RevPAR only takes into account 1 metric: the revenue per available room. But hotels and resorts are more than just rooms – there is a whole experience waiting to be unveiled when visiting a hotel. Equally, there are so many more revenue-generating opportunities than just bedrooms. So why wait until the guest arrives to offer these experiences?
By focusing instead on TRevPAR (total revenue per available room) – hoteliers are able to increase their bottom line profitability by incorporating a robust ancillary spend strategy into their business model (and hopefully ease operational efficiencies!)
Understandably, revenue managers have to be very careful when setting a pricing strategy for their hotel. Operating costs, comp-set and market conditions all need to be considered when calculating ADR. Some hotels are in a position where they need to drop their room rates due to oversupply or local competition, which can make it difficult to see an increase in revenue year on year. While there’s no easy ‘win’ or ‘quick fix’, there are strategies hoteliers can put in place to support their profitability. One of these is to increase the average booking value (ABV) through ancillary revenue.
Ok so hold on. What exactly is Ancillary Revenue?
(definition) Ancillary revenue: Revenue that is derived from goods or services other than a company’s primary product offering
Primary product offering in this instance would be the hotel room. Additional revenue that could be derived could be anything from flowers on arrival, champagne on ice or late check-out. Many Avvio customers have seen a substantial increase in their ABV by focusing on ancillary spend in their book direct strategy.
Here are 3 ways Avvio customers can increase their TRevPAR:
Wholeheartedly embrace Dynamic Packaging:
In addition to selling rooms, our booking engine can also sell add-ons that can considerably increase the total transaction value. Avvio’s Dynamic Packaging enables our customers to create extra add ons that the guest can choose to add to their reservation at the time of booking to personalise their stay. Strikethrough pricing is also available within dynamic packaging. This helps further highlight to the guest the benefits of advance planning. Hotels should be incentivising guests to add on dynamic packaging at point of booking to make sure their guests have the best experience possible. As a hotel you get free choice as to what products you want to make available to add to a booking: it could be a late check-out fee, a round of golf or a spa treatment.
Add bespoke upsells to Vouchers:
To help drive average booking value, Avvio customers now have the ability to add bespoke upsells to vouchers. The new bespoke upsells allows hotels to create a completely unique experience for the recipient! This means that you are able to complement a voucher sale with a pre-configured upsell(s), not unlike dynamic room packaging.
Offer early check-in / late check-out:
Currently, the only way for Avvio customers to optionally offer early check-in (ECI) or late checkout (LCO) to a guest is by adding it to the reservation as an upsell. This is not ideal as you cannot control the inventory or pricing for these options on a date or room basis. A new solution has been created which enables you to configure ECI and LCO, with options to configure the price and allocation per room type and also an option to set exceptions on certain dates to give further control over how these add-ons are available and charged for. We suggest utilising this feature during periods of lower occupancy when you know that you may not need all the rooms back at a certain time.This is an easy way to maximise revenue off guests who are already checking in to your hotel whilst ensuring operational efficiency.
There’s more to ancillary revenue than just increasing booking value. By creating unique, customizable packages you create a truly personalised booking experience for your guests.