How Urban Hotels Are Leveraging Ancillary Revenue Strategies Once Dominated by Resorts
AUTHOR: Alex Grant - Co-Founder & Head of Hotel Solutions
DATE: 30 October 2024
Traditionally, ancillary revenue, revenue earned from services beyond the primary room offering, has been the domain of resorts. Upscale spa treatments, exclusive dining experiences, and poolside cabanas were typical services used to enhance guest stays and increase profits. However, many urban hotels now recognize the untapped potential of ancillary services to boost their bottom line and improve guest satisfaction.
Why Urban Hotels Are Shifting to Ancillaries
Urban hotels have typically relied on room rates and occupancy to drive revenue, but recent shifts in guest expectations and competitive pressures are prompting city properties to innovate. Modern travelers expect more than just a bed to sleep in, they seek unique experiences, even in the heart of a city. Urban hotels are well-positioned to offer diverse services that enhance the overall guest experience.
Here are some key areas where urban hotels are beginning to cash in on ancillary services:
Meeting Rooms and Conference Spaces
For hotels in bustling city centers, meeting and event spaces are prime opportunities for ancillary revenue. Corporate clients, conferences, and private events can be a consistent revenue stream, particularly with flexible packages that include catering, AV services, and breakout spaces.
Wellness and Spa Services
While traditionally associated with resorts, spa services have flourished in urban hotels. City guests, particularly business travelers, often seek relaxation and wellness options. Offering on-site massage, fitness classes, or rooftop yoga can increase guest spending while improving overall satisfaction.
Food & Beverage (F&B) Experiences
Urban hotels are increasingly turning their restaurants and bars into must-visit destinations. By collaborating with local chefs or offering themed dining experiences, city hotels enhance their appeal to guests and locals. Exclusive cocktails, pop-up culinary events, and partnerships with local breweries can all add to the hotel's revenue.
Fitness and Wellness Facilities
Urban guests may not have time to visit a local gym during their stay. Hotels that provide on-site fitness centers, personal training, or wellness packages tailored for short stays can differentiate themselves from competitors. From spinning classes to saunas, urban hotels are creating holistic fitness environments that rival those of resorts.
Poolside Amenities: Cabanas and Lounges
Though traditionally a hallmark of resort hotels, poolside experiences are becoming increasingly popular in urban hotels with rooftop pools or indoor spa areas. Offering exclusive access to cabanas, poolside food and beverage service, and day passes for non-guests are some ways to generate additional income.
The Benefits of Ancillaries for Urban Hotels
Urban hotels stand to gain significantly by adopting a resort-like approach to ancillary services. This provides a steady stream of additional revenue and enhances the overall guest experience, leading to higher satisfaction, better reviews, and, ultimately, more repeat bookings.
Moreover, focusing on ancillaries helps diversify a hotel’s income sources, making it less reliant on room rates and occupancy alone. In an era of fluctuating travel demand, ancillary services offer a sustainable way to maintain profitability and competitiveness.
A New Era for Urban Hotels
As urban hotels continue to embrace ancillary services, the industry is witnessing a shift from a room-centric business model to one that prioritizes holistic guest experiences. By innovating in areas like F&B, wellness, and exclusive guest amenities, city hotels follow in the footsteps of resorts and transform how they do business—one enhanced experience at a time.
