When you distribute your rooms through online travels agents you are liable to pay a commission fee for the bookings they drive for you. The good news is it doesn’t have to be lost money. You can regain this expenditure through 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 hotel as more than rooms and rates, but in a more holistic way that leans towards complete revenue generation.
Although it should be a secondary consideration to making sure your guests receive quality service and value for money, it is still a clever and effective method to boost your revenue while also offering guests an even more enriching experience.
Without a successful revenue management strategy that produces consistent year-on-year results, your hotel will stagnate. The more revenue you have streaming in, the more flexibility you have to make improvements to your hotel and offer guests exclusive services.
Ultimately, implementing ancillary revenue ideas will lead to a more fulfilling experience for the guests who accept them and flood your hotel with a whole new source of revenue.
Before you employ any ideas you need to ask three questions:
- What is unique about your hotel – the setting, the geographical location, the theme?
- What do guests praise the most – the amenities, the restaurant, the convenience?
- Why do they choose it over others – for luxury, for service, for other features?
Once you start to analyse these questions, you’ll start to see opportunities for extra revenue arising from the story of your hotel.
There’s a huge range of revenue-boosting ideas you can use. Here are five of the best ones…
1. Partner with local producers
The simplest form of this idea is to contact local artists and hang their paintings in your hotel.
You may choose to turn the common areas into mini-galleries or even put the paintings in guest rooms.
In exchange for the exposure, your hotel would receive a percentage of the selling price on any pieces that are purchased by guests.
You might even go so far as to offer the art for purchase online via your website or a separate website if you have a dedicated gallery space.
Depending on the location of your hotel, this could extend to other craftspeople and farmers.
Think surfboard builders, sculpturists, potters, jewellery makers, fresh produce farmers etc. Your guests are predominantly tourists, so give them a gift shop.
2. Offer adventure and entertainment
Once again, take the local angle. Surrounding tours, attractions, and events need to sell tickets, so why not at your hotel?
Partnering with them makes your hotel an all-inclusive resource for guests and is an equally lucrative opportunity for your hotel and the other businesses.
Additionally you might have your own events, such as live music on weekends or comedy once a month.
Whatever it may be, you could entice guests to stay by offering a package deal on these events, meaning you get revenue for a booking and the event instead of just through one revenue stream.
3. Let the guests take your hotel home
When you get feedback from guests during or after their stay you might notice them raving about the quality of your sheets or pillow cases, or they may adore the wallpaper, or love your china, or crave the shampoo you stock. The list is endless. A lot of this you have to buy anyway so why not also partner with your supplier to offer it for sale to guests?
Not only will your guests be reminded of your hotel even in their own home, but it’s a simple way for you to get a little extra revenue on top of your reservations. As with the artwork, this could also be sold online.
4. Install a cellar
Perhaps the most obvious idea. Stocking local wine or beer for sale is a surefire winner in generating revenue. As always, this could be combined into some sort of package or extra deal for the guest.
While discussing beverages, don’t forget food. If guests can’t get enough of your restaurant, make your own cookbook to sell for them to take home.
5. Become a meeting place
And finally, don’t ignore the corporate sector. Business travellers converge from all over the world for their meetings so having a space such as a conference room to hire out will make it easier for them to conduct their business and give you another steady stream of revenue.
Even better, they might add a couple of days to their stay as the ‘bleisure‘ trend continues.
When used strategically, ancillary revenue presents an opportunity to all hotels for incremental growth. Read more about revenue management in our free eBook below…