In Insights, Revenue Management

Jeff Borman, VP Revenue Optimization, Ashford, HSMAI Revenue Optimization Advisory Board Member 

I think of ancillary as forever the next frontier. It’s always something that matters, but never something that gets the focus in the short term.  

These statistics highlight the immense value of ancillary revenue for hotels, especially in the wake of the pandemic. Ancillary revenue can help hotels diversify their income sources, enhance their customer loyalty, and increase their profitability. However, capturing this potential requires a strategic approach and a clear vision. 

Despite its vast potential, the ancillary sector has remained a bridesmaid, often sidelined due to its complex nature. I brought this topic to the HSMAI Revenue Optimization Advisory Board meeting to discuss.   

5 Key Takeaways 

  1. Redefining Ancillary: The need to broaden our understanding of what constitutes ancillary revenue is clear. From traditional offerings like spa and dining services to innovative concepts like revenue per available cabana (RevPAC) and on-site advertising. Even the utilization of hotel structures for antenna placements has emerged as a viable ancillary revenue stream. 
  2. Overcoming Obstacles: The absence of a unified strategy has hindered growth. The industry’s challenge lies in creating a cohesive approach that encompasses all potential revenue streams, ensuring they are not only recognized but actively optimized.
  3. Benchmarking for Growth: Identifying and understanding the competitive landscape for ancillary services is crucial.  
  4. Technology: Leveraging technology to streamline ancillary offerings and personalize guest experiences without crossing the boundary into invasiveness can significantly enhance revenue generation. As one AB mentioned, “We’re looking at merchandising opportunities… and leaning on technology providers that specialize in optimizing spend beyond room revenue.” 
  5. Cross-functional Collaboration: Ancillary revenue should not fall solely under the purview of one department. A collaborative approach involving revenue management, marketing, operations, and finance is essential for unlocking its full potential. 

Further explore how Ancillary is Primary! at our upcoming session at the HSMAI Commercial Strategy Conference. Led by the Revenue Optimization Advisory Board, we’ll dive into essential strategies and actionable insights that will transform your hotel’s food and beverage and meeting spaces into key revenue drivers. Learn from compelling case studies and gain practical, low-tech recommendations to capitalize on these crucial ancillary revenue streams.  

Read Further:  

Questions for Your Team: 

  1. Ancillary has so many disparate sources and providers, just getting started is often a challenge. 
  2. What resources exist for an aspiring commercial leader to tap into?  
  3. What would you (your hotels) want to better capture Ancillary revenue?  
  4. Is anyone at a hotel in charge of ancillary? Who should be? 

The post HSMAI Commercial Strategy Conference Session Preview: Ancillary as Primary! appeared first on HSMAI Global.

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