A new trend report by Skift, sponsored by iSeatz, highlights that ancillaries will play a much more central role in the entire process of hotel and customer engagement. They will no longer be a mere supplement to other travel products but will increasingly become the main event. The reason being is that in the guest’s eyes, hotels are no longer simply selling access to just rooms and beds but instead are providers of travel experiences. “They now travel gatekeepers and tastemakers, selling access to a universe of related experiences connected to dining, entertainment, spas, tours and activities, retail, local services, and more”.
For the astute hoteliers at the forefront of this mindset change, the paybacks are high. By offering personalised ancillary products and services will not only help to unlock new and lucrative revenue streams, increase up-sell and cross-sell opportunities, both of which contribute to the hotels bottom line, but they also create new opportunities to engage consumers not just at the moment of the sale but throughout the entire customer journey, and there is also an opportunity to evolve the hotels loyalty program. By integrating ancillary products effectively into a loyalty program, hotels can build deeper relationships with guests and offer more seamless, flexible rewards.
And the power of ancillaries is undeniable. The airline industry adopted the practice of cross-selling and up-selling trip extras more than a decade ago with impactful results. The size of the ancillary market for airlines was estimated at over $82 billion last year – over four times what it was ten years ago. Hotels, on the other hand, have not been nearly as aggressive in exploiting the ancillary opportunity and clearly, they are potentially missing out on billions of dollars of revenue as a result.
But, the selling of ancillary services within the hotel industry has always been a bit of chore. Not only that, but a lot of the time, the selling of ancillary products and services can come across as a mediocre bid to squeeze a bit more money out of the customer. However, at times, and more importantly guest expectations are changing. There is now a growing demand for more personalized and convenient buying experiences and a desire from guests and locals alike for hotels to serve as community hubs. With this shift in consumer habits, there is now an opportunity for hotels to reimagine the role of ancillaries in their business strategy.
While it sounds like a no-brainer, creating and implementing an effective strategy will not be straightforward or without its issues. But for those willing to overcome a variety of obstacles standing in the way, untapping into the world of ancillaries, represents a significant opportunity for hotels to add revenue while gaining a more detailed understanding of the wants and needs of their customers, and an ability to drive more repeat business and create loyal customers.