly competitive market.