The Importance of Ancillary Services to Grow Revenues
Ancillary Services in the travel industry can be defined as “additional services that can be provided to a traveller”. These services can be provided by any type of service provider in the travel industry like a travel company or your accommodation provider. Providing Ancillary services can be an ingenious way to add to revenue’s. It is also very beneficial for the local community as different stakeholders of the industry. Hotels can provide Ancillary services by themselves while also promoting services that are not provided by them. Travel Companies can also provide various types of packages for travellers based on their persona.
Travel Companies can massively benefit by working with local communities by promoting their services to travellers. Each traveller has their unique purpose but travel companies can categorize travelers based on their need for travel. People can travel to experience new cultures and face new adventures, or they can travel to meet family or for important business meetings. If travel companies can partner with these service providers, it greatly benefits travellers as the burden of research and arranging these services and products are eliminated allowing the traveller to achieve maximum utility during their stay. It can also help the local tourism sector by bringing them to the forefront, they can gain more feedback to improve their service/product, there could be an increase in word of mouth marketing for the tourist product and travel company if the traveller had a great experience.
External Ancillary Services can include a plethora of local sightseeing sights and activities like heritage sites, museums, theatres, legacy restaurants, art galleries, iconic sports arenas, etc. These sites can be by the tourism ministry or by private holders who can enter into an agreement with these hotels and travel companies to promote their product/service or to create packages. This would help boost the local tourism revenues and add more value to these markets. When hotels and travel companies collaborate with the local tourism market, it would make new and unique experiences more accessible to travellers, it would bring more traffic and revenue to these service providers and it would add to the revenues of hotels and travel companies as the ancillary service providers would share an agreed amount of revenue earned to the hotels and travel companies who promote the services. Hotels and Travel companies can create various packages which includes different ancillary services for each unique persona, they can even create customisable packages giving consumers more choices and more flexibility in payment.
Internal Ancillary Services for hotels can include a diverse range of services provided by the hotel to add to their revenues. While some services can only be provided externally, hotels can take the initiative to provide many ancillary services. While hotels will have to invest in creating these services one of the benefits of that is that hotels can keep all revenues earned. Some of these ancillary services can be themed rooms and themed dinings, business centers for conferences and meetings, specialty restaurants, and services like spa’s and adventure sports. Spas and adventure sports would be popular amongst the tourist persona and providing these services would be a great way to boost revenues for the hotels. Building a system of ancillary services for all consumer personas within the hotel would make consumers stay within the hotel itself and spend money to avail the services provided by the hotel. According to research, 49% of travellers in the USA Pre COVID 19 Pandemic travelled for business. Hotels can take advantage of this trend and invest in creating MICE (Meetings, Incentives, Conferences & Exhibitions) infrastructure to keep business travellers spending more time and money in the hotel by giving them an opportunity to book conference rooms, exhibition halls and so on. By also having fine dining options in the hotel, hoteliers would have a higher chance of these to dine in the hotel, especially if they are entertaining important individuals like customers or investors. Furthermore, a report by Manet cites market data showing that 51% of tourists living in a hotel would spend on an ancillary service like adventure sports or spa services. This is another pivotal data point for hoteliers as it shows that there is huge potential to earn ancillary revenues and have significant increases in RevPAR (Revenue per available room).
For hotels and travel companies to build a system of internal or external ancillary services, it is important they have the right tools to maintain an intricate system and the right travel technology to successfully utilise the ancillary services market. Many in the travel industry see ancillary services as a key to growing revenues. A report by Amadeus shows that 83% of the airline industry want to bring ancillary services. Furthermore IdeaWorks calculated that ancillary services for the airline industry earned them 11.85 million euros in 2010. Seeing that the ancillary market has been growing since 2010, it is very important for key stakeholders in the travel industry to build an intricate system of providing ancillary services to grow revenues.
