Diversify your Hotel Revenue Stream with Ancillary Services

Relying solely on room bookings is no longer enough to sustain growth in the face of shrinking profit margins and rising competition. To stay profitable, hotels need to explore new revenue streams. 

Ancillary services offer a powerful solution, enabling hotels to boost profits while enhancing the guest experience. This blog will explore ten ancillary services that can help diversify your revenue, improve guest satisfaction, and set your hotel apart.

Whether you’re introducing new services or enhancing existing ones, these strategies can unlock your hotel’s full potential.

What are ancillary services?

Ancillary services are extra products or offerings provided by hotels that go beyond providing a place to sleep. They are meant to enrich the guest experience during their stay.

Expanding ancillary services can open up new revenue streams. By offering these services, you can tap into new revenue opportunities while enhancing guest satisfaction, which drives repeat business and builds long-term loyalty.

One popular ancillary service is airport shuttle transportation. This service offers guests a convenient way to travel between the hotel and the airport.

By charging for it, you not only cover the costs but can also generate profit. A stress-free transportation option can also reduce early check-outs, leading to higher occupancy rates.

Why should you focus on ancillary services?

More than 70% of a hotel's revenue is traditionally from room bookings. However, with the rise of Online Travel Agencies (OTAs) and increasing competition, profit margins from room sales have been shrinking. This is where ancillary services come into play.

Ancillary services have become crucial for hotels as they offer opportunities to generate additional revenue beyond room rates, often with higher margins. Industry data shows that ancillary services can contribute up to 30% of a hotel’s total revenue.

By offering a diverse range of ancillary services, you can cater to different guest preferences, attracting a broader customer base. Moreover, these services provide an avenue for differentiation, helping your hotel stand out in a crowded market.

10 ancillary services to diversify your hotel revenue stream

1. Food and beverage services

Food and beverage services are essential ancillary offerings for hotels. By curating exceptional dining experiences, you can encourage guests to dine in-house, boosting overall revenue.

Consider the following:

• Diverse cuisines: Cater to various dietary needs and preferences.
• Unique dining concepts: Appeal to different segments of your clientele.
• Additional options: Establish room service, grab-and-go options, and event catering.

Ambiance and decor play a significant role in enhancing the dining experience. Focus on:

• Lighting
• Music
• Seating arrangements
• Decor elements that align with your hotel’s brand.

Staff training is also crucial. Ensure your team provides top-notch service:

• Menu knowledge: Everyone should be well-versed in the menu offerings.
• Customer service standards: Consistent, high-quality service is key.
• Food safety practices: Maintain rigorous standards to ensure guest safety.
  
  

2. Wellness and spa services

In today’s fast-paced world, guests seek relaxation and rejuvenation. Offering wellness and spa services can be a major revenue driver.

Consider the following:

• Dedicated spa facilities: Offer a range of treatments like massages, facials, and body wraps.
• Partnerships with local experts: Provide services like yoga classes or meditation sessions.
• Wellness packages: Entice guests to indulge in self-care, increasing revenue.

High-quality spa products enhance the overall experience. Offer:

• Luxurious massage oils
• Soothing facial masks
• Premium equipment

Unique wellness offerings can cater to specific preferences:

• Specialized treatments: Consider crystal therapy, sound healing, or aromatherapy.
• Holistic approach: Provide a comprehensive wellness experience.
  
  

3. Event and meeting spaces

Event and meeting spaces can attract both business travelers and social event organizers. It lets you utilize your hotel’s spaces to cater to various events.

Key offerings

• Well-equipped meeting rooms: Provide customizable event packages.
• Conference halls: Include audiovisual equipment and event planning assistance.
• Banquet venues: Market to local communities for weddings and celebrations.

Design considerations

• Flexible seating: Accommodate various event formats.
• State-of-the-art technology: Offer high-speed internet and video conferencing.
• Versatile banquet venues: Create spaces that can be transformed for different themes.

Partnerships can enhance the event experience:

• Local vendors: Collaborate for catering services or decor rentals.
• Memorable celebrations: Make your hotel a sought-after destination for special occasions.
  
  

4. Pet-friendly services

As pet-friendly travel gains popularity, offering services for guests traveling with pets can be a profitable ancillary offering. Provide pet-friendly rooms with amenities like pet beds, food bowls, and guides to local parks and attractions.

Revenue Opportunities:

• Pet fee: Charge a reasonable amount.
• Additional services: Offer pet-sitting or grooming to ensure a comfortable stay for both pets and their owners.

Loyalty Potential:

Attract a loyal customer base that values your hotel’s pet-friendly approach.

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5. Local experiences and tours

Leverage your hotel’s location by offering curated local experiences and tours. Partner with local tour operators to create custom itineraries that showcase unique attractions, landmarks, and cultural experiences.

Promote these offerings as an opportunity for guests to explore the destination in an authentic way.

Revenue Boost:

Create inclusive packages that combine accommodation with local experiences. This provides a one-stop solution for guests seeking both lodging and activities.

6. In-room entertainment and technology

Enhance your guests' in-room experience through state-of-the-art entertainment and technology options.

Key Features:

• High-speed internet access
• Smart TVs with streaming services
• Bedside charging stations

Consider upgrading to:

• Voice-controlled assistants
• IoT devices for a modern, convenient stay

Premium Options:

Offer on-demand movies and virtual reality experiences. These upgrades not only increase guest satisfaction but also present opportunities for additional revenue through add-on services.

7. Transportation and shuttle services

Guests often appreciate convenient transportation options. Offering shuttle services to airports, major attractions, or business districts can be a valuable ancillary service.

Partnership Opportunities:

Collaborate with local transportation providers to offer car rentals or chauffeur services for guests who prefer personalized transportation.

Revenue Generation:

Charge a reasonable fee for these services. Guests will appreciate the convenience and reliability, ensuring a steady revenue stream.

8. Retail and merchandise

Create a memorable shopping experience within your hotel by establishing a retail space. Curate a range of merchandise that reflects the destination, such as souvenirs, local crafts, and hotel-branded products. This enhances the guest experience while offering a new revenue stream through retail sales.

Consider the following:

• Mini-marts or gift shops: Offer essential items and snacks.
• Convenience: Cater to guest needs and boost on-site purchases.

9. Fitness and recreation

Offer fitness facilities and recreational activities to engage guests and promote an active lifestyle. Establish a well-equipped gym with cardio and strength training equipment.

Consider the following:

• Fitness classes: Organize sessions or partner with local professionals for personalized workouts.
• Outdoor activities: Offer swimming pools, tennis courts, or hiking trails.

Revenue Opportunities:

• Sports equipment rental: Provide rental services to enhance guest experience and generate additional income

10. Loyalty programs and memberships

Strengthen guest loyalty and drive repeat business with a comprehensive loyalty program. Offer perks like exclusive discounts, room upgrades, early check-in, and late check-out for members.

Consider the following:

• Targeted marketing campaigns: Promote your loyalty program effectively.
• Membership tiers: Create different levels to encourage higher spending and return visits.

Partnerships:
Collaborate with airlines, credit card companies, or other businesses to enhance loyalty program benefits and attract a broader customer base.

Last Thought

By diversifying your hotel's revenue stream through these ten ancillary services, you can create new sources of income while enhancing the overall guest experience.

Adapt these services to fit your hotel’s unique brand and location, considering the preferences and needs of your target audience. With creativity and strategic planning, you can unlock the full potential of ancillary services to achieve sustained growth and profitability.