Hospitality meets retail: A strategic shift for hotels

How to apply the basic principles of retail to hotels to boost revenue and profitability.

The art of hospitality has merged with that of retail to forge a partnership which is necessary to run a successful hotel today. The keys to a successful hotel retail strategy are simple: think less mass market, more streamlined and aligned to brand. 

Unlocking ancillary revenue in your hotel

There’s no denying the potential uplift ancillary revenue offers. Take airlines: a number of carriers  make more from ancillary revenue than tickets sales.

It’s important to take the learnings that can easily be applied to hotels:

• Offer attractive products that align with your brand and customer base

• Only sell and do things that increase your revenue and profit

• Leverage loyalty programmes to drive incremental sales via member exclusives

• Make it easy for consumers to buy with a simple ‘add to basket’ functionality. 

It’s important that hotels recognise the perils of ‘choice overload’ or how the ‘paradox of choice’ can overwhelm today’s consumers and turn them away from purchasing.

Finding the right thing to sell

Providing activities and services your guests actually want is key to driving ancillary revenue, but being successful as a retailer need not require big investment or infrastructure. Consider what already exists, and what you can easily implement with minimal (or no!) disruption to operations. Many hotels already sell experiences online in the shape of gift vouchers, so consider how you can convert gift voucher sales into real-time bookings and redemptions.  

We studied the performance of our hotel partners and found the top five ancillary revenue drivers in luxury hotels to be: 

Room extras

Spa facilities pass | Breakfast | Bottle of Prosecco | Dog charge | Spa treatment

Spa extras

Spa facilities pass | Glass of Prosecco | Afternoon tea | Robe / flip flops / towel hire | Glass of champagne

Most hotels, particularly luxury properties, are already well-versed in upselling items such as a glass of champagne or spa treatment. If you’re looking to take your ancillary offerings to an even deeper level, consider: 

• Selling experiences - classes for cocktail making or ‘shopping with the chef’ as a prelude to a cooking class - tapping into wider consumer trends can provide your staff with a more creative way to engage guests beyond traditional service. 

• Utilising facilities - such as poolside cabanas, hammams, bedroom upgrades, or turning an under-used suite or outside area into a private dining space with a view and/or a personalised chef - can also boost your bottom line without needing costly building work. 

Whatever you decide to sell in your hotel, it’s essential to regularly review the sales performance of your ancillary products. Listen to what your guests want; the sales data will tell you.

Make the path to purchase simple

This is perhaps the most pivotal lesson from retail that hoteliers should learn: use technology to facilitate sales. 

Ecommerce platforms make buying simple - in a few clicks. Reducing friction and fragmentation in the buying process can help open your hotel to new markets. Using a unified tool such as our ecommerce platform, hoteliers can remove fragmentation across different departments, transforming their website from a shop window to a seamless shopping experience. Tips for making the path to purchase easy for your guests include: 

• Use imagery to captivate browsers: a true reflection of the product or service you’re selling to help guests understand each offering. 

• Don’t forget the words: words can carry a potential purchase into a definite deal. Pair beautiful visuals with detailed descriptions. 

• Test your ecommerce site: act like a guest and experience your website. Is it easy to navigate? Are you encouraged to add items to the shopping basket? Are prices clear? 

• Translate the ‘extra mile’ in your service to extra sales. Consider what your Concierge/Guest Relations team usually arrange for guests - golf, bicycle hire, local activities - and make them sellable online. 

• Provide price parity and incentivise direct bookings. Have an online only rate, and consider value-added benefits such as late check-out - snare the direct booking to save commission costs with third parties. 

• Be strategic. Get creative with your marketing with the key objective of driving traffic to your direct booking channel. 

• Provide consumers with options on how to pay. Using payment providers such as Stripe - incorporated into our ecommerce platform - enable options of mobile wallets, pre-payment, deposits or partial payments and more. Consumers expect more flexible payment methods today.

Retail opportunities for hoteliers are wide-reaching, with operational constraints and imagination the only barriers. Giving guests what they want has been a long-standing tradition in hospitality, and technology enables ancillary revenue streams to benefit both your business’ bottom line, and your guests’ satisfaction by giving them the power to book what they want, when they want it.