By Larry and Adam Mogelonsky

The gift shop is for many hoteliers an afterthought. But a win is a win, and as travel recovery gets underway for a gangbusters summer of 2022 (our hope at least), it’s time for all hotels to consider operating under the model of optimizing revenue on a per guest basis (otherwise called TRevPAR) rather than simply trying to maximize occupancy.

By doing so, you can drive a better topline and healthier margin without having to rely on those 100% occ summer weekends (which may not be possible due to labor shortages) or the full-fledged return of corporate guests to buoy midweek occ. Hence, there’s a strong case to pivot the gift shop into an experience that halos positively back onto other core revenue pillars and drastically increases the amount of revenue generation within this often-small merchandising space.

Think first about the opportunity costs. Imagine converting a gift shop near the lobby entrance into a small café or a grab-and-go sundry. Which would generate more sales volume? And more importantly, which would be of more everyday utility to your visitors, be they overnight guests, event attendees or locals? While the café may require more labor and involve perishable goods, it will be a big plus for guests and thus help drive bookings.

In another situation, many hotels have tried to make something special out of their gift shops by stocking products from regional producers that can’t be found elsewhere. The goal here is a noble one – to service the demand for ‘authentically local’ experiences. Yet, few consider the amount of time needed to set up these partnerships and maintain inventory levels relative to the number of customers who pass by. Add to this that there will undoubtedly be fewer people entering your gift shop during these turbulent times of depressed occupancy and it makes the entire effort moot. Hence, in order to get greater customer volume, you need something special to draw them in.

The pattern here is that the future of retail is all about the holistic experience you provide. The modern gift shop is not an independent sales vertical for tchotchkes and touristy trinkets; it exists as part of an ecosystem of revenue generators, all of them working in harmony to amplify the onsite journey.

If there’s another consequence of Covid and the current retail apocalypse, it’s that it has catalyzed our entrance into the ‘Experience Economy’. Storefronts are no longer places primarily for transactions – all of this ‘nitty gritty’ can take place online via Amazon, eBay, AliExpress, Wayfair, Etsy, Shopify or a myriad of other ecommerce shopping platforms. And indeed, many would now prefer online purchases because it’s far more convenient and it’s contactless. Rather, physical shops are places where customers can discover new merchandise, interact with brands and educate themselves about how certain products will benefit their well-beings.

What if the future of your gift shop was not a ‘shop’ but instead an ‘experience’? In this new model, no inventory is kept within sight nor can visitors even walk out with an item. It’s no longer a store but an attraction to entertain and delight your visitors.

Think of it like an Ikea showroom where you provide a guided journey from kiosk to kiosk to show the best of what a specific product can do (with one-way markers on the floor to promote physical distancing). There’s no cash register, only a single, knowledgeable clerk with an iPad to facilitate touchless payments. If a guest purchases an item, it can be delivered to their room in a safe and contactless manner within 24 hours or shipped worldwide for an extra fee.

Secondly, consider the ‘gift’ aspect or, more accurately, the French root for the word ‘souvenir’ which means ‘to remember’. Another way to think about hotels as places for great experiences is that these are properties where ‘great memories are created’.

An on-premise store designed for immediate transactions is more or less one that’s set up for people to treat themselves in that moment. Suppose you have a couple staying at your hotel and the husband sneaks off during his wife’s spa appointment to peruse your wares. On top of having an item sent to the room, you could coordinate sanitized gift wrapping and a specific time of delivery to better fulfill the ‘surprise and delight’ factor. And if you are able to gift wrap onsite, there’s definitely a way to do it for those back home.

As we continue to adjust to the rigors imposed by the pandemic, the gift shop is but one more operation that you need to rethink from the ground up. Ruminate about what a ‘gift experience’ can be that’s true to your brand and your locality, and you may just find a viable profit-maker in the next normal.

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Editor’s note: To discuss business challenges or speaking engagements please contact Larry or Adam directly.