The world of hospitality has long revolved around optimizing room revenue. We’ve all focused on RevPAR, GOPPAR, and lately, Total Revenue Per Occupied Room (TRevPOR). But as the market evolves, so do our strategies for profitability.

Today, I want to talk to you about ancillary revenues, a term that’s gaining traction in the industry. 

You’ve probably heard about it, but the conversation surrounding it is about to become much bigger. As costs have risen, particularly in the last five years, hoteliers have had no choice but to pass some of that burden onto guests, most notably impacting services like breakfast. In urban hotels, we've seen a marked decrease in breakfast capture rates due to price hikes.

But what if I told you that the real opportunity lies in rethinking how we present and deliver these services, particularly breakfast, and beyond? Let’s explore how ancillary revenues are the untapped goldmine that can transform your hotel's bottom line.

Shifting Focus from Rooms to the Whole Guest Journey

Ancillary revenues cover everything from food and beverage sales, spa services, and room upgrades to event bookings and local tours. As we’ve optimized room revenue to the point where incremental gains are getting smaller, it's becoming increasingly clear that other areas of our hotels have enormous untapped potential.

Take a lesson from Las Vegas hotels. In a recent experience booking a room for IMEX Americas I had the full experience. 

They don't just focus on selling rooms—they've mastered integrating every guest interaction, whether it's dining, attending an event, or using a spa service, into a cohesive revenue-generating strategy. 

In Las Vegas, the entire guest journey is seamlessly connected, making it easy for the guest to spend more while enjoying a highly personalized experience. 

This is where ancillary revenue becomes crucial, not just as an add-on, but as part of a holistic revenue management strategy.

The Importance of TRevPOR

While RevPAR (Revenue per Available Room) has been the gold standard for a long time, we've shifted focus to metrics like TRevPOR (Total Revenue Per Occupied Room). 

This shift allows us to account for all the revenue generated by a guest, not just from their room rate.

It’s not just about filling rooms—it’s about capturing the maximum value from each guest's stay, whether that’s from food and beverage sales, upsells, or offering exclusive in-destination experiences. 

By thinking holistically, we can optimize the guest experience and boost profitability at every touchpoint.

Leveraging Technology to Capture Ancillary Revenues

With today's tech-savvy guests, the demand for personalized experiences has skyrocketed. Ancillary services such as breakfast need to be sold early in the booking process and framed as value-driven offers that can’t be missed. 

Technology plays a massive role here, whether through personalized booking engines, dynamic pricing for room service, or smart menu apps such us DynamEat, that optimizes food and beverage sales based on real-time demand.

Think of how dynamic pricing revolutionized room revenue management. Now, the same principle can be applied to every service offered, from a dinner at the hotel restaurant to an in-room spa service. 

With the right tech stack in place, these upselling and cross selling opportunities can be integrated seamlessly across the guest journey, from pre-arrival to post-checkout.

The Emotional Guest Journey

We’ve often discussed the emotional journey of guests—the importance of making every moment of their stay memorable, personal, and emotionally resonant. 

Ancillary services play a pivotal role in shaping that journey. It’s not just about what you offer; it’s about how you offer it. 

Guests may not remember the room they stayed in, but they will remember the Italian food cocking class with the hotel´s Cheff, the personalized dining experience, or the thoughtful concierge service that suggested a local hidden gem.

In a world where luxury is increasingly defined by convenience, integrating these services into your revenue strategy doesn't just make sense—it’s essential for creating loyal, repeat guests. 

Conclusions & Final Thoughts

The future of hotel revenue management lies not just in room optimization but in capturing the total value of each guest's stay. By embracing ancillary revenue as part of your core strategy, you can increase your profitability while also elevating the guest experience.

This is the path forward—more holistic, more personalized, and, ultimately, more profitable.

Now the question is: Are you ready to fully embrace this shift in focus and take your hotel's performance to the next level?

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Until next time, keep exploring the endless possibilities of hospitality. 

Fernando Vives

About Fernando Vives

Fernando Vives stands at the forefront of hospitality expertise, guiding Minor Hotels Europe & Américas (former NH Hotel Group) Commercial Discipline and Top Line Results. His dynamic leadership oversees a vast portfolio, including sales, revenue management and digital growth, steering a team of over 2,000 across 30 countries and managing a turnover of over $3 billion USD. Awarded as one of the Top 20 Extraordinary Minds in the industry for Commercial & Revenue Optimization Leadership, Fernando's extensive background includes senior roles at renowned hotel chains and ventures into entrepreneurship. He is an academic pioneer, and an esteemed speaker and a passionate industry advocate, Fernando's educational prowess is matched by his commitment to shaping the future of hospitality as an Ambassador for Hospitality Labs.

The views and opinions expressed in this newsletter are solely those of Fernando Vives and do not necessarily reflect those of any company or organization he works for or is affiliated with, nor those of their partners or suppliers. The data sources used are mostly public, ChatGPT may have been used for research assistance, copywriting or editing. If you find any discrepancies or errors in the data or insights shared, please reach out via LinkedIn for necessary adjustments. Thank you for following and being a part of this community