an analysis of strategies for maximizing ancillary revenue ... · ancillary revenues in the...

Ancillary Revenues in the Hospitality Industry

An analysis of strategies for maximizing ancillary revenue for hotels and resorts

Best practice insightsAnalysis and insight to help maximize every available revenue source. Discover best practice for all aspects of managing ancillary revenues from data gathering to marketing.

Competitor analysis Understand the market and competitive landscape through our global industry survey, in-depth research, and opinions from industry leaders

Industry intelligenceInterviews and case studies with top hotel groups, technology providers, consultancies, and airlines.

REPORT EXTRACT

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Industry overview

This report provides a comprehensive overview of today’s ancillary market so your hotel or resort can gain the most out of this currently underused, multi-billion dollar resource.

Although the hotel industry has largely adopted revenue management principles and processes, thus far this effort has almost entirely been directed at maximizing occupancy and room rates.

However, EyeforTravel’s exclusive research suggests that ancillaries now make up a considerable portion of the average hotel’s revenue, with the total global hospitality market for ancillaries likely worth more than USD100 billion per year. This is set to increase as the travel market exceeds its pre-recession levels, but are your properties properly benefitting?

The report offers business intelligence on trends, peer performance, and technology capabilities, alongside best practice in the fields of marketing, revenue management, distribution, and data management. With this you can achieve above market average revenue growth and gain a crucial competitive advantage.

Leading research from EyeforTravel

In this report you will discover:

■ How to maximize all of your revenue streams to their fullest potential

■ The latest developments from the leading technology providers

■ Insights from top industry players, including Amadeus, IDeaS, JDA Software, Las Vegas Sands Corporation, Onyx Hospitality, Red Lion Hotels Corporation and Sabre Hospitality Solutions

■ An exclusive eyefortravel global executive survey, contacting 3,841 revenue professionals from our data-base, resulting in 218 respondents

■ Key performance indicators for major ancillary revenue streams

■ How to distribute and market ancillaries in a changing physical and online market place

■ How to incorporate and sell across platforms

■ Specific advice for spas, food and beverage, and events and meeting spaces

■ How to best utilize data that is likely to already be at your fingertips, but has yet to be fully exploited

For more information visit www.eyefortravel.com/reports ANCILLARY REVENUES IN THE HOSPITALITY INDUSTRY | 2

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Key questions addressed

■ Benchmark yourself against your industry peers:

• What are the strategies of top revenue managers in leading brands?• What is the market penetration of ancillaries and what are your peers providing on a region-by-region

basis?• Breakdown and analysis of hotel RMS capabilities• What is the investment climate for ancillaries?

■ What are the latest trends in revenue management technology with regard to ancillaries?

■ What are the capabilities of the latest revenue management systems?

■ What are the primary trends in this market space?

■ What revenue streams are most profitable?

■ What is the future of ancillary revenue management?

■ What is the best practice in:

• Managing ancillaries both when with and without a capable RMS?• Monitoring, managing, and exploiting data?• Meeting customer expectations?• Selling ancillaries throughout the entire customer’s buying process, from first booking to their stay at

the hotel?• Using key performance indicators to measure success?• Pricing, positioning, and bundling ancillary offers?

Who needs to buy this report

■ Revenue managers – this report is a must read for revenue managers, whether you are looking to grow from a small base or you are an established player looking for the next step in maximizing revenues.

■ Distribution and marketing managers – often the amenities and experiences a property offers are its competitive advantage. Discover how best to position, display and market these vital value-add services to maximize customer conversion.

■ Technology providers – find out what the cutting edge is in this field, what the market space looks like, and how your competitors are approaching it.

■ C-Level execs – given the potential size and growth of this area to the hotel industry, ancillaries should be on the radar of all hotel management teams as the next major area to apply revenue management princi-ples to.

■ Catering, conference and hospitality managers – intelligent strategies and best practice can help make your business area more profitable and efficient, as well as raise its profile.


Acknowledgements

EyeforTravel would like to acknowledge, with great thanks, the contributions of our advisory panel of thought leaders and industry experts. Each named individual below provided insights and analysis to ensure the focus and quality of this report refl ect the highest industry standards.

