By Shelly Edwards, Director of Sales North America – Bókun
To counter uncertain demand and improve both revenue performance and margins at a time when it is difficult for hoteliers to raise base-level pricing, many hotels and resorts are increasingly turning to the sale of non-core products and third party services — known as ancillary services — to improve their bottom line.
Ancillary services are moving to the forefront of the hospitality industry as it strives to become — and remain financially stronger. Ancillary services are also critical to finding ways to better respond to and serve guest’s needs. In fact, Forrester believes the potential revenue uplift from third-party, commission-based ancillary services is virtually untapped. Third-party ancillary services can be defined as follows: third-party ancillary services are those operated or delivered by a third-party provider to the travel supplier, for which the supplier earns revenue via the payment of fees or commissions from the third party. Some basic examples of ancillary services include day trip excursions, dining, theatre, spa services, car rental, ski or golf tickets, spa services, car rentals.
Third-party services help build brand differentiation provided they offer a relevant product mix and deliver the types of services that guests are demanding. Travelers will come to expect greater levels of personalization and will be willing to pay for additional services, beyond the core product, that will allow them to tailor their travel experience more to their individual needs. Partnering with third-party ancillary service providers will help hoteliers improve the traveler experience by offering a more holistic and seamless proposition.
Hotels and resorts have a significant advantage over the GDS in doing this as most GDS systems are not equipped to sell ancillary services. However, the manual labour in developing, marketing, managing availability and processing commissions for ancillary services and products can be very daunting as well. The key to selling ancillary services is having them delivered automatically by technology. Some products such as spa treatments are limited in number, where others, such as National Park admissions, can be sold without limit. It is important in either case that these ancillary services are made available through technology in real time and even online – embedded on the hotels’ own website for easy access by the guest.
In summary, offering ancillary services and products can increase guest touch points before, during and after the guest stay resulting in additional revenues and commissions. However, to increase ancillary revenues effectively, an establishment must create partnerships with third party service providers that compliment their brand and use technology to collaborate with these partners to bring real-time availability and ease of access to their valued guests.