Guide to Creating Sustainable Revenue Streams Through Third-Party Ancillary Services for Hotels
Leverage third-party partnerships to expand your portfolio of products and services to generate new revenue streams.
During the pandemic, hoteliers struggled with the demise of tourism, yet found innovative ways to explore new revenue streams beyond the bedroom and through catering to the domestic market - such as in-house food deliveries and wellness experiences. While lodging and boarding might be the main revenue driver for hotels, it is far from being the only stream of income. In fact, ancillary services (services provided to guests in addition to lodging), have become a profitable strategy many hotels have adopted during dormant times. Aside from in-house amenities and services, hotels have been outsourcing and commissioning third-party providers to extend their portfolio of products and services to boost additional revenue, at a low investment. This strategy is regarded as third-party ancillary services, meaning add-ons are offered and marketed by the hotel are offered to guests - in which the revenue is not generated by the company’s core line of products and services, e.g. hotel rooms.
Example of Ancillary Services in Travel and Tourism
Apart from expanding own offerings, here are several examples of how to create new revenue streams through third-party ancillary services in the hospitality and tourism industry:
Aman Spa at the Connaught
World-renowned luxury hotel and resort Aman are usually situated in exotic locations, yet the Aman Spa can be enjoyed at Mayfair in London, within the Connaught Hotel. As the very first Aman Spa built outside of Aman’s resorts, the spa offers a place of tranquility in the city. Open to guests of the Connaught and non-residents, experiences are personalised and tailored by the therapist to define the most suitable treatment. Facial treatments encompass skincare from luxury Japanese beauty brand Decorté. Alongside an indoor swimming pool and steam room, the fitness centre is equipped with state-of-the-art equipment and training system, with personal training and sports massage available by appointment.
Goop Shop at Rosewood Miramar
Souvenir and gift shops may be a passé, but hotels are now inviting local boutiques into their properties, replacing mugs and magnets with merchandise that reflects the hotel’s branding. Rosewood Miramar Beach in Montecito houses celebrity Gwyneth Paltrow’s first-ever hotel retail Goop shop, a curation of skincare, fashion, and home goods adored by the wellness crowd. Clean beauty, workout clothes, sunglasses, accessories as well as forgotten travel essentials can be found at this destination store, becoming a one-stop-shop for vacationers by the beachfront of Montecito. An exclusively curated hotel gift shop also leads to future e-commerce opportunities and additional revenue streams for the property.
Fleming’s Mayfair welcomes celebrity facialist and practitioner Pietro Simone’s new skincare clinic within its boutique hotel. With more than 20 years of experience, Pietro Simone is highly regarded by industry professionals and beauty experts with a roll-call of high-profile international clients seeking his transformative experiences. Leveraging on the celebrity spa, the hotel promotes and sells Pietro Simone’s line of high-end skincare products on its gifting website, with the option to bundle and cross-sell with other outlets such as rooms or food & beverage within the one site through a singular checkout.
Theatrical Experiences at the Peninsula Hong Kong
Written and directed by acclaimed Artistic Director Richard Crawford, 'Nights at Studio 54' is an immersive dining experience hosted at the Peninsula Hong Kong. Held by the Secret Theatre Projects group, the immersive dining experience comes with a three-course dinner surrounded by a theatrical performance under the disco lights, and fabulous cocktails at its after-party. Tickets are available on Peninsula’s Gift Shop with add-ons available during purchase, where the customer can upgrade either with free-flow champagne or a celebrity look-a-like meet-and-greet experience.
Benefits of Third-Party Ancillary Services
Ancillary services have been a fundamental revenue source for hotels during low room demands. Research conducted by CBRE on American resorts identified a 26% increase in revenue through ancillary income from guests after reservations were made. This method has proven to bring more profitable opportunities than just being dependent on one revenue stream, which can be fluctuating and highly dependent on tourism seasons. Utilising third-party resources can achieve high revenues, and good margins yet diversify risk with only low investment and costs needed as the model is largely commission-based.
While there are many financial benefits of ancillary services, one of the most important outcomes is boosting customer satisfaction and loyalty. Travellers equally benefit from third-party brands as it also improves the overall guest experience with a wider range of services and products - such as spa treatments, or food and beverage. This can help serve and meet the needs of travellers looking for additional services and amenities while building a seamless proposition for guests to be able to experience a variety throughout their vacation. Introducing third-party brands can also open up untapped markets, attracting different types of guests by personalising the experience to their needs. This can also extend interaction with the guest before, during, and after the trip. A satisfied guest will be prompted to increase their stay, spend more and return from an engaged customer experience. Purchases after are also advantageous to utilise customer data to target offers in the future.
How to Differentiate Yourself from Your Competition through Ancillary Services
Hotels need to diversify and think like a retailer. Rather than just being boxed in a room, hospitality are to seek out additional services missing from their hotels by partnering with third-parties to expand their services and can contribute to its revenue. Aside from guests benefitting from a wide breadth of offerings, there are also profitable upselling opportunities. Collaborating with local businesses drives an influx of new customers and can craft experiences and curate products that are interesting and relevant for guests.
At the heart of a successful hotel is the experience as guests are often looking for something extra when they are on vacation. Travellers associate hotels with its brand and seek stays that align with their lifestyle and aesthetics, and are willing to pay for services that inspire their imagination. Hotel owners can choose to focus on additional services in order to create unique and memorable experiences that will give guests a sense of luxury.
Third-party ancillary services are an underexplored revenue-generating opportunity. As of current, no other providers have the technology to support the sale of third-party ancillary services in their gifting stores other than Techsembly. With our synchronised e-commerce platform, we can help you generate additional revenue without extra effort.
What Techsembly Can Do
Techsembly’s hospitality e-commerce platform enables properties to host their own multi-vendor marketplace, welcoming third-party business partners as an expansion of its portfolio. Showcase your experiences yet build a branded ecosystem of products and services that are attuned to your hotel branding. The platform supports multiple product types from F&B (click & collect or delivery), gifting vouchers and experiences, as well as third-party products. Curate your own online marketplace and give regional teams separate control and access to the commerce platform to localise each of its international websites to meet specific local audience needs. Unify multi-department offerings and obtain holistic data of sales across all properties. Track non-room revenue and turn data into insights, understand the impact on strategies and empower future decisions.
Reinvent your hotel and convert one-night stays into a repeated lifestyle destination hub for your fans today. Book an exploratory call with our Global Head of Sales, Floris Vermeulen, to begin creating a sustainable revenue stream through third-party ancillary services.