Boutique hotels generally struggle to generate ancillary revenue due to a lack of resources and tools. Smaller hotels struggle to attract guests and generate additional revenue due to brand awareness, economies of scale, and established supplementary services.

Besides these limitations, independent or boutique hotels can generate ancillary revenue through innovation and creativity. Smaller hotels may offer customers a more authentic and memorable experience by using their unique location, local partnerships, and personalized service.

As an independent or boutique hotel, generating ancillary revenue can be a great way to boost your bottom line. Ancillary revenue is any money that comes in from things other than room sales, like food and drink sales, spa services, and activities.

With a well-thought-out strategy for making extra money, a hotel can keep making money even when not many people are staying there. You can generate ancillary revenue for your hotel by using the right hotel ancillary revenue ideas and ancillary revenue strategies.

Still, even when things are going well, upselling and cross-selling hotel products and services is a great way to make more money through ancillary revenue strategies.

What is hotel ancillary revenue?

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Independent and boutique hotels can generate ancillary revenue by implementing a range of strategies and tactics that capitalize on their unique strengths and characteristics. Firstly, it is important to understand what ancillary revenue is and how it can be generated.

Hotel ancillary revenue is the revenue earned by a hotel beyond its primary room revenue. It refers to the revenue generated from additional goods and services offered by the hotel beyond the room rate. This can include selling food and drinks, offering spa services, activities, and other hotel ancillary services. Ancillary revenue can make up a big chunk of a hotel's total revenue and is an important part of how a hotel runs its business.

A hotel's ancillary revenue includes all of the money made via the sale of additional products and services, such as a breakfast buffet, services at a spa, early check-in or late check-out, and so on. It excludes the revenue generated from selling your primary inventory, such as hotel rooms.

Why Do You Need an Ancillary Revenue Strategy?

According to an Oracle study, 81% of hoteliers surveyed anticipate a significant service model shift between now and 2025, and 49% concur that special amenities and upgrades are crucial to their revenue strategy.

There's no good reason not to maximize a hotel's earnings potential. If money were raining down and you did nothing to collect it, that would be like not pursuing supplementary revenue. For several reasons, independent and boutique hotels need an ancillary revenue strategy.

• To begin, ancillary revenue strategies can help hotels expand profitability and invest in enhancements to enhance the visitor experience by generating additional money beyond room rates and occupancy.
• Second, by increasing revenue from supplementary services, hotels can cut back on expensive and margin-reducing third-party booking channels.
• Thirdly, an effective ancillary income strategy can aid hotels in fostering brand loyalty and enhancing the visitor experience, both of which boost the hotel's bottom line.
• Last but not least, an ancillary revenue strategy can aid hotels in maintaining their competitive edge in a saturated market.

What are the benefits of a successful ancillary revenue strategy?

A hotel of any size would benefit greatly from developing an ancillary revenue strategy.

• By diversifying the revenue streams, hotels can increase their overall profitability and become less dependent on room rates and occupancy alone.
• A successful ancillary revenue strategy can result in qualitative enhancements to the visitor experience, such as the provision of additional services and facilities that can increase customer loyalty and satisfaction.
• A well designed ancillary revenue strategy can decrease the amount of money a hotel must pay to third-party booking platforms, thereby increasing profitability and decreasing reliance on external channels.
• A hotel that offers innovative and customized packages and services can distinguish itself from rivals and attract new guests.
• An effective ancillary revenue strategy can increase revenue per visitor by providing a variety of services and amenities in addition to the room rate, thereby increasing guest expenditures.
• A successful ancillary revenue strategy can provide funding for investments in guest-centric amenities, such as spas, fitness centers, and restaurants, which can enhance the visitor experience and attract new customers.

Ways independent and boutique hotels can generate ancillary revenue

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It's important to figure out which parts of your hotel's operations are going well. This will help you use your unique selling proposition (USP) to your advantage by improving the services and amenities you already offer. At the same time, you need to identify the areas in which you are now lagging behind your rivals and work to make up the ground you've lost in those areas.

Let’s look at some of the ways boutique hotels can generate ancillary revenue:

Keep iterating and refining

Hotels should be receptive to client feedback and make necessary adjustments to their ancillary services. By continuously iterating and refining their services, hotels can offer their visitors the best possible experience while maximizing their revenue potential.

Tours and activities

Hotels can generate additional revenue by partnering with local tour companies and offering a variety of tours and activities to their visitors. This may involve sightseeing excursions, wine tastings, or outdoor activities. By providing tours and activities, hotels can provide their visitors with a variety of entertaining options while also generating additional revenue.

Rentals

Boutique hotels may provide visitors with bicycles, kayaks, paddle boards, and beach chairs for rent. This can be an effective strategy for generating additional revenue while enhancing the visitor experience. By offering rentals, hotels can provide access to recreational activities for their visitors and generate additional revenue.

Room upgrades

Offering room upgrades can be a fantastic method for hotels to generate additional revenue. Many visitors are willing to pay more for a more opulent room or a better view, so offering upgrades can be a simple way to boost revenue. Upgrades offered by hotels include larger accommodations, suites, balconies, and ocean views. The key is to provide visitors with upgrades that they desire and are willing to pay extra for.

Early check-in & late check-out

Particularly if they have early morning or late night flights, many guests are prepared to pay for the convenience of being able to check in early or stay late. A hotel's additional fees for early check-in or late departure can accumulate over time.

Meal reservation

Numerous boutique hotels offer meal reservations through their on-site restaurants or partnerships with nearby establishments. Providing guests with meal reservation options can help the hotel generate additional revenue. Hotels may offer guests the option to make breakfast, lunch, or dinner reservations and charge a fee for the service. This is a convenient option for visitors who wish to guarantee a reservation at a popular restaurant.

F&B upsell

By upselling food and beverage options to visitors, hotels can generate additional revenue. This may include the provision of premium wines, spirits, and specialty concoctions. By providing a variety of upscale food and drink options, hotels can increase their per-guest revenue and provide a more luxurious experience.

Spa and wellness services

Boutique hotels may provide spa and wellness services to their guests, such as massages, facials, and yoga sessions. This can be a lucrative area for hotels and is frequently a visitor favorite. By providing spa and wellness services, hotels can offer their visitors a relaxing and revitalizing experience while also generating additional revenue.

Event and conferences

Boutique hotels can generate additional revenue through the hosting of events and conferences. This may include ceremonies, business meetings, and social events. By hosting events and conferences, hotels can generate additional revenue and showcase their facilities to prospective visitors.

Upselling packages

This area can be extremely lucrative for lodging. By combining multiple services, hotels can provide guests with a more comprehensive and opulent experience while also generating additional revenue.

Conclusion

Independent and boutique hotels that want to compete in a market that is getting more crowded and competitive need to find ways to make extra money. Hotels can increase their income, make their guests happier, and become less dependent on third-party booking channels if they have a good ancillary revenue strategy.

Hotels can make extra money by offering unique and personalized extra services, partnering with local businesses and attractions, and using technology to improve the guest experience. They can make extra money and give their guests a great experience in a number of ways, such as by upselling, cross-selling, making custom packages, or partnering with local businesses.

By using effective ancillary revenue strategies, these hotels can boost their overall sales and profits and set themselves apart from other hotels on the market. So, putting hotel ancillary revenue ideas and hotel ancillary services at the top of the list can be important for success when opening a boutique hotel or focusing on boutique hotel revenue management.