Patrick Bosworth | Co-Founder and Chief Executive Offi cer, Duetto

Jason Bryant | Founder and Chief Executive Offi cer, Nor1

Angie Dobney | Vice President of Pricing and Revenue Management Services, The Rainmaker Group

Kate Keisling | Lead Consultant, IDeaS

Toby March | Vice President of Hospitality Practice, Discover the World

Anand Medepalli | Vice President of Industry Strategy, JDA Software

Mark Molinari | Vice President of Revenue Management and Distribution, Las Vegas Sands Corporation

Sanjay Nagalia | Chief Operating Offi cer and Co-Founder IDeaS

Ron Ramanan | Chief Executive Offi cer, GoQuo

Trevor Stuart-Hill | Founder and President, Revenue Matters

Jason Thielbahr | Vice President of Distribution and Revenue Management, Red Lion Hotels Corporation

Catherine Tremeau | Manager of Revenue and System Optimization, Sabre Hospitality Solutions

Peter Waters | Director of Hotel Distribution, Amadeus

Wizz Air | Airline Spokesperson

Special thanks to our peer reviewer Stefan Wolf | Senior Vice President of Revenue and Distribution Strategy at Onyx Hospitality

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Contents

Contents...................................................................................................................................................................................................................................................................................... x

Contents ........................................................................................................................................................................................................................................................................................ x


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Contents


Welcome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

About EyeforTravel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

List of Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

List of Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Key fi ndings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Chapter One . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Chapter Two . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Chapter Three . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Chapter Four . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Conclusion/Report recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

1. Selling ancillaries through Revenue Management Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

1.1. Revenue Management Systems (RMSs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

1.1.1. The case for ancillaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

1.1.2. Case Study: Wizz Air . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

1.2. Capabilities of RMSs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

1.2.1. Incorporating ancillaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

1.2.2. Integrating RMSs with eCRMs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

1.2.3. Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

1.2.4. Selling ancillaries via GDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

1.3. Latest developments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

1.3.1. Casino Resorts are the leaders in managing ancillary revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

1.3.2. Real time off ers through mobile phones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

1.3.3. Leveraging ancillaries through mobile phones to generate TRevPAR directly . . . . . . . . . . . . . . . . . . . . . . 18

1.4. The future of ancillaries and RMSs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

1.4.1. Collaboration with other technology providers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

1.4.2. Pooling and analyzing guest data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

2. Trends in hotel ancillary revenue stream sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

2.1. Identifying ancillary revenue streams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

2.1.1. Global comparison of ancillary items and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

2.2. Margins of ancillary revenue streams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

2.3. Trends in ancillary revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

2.3.1. Resorts vs. urban hotels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

2.3.2. Case Study: Onyx Hospitality Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

2.3.3. Budget vs. luxury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

2.3.4. Regional diff erences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

3. Maximizing ancillary revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

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3.1. Working without an RMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

3.1.1. Monitoring ancillary patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

3.1.2. Staffi ng. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

3.2. Working with an RMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

3.2.1. Case Study: Red Lion Hotels Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

3.3. Learning and Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

3.3.1 Charging ancillaries to the room . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

3.3.2. Obtaining data through loyalty program memberships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

3.3.3. Case Study: Las Vegas Sands Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

3.4. Strategies and best practice for diff erent revenue streams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

3.4.1. Deciding on pricing for ancillaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

3.4.2. How airlines price ancillaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

3.4.3. Best practice for maximizing function and event space . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

3.4.4. Best practice for maximizing food and beverage revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

3.4.5. Best practice for maximizing spa revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

3.5. Best practice when off ering packages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

3.5.1. Bundling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

3.5.2. Case Study: GoQuo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

3.5.3. Pricing - Opacity versus transparency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

3.5.4. Co-operating with external tour companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

4. From system to customer – getting ancillary inventory out there . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

4.1. Distribution of ancillaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

4.1.1. Driving bookings to the brand site . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

4.1.2. Optimizing ancillaries to reclaim traffi c from OTAs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

4.1.3. Tracking ancillary sales and clickstream data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

4.1.4. Selling ancillaries via mobile devices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

4.1.5. Selling ancillaries via social media. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

4.1.6. Best practice with ancillaries and social media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

4.2. The right off er at the right time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

4.2.1. Before booking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

4.2.2. From booking to check-in . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

4.2.3. Arrival at the hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

4.3. Promotion of ancillaries through review sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

4.4. Ancillaries and consumer sentiment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

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LIST OF FIG

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List of FiguresFigure 1: Ancillary revenue as a proportion of total revenue for hotels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Figure 2: Future investment in ancillary revenue management by hotels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Figure 3: Ancillary revenue streams accounted for by RMSs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Figure 4: Percentage of hotels in diff erent regions that provide various ancillaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Figure 5: Red Lion Hotels Corporation’s RevPAK platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

