Ancillary Services In Hotels: A Revenue-Generating Machine
The Hospitality Industry is among the most competitive industries in the world. With so many hotels located in different locations, and offering so many amenities, properties have to compete with each other every day, or rather, every moment. Hotels generally offer two types of services - the main service and the ancillary services in hotels.
The main service here refers to the room inventory. Room inventory, in simple terms, means the rooms in which the guest stays for the night, or multiple nights. They are the most important component of hotel revenue. Ancillary Services on the other hand refer to the additional services that a hotel provides over the main room inventory.
In this blog, we will discuss the various ancillary services in hotels, as well as give several tips and strategies to make them revenue-generating machines.
What Are Ancillary Services In Hotels?
Ancillary Services are additional services that hotels offer over a room inventory. These include accommodation services, food and beverage services, spa and wellness services, transportation services and event management services. The aim of offering these ancillary services in hotels is to generate additional sources of hotel revenue and enhance customer experience.
The hotel industry is a competitive industry, and hence, hotels need to offer something more than just a room for a stay if they want to distinguish themselves from their competitors. In fact, many hotels are renowned for offering unique ancillary services such as spas, saunas, jacuzzis and various others.
In fact, hotel ancillary services have now become an integral part of upselling and cross-selling strategies. As we go ahead, we will be discussing the various types of ancillary services in hotels, their benefits and the strategies you can use to generate more revenue.
Types Of Hotel Ancillary Services
There are various types of additional services for hotels, each of them satisfying a particular want of the customer. These include accommodation services, food and beverage services, spa and wellness services, transportation services, and event management services. Let us discuss these types of ancillary services in detail.
The aim of these hotel ancillary services is to enhance the satisfaction provided by the room inventory. In fact, they have become an integral part of the room inventory now. It includes upgraded room types and additional services such as a minibar, laundry, and various in-room services. In fact, many food and beverage, and spa and wellness services can also be offered in the accommodation itself.
Accommodation services also include concierge services such as making dinner reservations as well as booking tickets for local attractions and events. It also includes early check-in and late check-out.
Food And Beverage Services
Food And Beverage services, commonly known as F&B services in the hotel industry, refers to everything related to food and beverages such as room services, in-room dining, restaurants as well as bars. F&B is among the most important component of the hotel experience.
With room service, the guests can enjoy food and drinks in the comfort of their rooms. In-Room dining takes it to the next level, where the dining experience is set up with more sophistication. Most hotels have at least 1 restaurant (many have 2 -3 nowadays). Bars and lounges offer liquor, another popular item with guests.
Spa And Wellness Services
Spa and Wellness services are another emerging categories of ancillary services for hotels. It includes all the amenities that aim to provide relaxation and health to the hotel guests. It includes spas, salons, saunas, yoga and meditation classes.
Nowadays, many five-star hotels are offering saunas and jacuzzi services. Spa services offer massages, facials as well as body treatments. It also includes gyms and a fitness centre, allowing the guests to maintain their fitness.
It is another important facility offered to the guests. It helps the customers reach/leave the hotel as well as travel across the destination. The reliability of taxis and public transportation is not fixed, and hence transportation services are essential hotel ancillary services.
Some of the transportation services include airport shuttle services, car rentals, as well as offer a driver to help them explore the city. These services are really convenient for the customers. In fact, many hotels organise group tours as well, with bus and driver.
Event Management Services
Hotels have always utilized their space to host events such as weddings, pre-weddings, birthday parties and more. Corporate events such as team building activities, corporate parties and many more are also a source of revenue generation. Hotels take care of event planning as well such as decor, catering, photography and more.
The aim of these ancillary services for hotels is to provide a better guest experience to their customers, as well as stand out from their competitors. This leads to customer loyalty and more revenue.
Benefits Of Ancillary Services In Hotels
Offering hotel ancillary services has several advantages, let us discuss them in detail. In fact, they have become an essential component of hotel management. Here are some of the most important benefits of additional services for hotels:
Increase In Revenue
One of the biggest advantages of ancillary services in hotels is an increase in hotel revenue. Room inventory is surely the most important source of hotel revenue. However, ancillary services can increase hotel revenue, since you are offering something more. People will always want food, beverages, spa, wellness facilities as well as transportation.
Most importantly, there is no hotel guest in the world that will reject the opportunity to avail of room upgrades and in-room amenities. The hotel offers various types of rooms for different guests, such as standard, deluxe, executive and luxury. With room-type upgrades, guests can have better experiences.
Better Guest Experience
Hotel ancillary services provide better guest experiences since hotels are offering something more to the guests. With upgraded room types, in-room services, and check-in/check-out relaxation, guests can enjoy their stay better. F&B options take care of the guest’s tastebuds, while spa and wellness services make the guests feel relaxed. These services, when combined together, will give you the required edge over your competitors.
Offering additional and unique services in the hotels gives you an edge over your competitors. It ensures that your hotel will be preferred. In fact, if a competitor charges a lower price than you, but does not offer the same amenities as you do, the guests will prefer your hotel.
Diversification Of Revenue
Last but not least, diversification of income is among the biggest advantages of ancillary services in hotels. By offering many services, hotels are not wholly dependent on their room inventory. So in case there is a low season or a bad week, hotels can compensate from other channels. So, you can gain good revenue throughout the year.
Revenue Strategies For Ancillary Services In Hotels
Now that we have discussed the basics of hotel additional services, let us now discuss the various revenue strategies to make the most out of ancillary services. Now we know that it is an important source of hotel revenue. With the right strategies, you will make to make ancillary services a revenue-generating machine for hotels.
Use Room Upgrades
Room upgrades can be transformed into paid upsells to generate the most revenue. You can offer them at discounted rates. For example, if you want to increase the occupancy of deluxe rooms, you can offer an upgrade from standard rooms with 25% off on deluxe rooms. This way, you gain revenue as well as increase your occupancy.
However, you need to make these offers after taking revenue into consideration. You should not offer room upgrades that reduce your hotel revenue in the long run.
Optimally Use Upselling And Cross-Selling
Upselling and cross-selling strategies are a perfect way to increase your hotel revenue. You can upsell your rooms and even ancillary services. Cross-selling is another strategy, mostly used in meal plans.
For example, Continental Plan includes breakfast only, while American Plan includes all the meals. With these plans, you can sell room inventory and F&B together. In fact, you can combine upselling and cross-selling to make it more attractive for the guests.
Along with these, you can also offer complementary spa services as well. In fact, there are hotels that allow complementary access to Jacuzzis, Saunas and spas.
As we discussed earlier, events are a major source of hotel revenue. There are many hotels that host weddings, pre-wedding events, corporate events, launch events as well as birthdays and anniversaries. With these, you will be able to generate an additional source of revenue other than the room inventory.
By following these strategies, you can use ancillary services in hotels to increase your hotel revenue. The hotel industry is extremely competitive and by offering additional services, hotels can easily increase their standing amongst their competitors.
Read our blogs to know more about the hospitality industry, its concepts, trends as well as the various challenges and their solutions.