The increase in the hospitality market has led to an increase in the need for more revenues streams. Customers can now enjoy ancillary services throughout the purchase process. Nigel Bramwell, the CEO of Voiamo was asked to explain why hotels offered add on services that were not one-offs but those that would be able to build long-term relationships with customers.
With fierce competition continuing to reduce room prices, ancillary revenue has become important in the hotel industry around the world. At the moment, it is impossible to book a room through a third party and not receive add-on products like spa treatments, airport transfers and breakfasts, that were quite unheard of in the past. According to an analysis that was done by PhoCusWright, European hotels lag in ancillary revenues with hotels in the US selling around $1.85bn in ancillary services and products in the year 2011 alone.
Estimates by Forrester indicate that by 2015, 18% of total revenues from tourism will represent ancillary services, which is a great improvement from the past. With the increase in people purchasing over the internet, hotels have found it easier to add extra products for clients without having to incur any additional advertising cost. Initially when add-ons were mainly offered by low-cost hotels; currently, they are offered by both low cost and boutique hotels.
There are definitely several benefits of offering clients various extras but are one-off extras the full potential of this approach? However, with the increase in competition, there is a need to make the most out of ancillary products and services. This will enable hotels achieve the 18% of total revenues coming from ancillary products and services.