Hotels continue to search for innovative ways to rebuild their revenue streams after emerging from the pandemic. The first has been an increase in room rates starting in 2022, with double-digit increases in many cases. However, hotel consultant Pablo Torres warns that "there is beginning to be a feeling among part of the population that vacations in certain destinations are prohibitively expensive, so they either choose a new destination or, considering the slowdown that seems to be looming, stay home. All this while hoteliers continue to suffer a constant increase in their costs (raw materials, supplies, labor, etc.) that jeopardizes their margins." However, he encourages, "those establishments that diversify their product and service offerings have before them\u2014almost\u2014a blue ocean through the dynamic management of ancillary revenue."<\/p>\n
Ancillary revenue, as Pablo Torres explains, \u201cis not a new concept, but its importance has never been more evident. Defined as revenue derived from non-room-related sources, such as food and beverage, spa, and other services, it has the potential to not only increase profitability but also create memorable experiences for guests and customers.\u201d<\/p>\n
"The idea is to diversify revenue streams so that hotels don't rely solely on room sales to thrive. And now, maximizing ancillary revenue seems like a strategic move to prepare the business for the future," says Pablo Torres.<\/p>\n
Why now is the time: The perfect storm
\nWhat makes this a perfect time to focus on ancillary revenue? Several factors point to this being a perfect storm of opportunity, as the expert explains: \u201cFirst, there is the recovery in travel demand. According to UN Tourism (formerly UNWTO), international tourist arrivals are expected to return to 80-95% of pre-pandemic levels by the end of the year. As occupancy rates increase, there is an opportunity to optimize every stay by offering personalized services and experiences.\u201d<\/p>\n
Furthermore, he adds, \u201cTechnological advancements have made it easier than ever to offer and promote complementary services. Today's digitally savvy traveler expects seamless, mobile-centric experiences. Hoteliers can now leverage data and artificial intelligence to recommend personalized add-ons during the booking process. Integrating upselling tools directly into hotel websites or apps\u2014offering room upgrades, spa treatments, dining experiences, or even unique local tours\u2014has become simple and effective.\u201d<\/p>\n
\u201cAirlines globally will earn more than $109.5 billion in ancillary revenue in 2022, up from just $22.6 billion in 2010, according to IdeaWorksCompany. This growth demonstrates their significant potential if companies strategically identify additional services that complement their core offerings. If hotels adopt a similar mindset, the revenue potential is immense,\u201d said Pablo Torres.<\/p>\n
Key areas for ancillary revenue growth
\nThe data included in the book \u201cMastering Hospitality Ancillary Revenue,\u201d published by Pablo Torres, reveals some particularly lucrative key areas:<\/p>\n
\u201cFood and beverage: Implementing dynamic pricing on digital menus with personalized offerings is just the tip of the iceberg of what can be done in this area, where the goal is to provide a culinary experience.
\nHealth and wellness, a segment that is growing at a rapid pace. The Global Wellness Institute forecasts it will reach $1.3 trillion by 2025. Spa treatments, wellness retreats, and fitness programs can attract guests willing to spend more, as well as people concerned about their nutrition and mental well-being.
\nLocal Experiences: Today's travelers crave authentic local experiences. Offering exclusive tours, local food tastings, or cultural workshops can turn a stay into an immersive experience, which also fulfills one of the key pillars of sustainability: the social component. Partnering with local businesses for these experiences not only increases revenue but also strengthens the local economy.
\nTechnology-enhanced services: Making the customer journey a loop depends on the ability to build customer loyalty through the integration of technology-driven services. Mobile check-in, keyless room entry, and personalized digital concierge services meet guest expectations and can also be a pathway for additional charges.
\nThe role of data and personalization
\nFor Pablo Torres, \u201cone of the most powerful tools for driving ancillary revenue is the effective use of data. Hotels have a gold mine of information about their guests: from booking preferences to past spending behaviors. By leveraging this data, hoteliers can create hyper-personalized offers tailored to each guest.\u201d<\/p>\n
Furthermore, he adds, \u201cAutomated systems can now predict which services will appeal most to guests based on their profiles. This dynamic pricing approach, already used successfully in room rate management, can be extended to ancillary services, maximizing revenue without overwhelming guests with offers that don't match their preferences.\u201d<\/p>\n
Conclusion: the future is ancillary
\nThe hospitality industry, the consultant concludes, \u201cis at an inflection point. As the sector moves beyond recovery and seeks future growth, ancillary revenue presents a clear opportunity for hoteliers to capitalize.\u201d<\/p>\n
\u201cBy leveraging changing guest preferences and the power of data and technology, hotels can unlock new revenue streams that improve both the guest experience and property profitability, ensuring guests leave the property happier and have spent more money,\u201d Torres emphasizes.<\/p>\n
This research on ancillary revenue highlights the importance of diversification and innovation in the current landscape. In his book, "Mastering Hospitality Ancillary Revenue," he delves into practical steps, with over 100 case studies, on how hotels can take advantage of this shift. Because "the time for ancillary revenue is now."<\/p>","protected":false},"excerpt":{"rendered":"
Technological advances have made it very easy to offer complementary services and provide seamless, mobile-centric experiences.
\nIntegrating upselling tools into websites and apps to suggest room upgrades, spa treatments, or local tours is now easy.
\nAirlines earned more than $109.5 billion in ancillary revenue in 2022, demonstrating the enormous potential of this strategy.
\nFood and beverages, health and wellness, and local experiences are particularly lucrative areas for hotels.
\nFor Pablo Torres, one of the most powerful tools is the use of data to create hyper-personalized offers based on each guest's preferences.<\/p>","protected":false},"author":5,"featured_media":552,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[47,53],"tags":[],"class_list":["post-212","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-noticias","category-revenue"],"_links":{"self":[{"href":"https:\/\/torreshospitalityconsulting.com\/en\/wp-json\/wp\/v2\/posts\/212","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/torreshospitalityconsulting.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/torreshospitalityconsulting.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/torreshospitalityconsulting.com\/en\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/torreshospitalityconsulting.com\/en\/wp-json\/wp\/v2\/comments?post=212"}],"version-history":[{"count":1,"href":"https:\/\/torreshospitalityconsulting.com\/en\/wp-json\/wp\/v2\/posts\/212\/revisions"}],"predecessor-version":[{"id":362,"href":"https:\/\/torreshospitalityconsulting.com\/en\/wp-json\/wp\/v2\/posts\/212\/revisions\/362"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/torreshospitalityconsulting.com\/en\/wp-json\/wp\/v2\/media\/552"}],"wp:attachment":[{"href":"https:\/\/torreshospitalityconsulting.com\/en\/wp-json\/wp\/v2\/media?parent=212"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/torreshospitalityconsulting.com\/en\/wp-json\/wp\/v2\/categories?post=212"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/torreshospitalityconsulting.com\/en\/wp-json\/wp\/v2\/tags?post=212"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}