By President and CEO of RealTime Reservation, Shawn Tarter, shortlisted for Most Agile / Responsive SaaS Solution of the Year and Best SaaS Product for Catering and Hospitality categories at 2022 SaaS Awards
One of the most prominent tools that hotels, resorts, and others in the hospitality industry are increasingly utilizing is big data and analytics to generate more revenue and support customer satisfaction.
Big data in hospitality industry
For years now, hoteliers have leveraged the availability of this big data to help them develop, maintain and benchmark an effective room revenue management strategy. Access to data and analytics for key performance indicators such as room occupancy, average daily rate (ADR), and revenue per available room (RevPAR) has been critical. The biggest recent news is the opportunity to leverage this data and analytics beyond the guest room and into the area of ancillary revenue.
Big data generally centers around predictive and behavioral analytics for the hospitality industry to help hotels and resorts identify timely trends from which they can adapt their room pricing, marketing, and overall customer/guest focus. The information gathered from outside sources, and internal predictive analysis has been instrumental in predicting demand to optimize room rates and revenue.
Today, big data has extended beyond what has been available, occupancy, ADR, and RevPAR. Many hotels and resorts are seriously looking at ancillary revenue opportunities to boost cash flow and enhance the guest experience while supporting guest satisfaction and loyalty. This has proven particularly important as leisure travel has grown to some of its highest levels since the pandemic’s start in early 2020.
Defining ancillary revenue and its importance
To start, let’s define ancillary revenue. Broadly defined, ancillary revenue is generated from goods and services that differ from or enhance a company’s primary services or product lines. Within the hospitality industry, this is revenue garnered for your hotel or resort that is not directly from guests booking their hotel room.
In the past, automating selling on-site amenities and creating add-on experiences was difficult. With new technology, hoteliers can look at the total guest journey and help them create one-of-a-kind experiences. The ideal ancillary revenue strategy for hotels requires a more comprehensive and integrated approach to a customer’s visit to the property, extending beyond just the hotel room.
The impact of the pandemic has forced hoteliers to rethink and reimagine the total revenue management strategy and how ancillary revenues impact the P&L. The benefits are clear. They include new sources of income that increase the value of your guest room and actual customer worth.
By having amenities that attract new customers and create different experiences, the hotel can develop marketing campaigns and promotions that target new audiences and protect the property against unexpected downturns. For many, boosting revenue through add-on amenities such as food and beverage, renting cabanas, day beds, and on-site parking is a no-brainer. Many hoteliers have failed to recognize and embrace such opportunities due to a lack of processes and automation.
Savvy management has become more forward-thinking and creative in targeting the local community, hosting local activations, and opening the hotel or resort to non-hotel guests. This is a huge opportunity, particularly during low-demand periods on property.
Technology is now welcomed, as demand for guests to drive their travel, accommodations, and experiences is high. The capturing of ancillary revenue has been made even easier for the hotelier and more convenient for the guest through sophisticated software that allows the hotel and resorts to offer these amenities and services when booking their room. Such software guarantees they don’t miss out on fun opportunities when they arrive on the property.
Hoteliers can work with a significant software partner to develop individual modules explicitly customized for the services and events offered with each property. Such customized software is provided as a white label service, branded for each hotel and resort, and is easily integrated with their PMS, POS, and credit card processing systems.
The benefits include personalization, capturing revenue when booking, and tracking guest interactions and preferences, and it also supports customer satisfaction and loyalty while driving incremental revenue. Importantly, such an offering allows hotels and resorts to more effectively manage today’s business challenges, including high occupancy when there’s an industry-wide staffing shortage.
Data and ancillary revenue
One of the newest trends in the hospitality industry relating to capturing guests’ information is the expansion of predictive analysis extending beyond the hotel room. Guests’ hotel room buying data has been analyzed and available to hotels and resorts for years.
As mentioned previously, combined with internal resources, it has provided significant and timely analytical insight into customer behavior that impacts occupancy and room rates. What we are talking about now is using room management and yielding strategies and applying them to identify emerging trends and opportunities related to ancillary revenue. With new technology, hotels, resorts, and other hospitality companies can develop a comprehensive and more effective total hospitality revenue strategy.
This data will soon be available thanks to a recently announced collaboration behind two industry leaders – one in developing and deploying hospitality software to drive ancillary revenue and the other a lead in big data collection, analytics, and management.
RealTime Reservation and SAS will soon make available information from the RealTime Reservation pre-arrival hub and incorporate the advanced analytics of SAS to provide this new data specific to ancillary revenue. The resulting intelligence will help hotels and resorts develop informed and educated ancillary revenue plans based on this timely information.
Similar to room rates reporting, this data will allow the hotels and resorts to determine the price for individual amenities and pool cabanas, identify products and experiences that will best resonate with guests, and even potentially provide insight into new service offerings. This new service is called ARROW (Ancillary Revenue Reporting Optimization Worldwide) and will soon be available to hoteliers.
What ARROW will offer to hoteliers has not to date been available. Still, these benchmark reports are expected to become a critical tool in maximizing ancillary revenue while also continuing to support the guest experience positively and favorably. Combined with what is currently available with occupancy and room rates, it will now provide hoteliers with the most comprehensive analytics on ancillary pricing and utilization, trends, and buying behavior, allowing them to manage revenue while enhancing the guest experience more effectively.
Receptivity among hoteliers is high
These are only the latest advancements on the big data front related to ancillary revenue as hotels and resorts increasingly focus on maximizing revenue opportunities. Since ARROW was first introduced at the Hospitality Industry Technology Exposition and Conference (HITECH) in July, the industry reaction has been favorable.
Increasingly hoteliers have recognized the importance of ancillary revenue (particularly since the impact of COVID-19) and many have more readily and aggressively developed programs on this front. Guest experiences are trending and will evolve to be more creative and expand. The availability of ARROW’s data will provide more timely and informed decisions on this front, allowing hotels and resorts to maximize revenue and support customer satisfaction and loyalty.
Technology’s role in the hospitality industry
As we think about technology’s role in hospitality over the years, the industry has been slow to move away from its legacy systems and embrace new advancements and complex ideas. Due to the pandemic, the industry was forced to apply technology quickly and efficiently. As a result, it created new opportunities for hotels and resorts to capture additional ancillary revenues.
Understanding technology’s relationship and role in the hospitality industry is a significant component of the equation. With technological advancement, data collection, and analytic findings, capturing ancillary revenues is possible. Big data combined with customer relationship management programs (CRM) now enables hotels to identify guests and their preferences and segment them to suggest opportunities to enhance their stay.
Whether a repeat guest books a massage or requires in-room dining service, the available data enables strategic marketing to personalize and customize the individual vacation. In addition to personal service, the software empowers guests to utilize contactless check-in and check-out, upgrade room type, and reserve activities in return for a customized itinerary. Without this sophisticated technology, hotels may not realize such opportunities.
To summarize, the challenges imposed on the industry over the past few years have led to incredible opportunities resulting in significant growth. From coining the term “ancillary revenue” to implementation to comprehensive reporting, we now have a means of grasping its influence, putting the industry back at the top of the food chain.