5 best ancillary revenue ideas for independent hotels

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.

5 ways your hotel should be managing room rates to get ahead of the competition

How can you use revenue management strategies to get ahead in today’s increasingly competitive landscape? By keeping a close eye on the local competition.

Among other things, your hotel should be monitoring the room rates of your competitors so you can see just how competitive your pricing is and react in a timely manner when needed.

Here are a few examples of what you can do with the information at hand:

1. Value-match competitors

One of the ways you can use competitor pricing to increase your hotel’s revenue is by matching them on price.

Set one room rate at the same price point as competitors, and set another room at a slightly higher rate. This allows you to attract deal seekers without sacrificing the opportunity to make a slightly bigger profit.

Keep in mind that value-for-money is the key point here – value-matching goes beyond bringing your hotel in line with your competitors’ rates or simply making your hotel rooms cheaper.

2. Run effective promotions

Continuing with the idea of value-for-money, promotions are one of the best ways to keep up with, and stay ahead of, your competition.

When you notice your competitors are doing it – probably in the lead up to an event in your local area – find out what their rates are, and then set your rates at the lowest price possible to draw a crowd. This is your opportunity to be proactive and truly get ahead of the pack. Look at the details of the room offers. Do they include breakfast? How many nights is the special rate on offer? Are there any spa or restaurant incentives factored in? Think about how your hotel can give guests that little bit extra.

A word of caution, though: you should only do this in short promotional bursts so your hotel isn’t perceived as low-quality or constantly discounting.

3. Meet market demand

Monitor your competitors’ rates to look for signs in the market that indicate demand is increasing and inventory is getting booked out. Then you can react accordingly.

For example, when your competitors increase their rates or you notice their rooms are closed out, increase your own room rates to make sure you’re not losing out on revenue and profit. You can read more about the science of supply and demand in our recent blog.

4. Maximize midweek bookings

While discounted promotions are great, they rarely sell enough to offset reduced revenue. Instead, look at your competitors’ rates and add value to increase midweek bookings.

Create and promote special packages which offer additional services. Think clearly about who your weekday audiences are. We recently wrote about attracting midweek guests, with some great tips for boosting revenue during quieter times. Did you know that for a two-night stay it’s likely your guests will travel about four hours’ drive from your hotel’s location?

Another great approach is collaborating with tourist attractions locally and submit advertisements or editorial to newspapers and websites in population centres within the vicinity promoting midweek breaks that include bus tours, wine tasting trips, or a concert.

5. Sell distressed last-minute inventory

Data from Hotels.com shows that 50% of travelers who book via mobile devices do so for last-minute or next-day stays. This trend represents a huge opportunity for hotels to sell their very final rooms, right up to the last minute. By monitoring your competitors’ rates in real-time, you’ll be able to make the right pricing decisions to ensure those final rooms are sold without compromise.

The best way to do this is through a pooled inventory system via a channel manager. A seamless two-way connection to your hotel’s various booking sites is key to ensuring the constant flow of information is reliable.

Bonus tip:

Understand the importance of real-time data

Without real-time data, you won’t notice competitor rate changes – or by the time you do, it will be too late to respond in a way that maximizes your own hotel’s revenue.

Having real-time data allows you to assess the level of live demand in the market so that you can react faster, and more accurately – whether it’s increasing your rates or lowering your rates and putting promotions out.

To get this real-time data, you will probably need a pricing intelligence solution – but it’s important that it suits your property’s needs and size. Look for features and benefits that speak to your hotel’s requirements.

Choosing complex technology that’s geared for larger properties will just create more work for yourself – instead, choose something smart and simple that helps you take the guesswork out of your pricing strategy and gives you the control you need.