Even if your hotel is the most effectively managed property in the world, the revenue growth rates you can achieve from bookings will always be limited by the fact that your supply is fixed. This is true whether you have properties in downtown Manhattan — where you can bring in top dollars and occupancy rates — or Folsom, California — where tourism only drives around 10,000 visitors a year.
Because there is a limit to the amount of revenue that can come in from bookings, many hotels rely on ancillary services as a core part of their revenue strategy.
Why Ancillary Income is Critical for Hotels
Ancillary services are crucial for maximizing the lifetime value of your customers, but they aren’t often a differentiator when it comes to booking a hotel — almost 50 percent of travelers say price and location are the leading factors that drives a purchase decision. So while ancillary services don’t often drive first-time bookings — only 3% of consumers rate amenities as the leading factor in booking — services can be incredibly useful for driving the value per stay of a customer, as well as a customer’s lifetime value, accumulated through repeated stays.
After all, what better way to instill a sense of value in a customer than solving a pain in the moment they’re feeling it?
Whether your guest is saying, “I’m hungry,” “I just spilled coffee on my suit,” or “I need a massage,” solving a critical problem through high-quality and right-timed services not only allows you to capture additional revenue in the moment, but it creates a positive and memorable brand experience that lasts long after the guest departs
And creating positive brand experiences is especially critical now, as hotels face increased pressures to differentiate from AirBnb and other private accommodation companies — which were used by ⅓ of all leisure travelers in 2015. As factors like authenticity, personalized experiences and convenience become more important to travelers, ancillary services allow hotels to offer something that a private home can’t offer — whether it’s dry-cleaning, champagne delivery, on-site restaurants, luxury spa services or support arranging travel.
How Hotels Can Drive Awareness For Ancillary Services
If your hotel provides ancillary services as a value add for guests, it’s important to make sure your guests reap the benefits of those services. But hotels are struggling to effectively market their amenities, with ancillary revenues falling by almost 1%
Prior to visiting your hotel, the most effective way to educate customers is your website. But with many travelers making a purchase on sites like Expedia or Kayak, your most current promotions and services are easily missed. Once travelers are in the hotel, the most obvious place to promote your services is at check-in. But the last thing groggy travelers — especially those fresh off a red-eye flight — want to hear is a sales-pitch.
Past the point of check-in, the best thing hoteliers can do is promote services through ads. But in-hotel ads often disrupt the relaxing, professional or sophisticated vibe your brand strives to achieve.
So if websites, hard sales pitches and signs don’t work, how do you educate guests about your ancillary services, and maximize customer lifetime value? The answer is technology.
Mobile Applications and Humanoid Robotics Drive Engagement and Ancillary Revenue
Hotels that invest in technologies that focus on driving engagement will be a step ahead of the competition in 2017 and beyond. Obviously, the mobile app is a natural tool for this, as 51.8% of travelers who use the internet to book will do so on a mobile device. Right-times push notifications — often aided with the use of beacons — can make sure your guests are always aware of what promotions and services make sense for them during their stay.
Other hoteliers are using more innovative solutions — like SoftBank’s Pepper — to effectively and gracefully promote ancillary service.
Pepper is the world’s first emotion-reading humanoid robot. With a disarming, fun and charming presence, Pepper gets the attention of guests, educates them about your services as they’re walking through the lobby, and pushes guests to a call to action — whether it’s providing an email address to get a coupon for your restaurant, or subscribing to text notifications. Pepper aids your valuable staff by taking over the role of sales and marketing — this allows your staff to focus on providing support to guests, without having to go through the pitch of selling your services.