Remember Blockbuster? I do as it was a staple growing up in the 90s. I also remember how every time I rented a movie; they would offer me a deal to get a box of candy or microwave popcorn along with the movie. I typically said yes, because … well, candy. This is the power of ancillary revenue in motion. Blockbuster wasn’t a candy store, but here I was purchasing candy with a movie rental.
In the competitive hospitality industry, success is seen in maximizing revenue. Achieving this through add-on revenue is an influential strategy. Additional services and packages presented, hotels can unlock extra revenue opportunities beyond standard room upgrades. Utilizing this approach improves the guest experience and boosts the hotel's bottom line.
Why Add-On Revenue Matters
For hotels that look to optimize their income streams, add-on revenue is essential. Allowing hotels to offer personalized experiences that cater to guests' needs leads to increased guest satisfaction, loyalty, and positive reviews, and contributes to hotels’ long-term success.
Add-ons are just ancillary revenue, they refer to the additional income rendered by a hotel, outside of their primary revenue streams, which are associated with room bookings. Ancillary revenue is crucial when it comes to maximizing a hotel’s profitability. This type of revenue encompasses a myriad of services and products, also improving the guest experience while contributing to the hotel’s bottom line. Effectively managing and promoting ancillary services will take hotels to another level and boost their average daily rate (ADR) and revenue per available room (RevPAR).
A study by Prosper Hotels highlights how ancillary revenue can seriously impact a hotel's overall financial health. Hotels developing a more resilient business model that depends less on room occupancy rates alone must consider that diversification is crucial during periods of economic uncertainty or inconsistent travel trends, when the traditional revenue sources may be affected.
Additionally, another research from InnQuest emphasizes that ancillary revenue strategies strengthen a hotel’s success by boosting revenue per available room (RevPAR), total revenue per available room (TRevPAR), and gross operating profit per available room (GOPPAR). The study shows that between 2019 and 2022, ancillary revenue in the hotel industry grew by over 10% per year, showcasing the potential it has in boosting profitability.
What Are Some Easy Wins for Add-Ons?
On-site Entertainment: On-site entertainment is an excellent way for resorts to boost revenue. Rooftop cinemas, live garden concerts, and themed parties during the festive season are just a few examples. By offering a variety of food and beverage options, these events can draw diverse crowds and enhance revenue for the hotels.
Early Check-in and Late Check-out Options: Guests' flexibility to check in early or late for an extra fee is a win-win situation for both parties involved. This add-on generally doesn’t require additional investment and can help increase occupancy rates by accommodating guests with their hectic travel schedules.
Champagne on Arrival: This add-on service appeals to guests celebrating special occasions such as anniversaries or birthdays. Offering a chilled bottle of champagne in the room can encourage guests to spend more on an indulgence they might not have initially considered.
Upsell Pre-Arrival Upgrades: Resorts can also use Pre-Arrival Upsell to boost revenue by providing services like massages, room service, and other amenities through automated emails before guests arrive. This strategy saves time at reception and increases the likelihood that guests will opt in due to pre-trip anticipation.
Local Activity Packages: Partner with local tour operators and activity providers to create package deals that will boost revenue. For instance, if the resort is close to a ski area, water sports center, hiking trail, or wildlife sanctuary, these are great indicators that these resorts need the unique packages.
We Can Help Build Add-Ons with LuxSell
Add-on revenue is an effective tool for hotels that want to boost their income and improve their guest experience. With LuxSell by Luxe Pricing, hotels can implement and manage add-on services, unlocking new revenue opportunities and achieving greater success. Leverage the power of add-on revenue today and witness the positive impact it can have on your business.
