How Limited Service Properties Can Generate Ancillary Revenue

December 22, 2021

Ancillary revenue is traditionally only associated with full service hotels. But why? Limited service hotels can also benefit enormously from upselling all kinds of products and services.

Limited service hoteliers who rely solely on direct room revenue miss out on lucrative ancillary revenue streams that contribute directly to a hotel’s bottom line. Ancillary revenue helps hoteliers maximize profit and the valuation of their property, and, in some cases, is actually what keeps the lights on.

Hotel owners and managers, particularly those running limited service properties, need to find ways to monetize a variety of additional products and services to generate ancillary revenue from guests.

What products and services make the most sense to offer as upsells depends on a number of factors. Where the hotel is located, what types of guests the property serves, staff size and core competencies, the general layout of the hotel, and more, will all have an impact on determining what makes sense to sell.

Below are a number of creative upsells that limited service properties (or any hotel) can deploy to generate ancillary revenue.


Early Check-In & Late Checkout 

Offering guests the option to pay a little extra to check-in early or checkout late is a relatively low lift way to boost ancillary. Even the most price-sensitive of guests are often willing to pay a small premium for the convenience. 


According to data collected by Canary, guests at limited services properties generally will embrace a $20-$30 fee for early check-in or late checkout, and 5-10 percent of all guests will select one of these options through a digital upsells platform. It’s easy to imagine how presenting these basic offers can lead to hundreds or thousands of dollars in ancillary revenue for limited services hotels every month. 


An important note: Hoteliers that utilize software for early check-in and late checkout need to ensure they have the ability to approve and deny these requests and inform guests as to their availability. If a hotel is at 100 percent occupancy and a number of guests wish to check-in early or checkout late, housekeeping may not be able to turnover rooms quickly enough to accommodate to fulfill the requests. 


Limited service hotels should thoroughly evaluate any software solutions that enable the selling of early check-in and late checkout to ensure these features are included.


Room Upgrades

Consumers are fickle, even with their own decisions. It’s an all too common occurrence that directly after making a purchase, a buyer will want to swap out or modify their order in some way. Hotel guests are no less prone to these temptations as anyone else — and limited service hotels should see this as a golden opportunity. 


Providing guests with the option to upgrade their rooms after booking or at check-in is a fantastic way to boost a hotel’s bottom line. How upgraded rooms are marketed is entirely up to the hotel. King beds, corner rooms, a higher floor with a nicer view — there are lots of ways to divide up and present room upgrades to guests in appealing ways that will entice them to pay a little extra.


Food & Beverage Services — Even Without a Restaurant 

Everyone has to eat and there is no reason limited service hotels can’t capitalize on this most basic of human needs. 


If you aren’t set up to cook and serve food yourself, then there are a few options for hoteliers to increase revenue from F&B. One popular option is to offer non-perishable, packaged foods digitally via an upsells platform, which guests can easily use to order food and drinks at any time of day or night. As long as hotel’s have a small storage area, existing hotel staff can fulfill guest orders relatively easily. Don’t underestimate your guests’ desire to snack. Chips, cookies, soda, water, etc., are all popular options that can provide high margins for limited service hotels. 


The other option for hoteliers without an on-site restaurant is to partner with local restaurants to offer guests access to food delivery. Many local restaurants are willing to give commissions to local hotel partners if the hotel can offer a steady stream of new business. Hoteliers should aim for a 10 percent commission from the restaurant, but also consider an additional delivery fee to cover for the guest to cover the cost of any necessary hotel staff allocation. Another option is to partner with those same restaurants to provide continental breakfast and snack items, such as croissants and pre-made sandwiches, in the lobby. 


If you already have a dining area and kitchen facilities on site, you may want to consider expanding your service to include 24-hour room service. Offering room service doesn’t necessarily mean you have to provide the same full menu you’d expect at a restaurant, but presenting a few key culinary options at any time of day can go a long way toward improving guest satisfaction and revenue generation. 

No matter the implementation, finding ways to monetize food and beverage are easy ways to increase revenue and profit for limited service hoteliers – and leads to happier guests!


Pet Fees & Activities 

People love to travel with their furry friends, and, if your property is set up to accommodate animals, many will happily pay a little extra to ensure that Fido or Fluffy doesn’t have to be left at home. 


Including pet fees as a part of the check-in process is a fantastic way to increase ancillary revenue, but why stop there? People are often quite busy when they travel and attending to their pets’ needs is probably low on the list of things they would prefer to spend their time doing. 


If your property allows pets, you may want to consider partnering with a local dog walking service or groomer. Both the guests and their pets will appreciate it. 


Parking Permits 

Finding a place to park a car, especially in urban areas, can be a nightmare. If you have a designated parking area at your property, you may want to consider charging a premium to use it. 


There are essentially two ways to implement a pay-to-park service at your hotel. The first, and less labor intensive option, is to set up an automated toll booth similar to those you would find in most parking garages. The second, and cheaper option, is to simply issue parking permits at the front desk and ask guests to place them in their windshields. To ensure that only designated cars are taking up valuable parking spaces, a member of your team should routinely walk through the lot checking for permits. 


If you do not have a designated parking area at your hotel, limited service properties should consider partnering with a local parking garage or working out a system with your local municipality to use public spaces.


Daily Housekeeping Services

Every hotel guest wants a clean room upon arrival that has been attended to by the housekeeping department. However, once their stay has started, not everyone needs (or in some cases, wants) to have your team entering their room daily. During the COVID-19 pandemic, it has even become the norm that hotels do not clean occupied rooms on a daily basis and many believe this trend is here to stay. 


Only offering daily housekeeping services to those guests who have indicated they want it, and are willing to pay a premium, presents an excellent opportunity for limited service properties to increase staff efficiency, lower housekeeping costs, and generate ancillary revenue.

Discounts on Local Attractions & Specialty Products 

Whether a hotel guest is traveling for work or leisure, there is a good chance they’ll want to explore local attractions and interesting shops during their stay at your property. Limited service hotels looking to capitalize on this desire would be wise to reach out to local businesses of all kinds to create revenue-sharing relationships. This may include selling tickets to local attractions, issuing vouchers for discounts on local specialty products, and scheduling reservations for exciting and unique experiences. 


The best part: all of these products, services and experiences can be sold easily throughout the guest journey using a digital upsell platform. A digital upsells platform enables guests to make purchases seamlessly through their own personal mobile devices, with no need to download new apps.

Conclusion

Offering upsells is not limited to full service hotels with restaurants and amenities such as spas . There are enormous untapped opportunities for limited service properties, which are only now beginning to be explored by hoteliers. 


Major airlines went from bankruptcy in the mid 2000s to generating billions of dollars in profits today primarily due to a huge injection of ancillary revenue (e.g., checked bags, in-flight food, etc.) into their bottom lines. It’s time that limited service hoteliers catch up and unlock similar stores of massive value. Guests are more than willing to pay for add-ons and upgrades, and the technology now exists for hoteliers to offer these ancillary revenue streams without the need for extra staff. 


More than ever, guests expect these types of add-ons and amenities while traveling and search out hotels that provide them. Properties that seek to address these guest needs proactively and offer a cafeteria-style selection of services set themselves up to maximize ancillary revenue and overall profitability. Those that ignore these important revenue channels do so at their own peril. So, as the Grail Knight in “Indiana Jones and The Last Crusade” warned the world, “Choose wisely.”

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