The $28 billion opportunity for hotels | PhocusWire - 0 views
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Ancillary bookings represent a significant opportunity for hotels to add revenue while increasing guest engagement. The airline industry adopted the practice of cross-selling and up-selling trip extras more than a decade ago with impactful results. How can hotels do the same and best complete their guests' travel experience by offering products beyond hotel rooms?
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This article will share some of the findings of the new white paper, which show that the majority of business travelers surveyed are very interested in purchasing either on-site or off-site extras. The research also identifies business traveler segments and details the preferences on when, where, and what extras business travelers are interested in buying.
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Hotels that participated in the white paper cited reasons why they do not currently offer ancillary services. Many talked about resources, including a lack of technology to streamline ancillary offerings for both on-site and off-site trip extras. With many hotels having their staff and management doing multiple jobs, hotel management is reluctant to add another task to management’s plate. This highlights the need for digital ancillary technology to address these valid concerns and reduce such effort while simultaneously scaling the operation.
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managers are focused on perfecting the on-site process, instead of branching out and offering new services to differentiate their brand from their competitors.
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Hotels, both large chains and independent boutiques, can learn from other companies in the travel sector who have successfully implemented an ancillary sales strategy. Airlines were quick to offer ancillary services more than a decade ago. Now these non-core services such as priority booking, baggage fees and car rentals make up an estimated US$28 billion in revenue annually for the top ten airlines. This trained travelers to purchase travel add-on services during checkout, and at other cross-sell merchandising points such as confirmation emails.
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Trip extras that increase productivity include wifi access, early check-in/ late check out to continue working between meetings and travel. More than 70% of business traveler respondents indicated they are interested in purchasing more than core hotel products such as on-site dining, retail sundries and transportation options
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Business travelers surveyed were most interested in purchasing off property local dining (36%), access to fitness/wellness activities (32%), and tickets to live shows/ events (31%), while in destination or on the day of service.
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An ancillary strategy that is managed and implemented, with constant communication at the individual properties, can offer a consistent guest experience across the brand. Off-site ancillary offerings are opportunities for hotels to access more wallet-share for the business traveler’s trip. Offering car rentals, or restaurant reservations through strategic partnerships and additional loyalty points add revenue streams to the hotel, boosting profits without increasing ADR.
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The article describes how hotels have been late in adopting the cross-selling and up-selling trip extras that airlines have been so successful with over the last decade or so. It also summarizes the results of research done by Phocuswright with iSeatz which found that the majority of business travelers surveyed are interested in purchasing additional on-site extras and off-site extras. The research also found that the hotels that were surveyed cite reasons such as a lack of technology and stretched resources at hotel level as barriers to implementation.
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The author fails to recognize that the e-commerce platforms developed by the airlines over the past decade have been focused on selling unbundled extras, whereas until recently the hotel e-commerce platforms have been very focused on offering the customer bundled packages and only had limited capability for up-selling and cross-selling.