How to find ancillary revenue streams
Hotel revenue doesn’t have to be restricted by the number of rooms in a given property. Ancillary revenue is well worth seeking out, and there are plenty of ways to boost income when you’re at maximum occupancy, or to ensure your hotel can stay afloat during the low seasons.
Many hotels rely on their food and beverage offering, drawing in locals and visitors to keep revenue ticking over even in the quiet periods. Value-added services like spas are another great way to add revenue, attracting extra spending from guests and enticing non-guests too. But look beyond the stable hospitality offerings and there’s even more opportunity.
“In a competitive market space,” says Biswajit Chakraborty, General Manager of Mumbai’s Sofitel BKC, "alternative streams of revenue that go beyond traditional offerings play a significant role and is a factor that is constantly in consideration when we look at maximising revenues.”
At the Sofitel BKC, part of its French bistro restaurant has now been converted into a cigar lounge where guests and the city’s smoking enthusiasts have access to a selection of high quality cigars. While only a small portion of staying guests make use of the lounge, it’s the local businesses that bring in the most revenue here. One group from a nearby office building recently came to celebrate a milestone, explains Chakraborty, and in the process spent hundreds of thousand of Indian rupees on cigars and whisky for their team.
In a very competitive market, we see opportunity to offer something unique
Elsewhere, the sale of cigars accounts for approximately 10% of revenue at London-based boutique hotel No. Ten Manchester Street.
Making the most of what you’ve got
Not only do services like this create extra income, but they also add value for the guest, highlighting the luxury aspects of the hotels and creating a unique experience. But you don’t have to make major additions or adjustments to your hotel in order to gain revenue.
Abode Hotel, a boutique property in south Mumbai, makes the most of what it’s got in order to generate extra revenue, renting out its beautifully-designed rooms for photo or video shoots to the media, filmmakers or influencers. Charging up to US$430 a day for shoots, they earn 8-10% of their income from ancillary revenue streams like this.
Photo: Hotel Arts
In Calgary, Canada, Hotel Arts is using its talented kitchen team to earn extra revenue by catering external events. “Over the years, we’ve built up a robust off-site catering division for Hotel Arts and it represents a significant portion of our business operations,” says Director of Business Development, Fraser Abbott. “With event planners seeking out alternate venues than just a ballroom, it keeps our team in consideration for hosting larger events.”
The reward goes beyond the financials too, says Abbott: “Our offsite catering also introduces an array of new customers to our catering services that they wouldn’t otherwise be aware of unless they had been to our property. In a sense, our offsite catering division can serve as an excellent outreach to connect with new customers while also reinforcing our brand with those that are already familiar with us.”
Big investments, big returns
At the opposite end of the scale, Grecotel – a hotel chain with 27 properties on 10 different Greek islands – have made major investments in order to generate extra revenue. Amid the bucolic landscape of Crete’s inland, the group owns a traditional organic farm producing honey, olive oil, herbs and beauty products. As well as providing for all the hotels – saving on the cost of purchasing externally – the farm is also open to the public for experience days.
Photo: Agreco Farm, Grecotel
Visitors to the farm can join a ‘Be a Farmer for a Day’ course, or enjoy a classic Greek meal in the beautiful surroundings. Plus, they sell the products created on the farm in their hotels and online, shipping globally and adding even more revenue.
The group also owns Danilla Village, a replica of a 1930s Corfiot village, complete with a typical open-air square, church and tavern, in Corfu. They rent out the village as a venue for weddings and events, and it has even served as a location for TV and films, including James Bond movie For Your Eyes Only.
It’s about more than just revenue
These projects weren’t just about added revenue, though. “Part of our CSR is the care for our impact on society and the needs of local communities. Danilia Village promotes local culture and heritage to its national and international visitors by showing what a genuine Corfiot village looked like in the 1930s," explains Ioannis Tsichlis, Grecotel Marketing Director.
“While Agreco Farm hires local people to produce sustainable products that will provide Grecotel properties with locally sourced food, it also promotes Greek culture by showing visitors the old farming methods and what authentic Greek food tastes like.”
Tsichlis adds: “Projects that have extra revenue should be great for all stakeholders: for guests, by adding value to their stay; for staff, by creating job opportunities and better salaries; for investors, by bringing profit and/or disposable income; for local communities, by having a positive impact.”
If you’re a property partner you might want to access:
Hero image: credit to Michael Longmire, Unsplash
- In a competitive marketplace, seeking alternative streams of revenue can make a big difference to your hotel’s books
- Projects that create extra revenue are good for everyone, from the guest to the employees and investors
- You don’t have to spend big to get big rewards – consider external catering services or renting out unused space in a property
- Many ancillary revenue projects can help bolster reputation and create more business for main services