2020 showed us that you can never be complacent in your hotel’s revenue strategy. Regardless of if your hotel has a strong revenue stream and your finances look positive, diversifying your hotel’s income channels improves your overall hotel offering and protect your hotel’s revenue from the unexpected.
Hotels can achieve this by creating new ancillary revenue channels to grow their income through upgrading guest amenities and offering add-on services that go further than your guests’ rooms. This will help build a moat of income streams to protect your hotel from unexpected events – such as COVID-19.
What Is Ancillary Revenue for Hotels?
Ancillary revenue is income generated for your hotel that is not from guests booking your hotel rooms. Ancillary revenue examples for hotels and resorts are generally from add-on products, services, and amenities you sell at your hotel. A successful ancillary revenue strategy for hotels will view your hotel property as more than just a room and more of a holistic guest experience and all-in-one campus.
5 Benefits of Having an Ancillary Revenue Strategy
- Creates new sources of income for your hotel.
- Additional services drive up the value of your guest rooms, including your hotel’s average daily rate (ADR.)
- Attracts new guests with add-on services.
- Creates opportunities for special marketing campaigns and promotions.
- Protects your hotel from unexpected events and downturns in the economy with diversified guest offerings.
6 Best Ancillary Revenue Ideas for Hotels to Diversify Income in 2021
1. Offer Room Service & Other F&B Services
Food & beverage services for guests are one of the most popular ancillary revenue channels for additional hotel income.
There are countless types of F&B services you can offer your guests to drive ancillary revenue, including:
Some F&B ideas for driving new income streams will need more attention than others. For example, launching a new on-site restaurant at your hotel will be a costly upgrade – from building and operating an onsite kitchen, paying kitchen staff, acquiring licenses and permits, and more.
Others such as outsourced room service and mini-bars have a much lower barrier to entry. For example with 2ndKitchen, hotels can add room service and continental breakfast without the need for an onsite kitchen. With room service from 2ndKitchen, hotels earn income for each guest order – all at no cost to the hotel for using 2ndKitchen.
2. Rehab Empty Spaces into Co-Working Offices
Pre-COVID, 49% of US travelers shave at least one business-sponsored trip a year. This means there is a need for business spaces such as projectors, dual monitors, high-speed and secure internet, office supplies, printers, and more. Having rentable spaces for these travelers, as well as local freelancers and small companies who need to rent out a co-working space, is a great way to drive ancillary revenue for hotels.
3. Use Your Hotel to Host Local Events
Consider all of your event halls, common areas, outdoor areas, and other large spaces. Your hotel can use these spaces to host concerts, comedy shows, wedding receptions, winery tastings, corporate events, and more.
This is a great way to partner and build strong relationships with local hospitality and entertainment companies – and is a great way of driving ancillary revenue. Your hotel will be able to use these events to improve booking conversion for prospective guests researching hotels in your area, as well as attract non-overnight guests from the surrounding area. Be sure to investigate banquet event order (BEO) forms and contracts when preparing your first client event!
4. Sell Home Decor, Supplies, & Merchandise in a Hotel Gift Shop
Do you receive positive feedback from guests on your hotel’s decor? Use this as an opportunity to open a home decor store and gift shop in your hotel. Here you can sell anything that makes your hotel unique or that guests rave about.
Examples of things you could sell in your hotel’s store range from:
- Local art that you use to decorate your hotel
- Home products such as hand soap and shampoo you use in guest rooms
- Home decor found in your hotel’s rooms such as sheets and curtains
- Unique products found in your hotel’s town such as local beer, food, and more.
- Products featuring your hotel’s branding such as t-shirts, hats, postcards, and shot glasses.
- Gift cards for your future visits to your hotel.
5. Launch Add-On Experiences for Your Guests
Similar to adding room service to your guest experience is launching add-on experiences for your guests to purchase at your hotel or resort. While these may require more up-from work and expenses, they provide hotels with brand new revenue streams, as well as hotel amenities that can be used in hotel’s marketing.
A few examples of add-on guests experiences that drive ancillary hotel revenue include:
- Spa area
- Massage services
- Cooking and fitness classes
- Business seminars
- Movie rental
6. Partner with Local Attractions to Build Guests Packages
Did you know hotels can advertise certain services without having them onsite? For example, hotels don’t actually need to have an on-site golf course to advertise that they have a golf-course on their hotel’s campus and to include it on their website and booking channels.
Instead, hotels can partner with local businesses and offer discounted rates or upsell guest packages that include free golf trips, spa visits, waterpark tickets, shuttle services, and more.
Partnering with local businesses to offer guest experiences and packages provide a new channel for those businesses to drive customers, creates new hotel ancillary revenue channels and upsell opportunities, and is a facilitator in building relationships with other independent tourism and entertainment businesses that open the door for future partnerships and opportunities.