According to PhoCusWright, in 2011 U.S. hotels sold approximately US$1.85 billion in ancillary products and services, which accounted for 1.7% of the country’s total hotel revenues – when compared to the airline industry’s total of $12.5 billion (12%) in ancillary revenues in the same year. All in all it points to the fact that hotels are substantially underselling their add-ons; a wasted revenue opportunity.
However, the selling of ancillary services within the hotel industry has always been a bit of chore and in many cases are still often overlooked. It’s never quite been a priority and always seems to feature last in the pile when it comes to the long list of check-in items that a front desk agent has to go though with the guest on arrival. A lot of the times, the selling of ancillary products and services can come across as a mediocre bid to squeeze a bit more money out of the customer – which doesn’t do much for guest satisfaction just as they are about to begin their stay!
Findings from a more recent report by EyeforTravel (Ancillary Revenues in the Hospitality Industry) were inline with PhoCusWright i.e. Many hotels are still not yet grasping the significant revenue opportunities obtainable to them by the selling of ancillary products and services. In order to be successful, recommendations from their report include:
- Hotels need to be flexible and relevant and take a data driven approach that is based on customer needs
- Loyalty data should be scrutinized and combined with previous consumer spend/ transactional data
- Mobile should be considered as the upsell technology of choice to help identify which goods to sell at the right time
- Hoteliers need to take a holistic approach. It’s not just about in-room revenues but managing inventories across the hotel and a on every channel
While it has not always been easy to make ancillary sales, with the advancements in cloud, data and mobile technology, implementing and exploiting the said recommendations has never been easier. Cloud, coupled with mobile technology can accomplish an increase in the visibility of ancillary products and services at each point of contact with guests – and when done well, ancillary sales via mobile technology can be seen as a valuable service, not just another pushy sales attempt.
One very attractive feature of Cloud technology is its ability to consolidate pertinent guest stay information and preference data (from multiple sources) all in one place. This collected data provides a real insight into guests stay and spending habits thereby enabling hoteliers to create loyalty pricing and offers that increase guest wallet share.
“Big Data also helps hotels refine their loyalty strategies. You can’t execute dynamic loyalty pricing without lost-business data like web shopping regrets and denials. These new forms of information let you experiment with loyalty rates and see what amount a discount needs to be to meaningfully increase conversions on your direct channels.”
-Patrick Bosworth, Duetto
With such rich guest data, savvy hoteliers can promote real time offers and sell customized relevant ancillary products, services and/or packages to the right customers, at the right time in their journey and at their moment of decision (all based on the availability of those additional streams on a hotel-by-hotel basis!).
By putting technology into the equation, up-selling and the promotion and selling of ancillary products and services doesn’t have to be all that difficult;
- According the mashable.com, targeted up-sell ads can provide for a 15% to 20% conversion rate. For hotels with an average of 150 rooms, 60% occupancy, that conversion can add very easily another $65,000 revenue annually!
- When Fontainebleau Miami partnered with StayNTouch to rollout it’s cloud based mobility platform, within minutes of turning on the system, guests were taking advantage of it and the hotel experienced some strong results right off the bat. Revenues from extended guest stays/late checkout were substantial – they saw a 140+% ROI in the first 30 days!
The possibilities of promoting and selling ancillary services have been exponentially enhanced by mobile. A well-developed mobile channel, integrated with your business systems, allows you to offer your guest what they want, when they want it and when they are willing to pay for it. Not only does it make the decision-making process easier and more personal for your guestS (making them happier and more loyal!) but it adds a viable revenue stream to your business.