It’s not just about the sold bed night or events space that will help increase profit for your property, let’s look at additional revenue streams that we sometimes forget about!
While selling rooms is likely to be your hotel’s main revenue driver, it’s probably not the only one. In fact, finding ways to generate additional revenue had helped many properties pull through (or even thrive) during the pandemic.
Whether demand is high or low, having an additional revenue strategy can help you lift your bottom line and boost the profit of your organisation. Upselling and cross-selling are two major parts of such a strategy.
But of course, there are also other ways to generate extra revenue.
Ancillary revenue at hotel – What is it and why is it important?
Bedroom sales, conference space hire and 24-hour delegate rates maybe the main offering for your business.
Ancillary revenue is the money you make from everything that’s not your core offering. Ancillary revenue comes from F&B, the spa, add-on services, special offers, packages, etc.
Offering a variety of add-ons for your different guest segments can improve their experience at your hotel. Having unique offers or packages is a powerful way to elevate your marketing efforts and make your hotel stand out from your competitor.
So how can you boost ancillary revenue at your hotel?
Before you get started, it’s important to get clear on your USP and which of your offers or services are already popular. This can be the base for your ancillary revenue strategy. Then look at areas where you have untapped revenue potential. How could you make the most of it?
Here are some ideas to get you going.
- Go from giving free room upgrades to charging for upsells
Free upgrades don’t contribute to your bottom line and often represent lost revenue. Instead of just handing them out, offer upgrades at a discounted rate. That way your guests get a good deal on an amazing experience at your hotel, and you boost your earnings.
Task Reception team to offer upgrades to guests upon arrival or better still, 2 / 3 days prior to arrival, contact guests who have indicated they are staying for a special occasion and offer them a reduced rate for upgraded rates.
You will be amazed how many will say yes …. and you are enhancing their experience before they set foot into your property.
- Put together upselling offers and deals
These are a fantastic way to increase average guest spend and you can get started quite easily. Simple offers like paid upgrades, early check-in or late check-out are among the most popular upsells and require little extra work from your side. Get your offers’ timing right to further increase your results. Pre-arrival upselling works best since that’s when travellers are willing to spend extra on things that will make their stay more fun and memorable.
If your property has golf / spa facilities make sure it is mentioned in the pre-arrival confirmation. Monthly spa offers, mid – week specials and any golf packages should be included in your pre-arrival confirmation.
- Implement cross-selling
Cross-selling at hotels means you offer add-on services or amenities that complement a guest’s stay. Usually, these cross-sells come from departments other than rooms. They could include F&B deals, spa treatments or recreational activities. You can also create packages that bundle services from several departments.
F&B Teams tasked with up-selling wines, after dinner drinks or additional courses…. all these help with the increase in incremental spend. Make it competitive with F&B staff by incentivising the team to upsell with monthly prizes.
- Work with local businesses
Work with local partners to offer a broader range of services and create new upselling opportunities at your hotel. Everyone benefits from this setup. You and your local business will generate extra income while your guests have more options to tailor their stay.
Examples of excellent partnerships could be; local attractions/ wineries/ historical attractions…. where a leisure package / tour could be created to include staying at your property and visiting said attractions.
Ensure the local business / attraction is also cross selling your property and that both parties are included in social media platforms, posts and websites.
- Get creative with events and conferences
Every space including your public areas, outdoor areas and banqueting rooms has the potential to bring in revenue.
Think of new ways to make money with these areas apart from the traditional business meetings or weddings.
New options could include hosting local artist performances, renting out areas for photoshoots / film sets.
Additional revenue can be made with room hire charge pre or post event days, additional room hire for event office / organisers office, private dining, private drinks receptions.
If you are a venue with outdoor space, you could look at ground hire for team building or approach an external agent like Borrow my garden to help sell your space.
For conferences that fall over a weekend, why not offer a special rate for partner / spouse to attend after the conference, converting the stay from business to leisure.
- Open a gift shop
Travellers love souvenirs so why not offer them a selection right at the hotel? Apart from the usual items, this could also include local food and drinks or work by local artists. Again, this is an opportunity to work with your community and promote your partners. See point 4!
- Never rest on your laurels – Check your results and identify your top-selling packages
Go through your results to find your bestsellers and most profitable offers. Is there a way you could further optimise them or promote them even more effectively to maximise your results? This exercise can also give you ideas for how to improve other offers that aren’t doing so well yet.
How other hotels are doing this, and which offers work best for them? You can find all that in the latest Hospitality Market Report of Best Upselling Deals and Trends 2022 which analyses the top-performing deals in several regions worldwide. For instance – data shows that one property in the UK was able to generate £350K in ancillary revenue by selling upgrades and add-ons.
So don’t forget to check out your competitors and what they are doing…..!