List of TablesTable 1: Ancillary revenue as a proportion of total revenue for hotels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Table 2: Future investment in ancillary revenue management by hotels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Table 3: Ancillary revenue streams accounted for by RMSs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Table 4: Potential ancillary revenue streams for hotels and resorts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Table 5: Internet access is among top 5 things most guests note about hotels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

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■ What is the lead in time in terms of booking, and what cancellation rates are we getting?

■ What type of value add-ons are we off ering during certain times of the year to get those occupancy levels higher?

These types of questions can also be applied to other ancillaries. Only when a systematic process for collecting data about a property’s ancillary revenue is achieved can revenue managers begin to assess performance and set targets in the same way that they do for room rates.

3.1.2. Staffi ngOne consideration for properties when it comes to ancillary revenue, whether they use an RMS or not, is having the operations in place to be able to deliver the off ers they are upselling.

“If you are pushing ancillary off ers and this results in, say, more footfall into your restaurants, then you need to make sure that you are aligning your staff requirements accordingly, which means you have to forecast your staff schedule accordingly, and this, of course, has a cost implication, “ says Anand Medepalli, vice president of solution strategy at JDA Software.

“Once you start managing these, you need to put metrics and incentives in place, to measure and reward good behavior from staff when it comes to ancillary sales, just as you would with any other sales activity. Whether it’s commissions or other incentives, they need to be there for staff , whether it’s the sales manager of the function space or the check-in staff .”

3.2. Working with an RMSFor hotel revenue managers aiming to incorporate ancillaries into their RMS, the fi rst step is to communi-cate with the provider and understand what is possible.

3.1. Working without an RMS

3.1.1. Monitoring ancillary patternsHotel revenue managers working without an RMS are at a disadvantage when it comes to making calculations and interpreting raw data. Crunching the numbers becomes signifi cantly more time consuming, as does the management of the property’s inventory. “Eventually the RMS providers will catch up and surpass the ability of an individual working with an Excel spreadsheet to see the data in a way that allows them to make good decisions [about ancillary revenue],” says Trevor Stuart-Hill, president of Revenue Matters. However, given that the most common systems are generally not optimized for processing ancillaries at present, managers often fi nd themselves continuing to use these older methods. Nonetheless, if hoteliers continue to demand better functions from their providers, it is only a matter of time before it becomes incorporated into the solutions they off er.

“In the mean time, revenue managers can begin to track at least on a manual basis some of the key elements related to ancillary spend. They should begin to collect the same kind of data for ancillaries that they do for rooms. The type of product that’s being consumed, the way it is being consumed and the frequency, pace and price at which it’s being consumed – just as they do with rooms and occupancy rates.”

Stuart-Hill uses the spa as an example, and suggests collating data to answer the following questions:

■ How many treatment rooms are occupied through-out the day?

■ How many are available?

■ What is the revenue associated with that? Does it change by season?

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3.2.1. Case Study: Red Lion Hotels Corporation

work with the ancillary transaction data. So part of the puzzle is, where is the road block?”

In order to create a foundation for automated ancillary revenue management, with the aim of eventually fi nding a way to market ancillary off ers to transient guests, hotels need to facilitate the integration of their systems with the RMS, so that data can eff ectively be extracted and used to inform dynamic pricing. Properties that are able to do this are in a stronger position to work towards Total Revenue Management than those who do not.

If there are limitations, it is important to identify where the issue is, and whether it lies with the technology itself, or on the hotel’s ability to collect and share ancillary spend data in an automated way.

“If a Property Management System (PMS) is not providing data dictionaries or information that allows an RMS provider to get the data they need, then that’s one thing,” says Stuart-Hill. “The second is the level of data required. If it’s transactional data, then many RMSs aren’t set up to extract transactional data, and if they are, they probably aren’t set up to extract and categorize and

Figure 5: Red Lion Hotels Corporation’s RevPAK platform

Source: Red Lion Hotels Corporation, 2014

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