Upselling and cross-selling have long been staples of a hotel’s revenue generation but in today’s digital first world, successful hoteliers are shifting their mindset to the more holistic approach of retailing. Riding on the wings of airlines which have transitioned beyond simple transport carriers to selling more experiential-led elements, hotels have the opportunity to tap into a growing market and provide an enhanced, personalised experience to guests.
The importance of ecommerce
Brits remain avid online shoppers, with the UK ecommerce market projected to reach £225 billion by 2025, according to the International Trade Administration. As consumers increasingly rely on digital platforms for purchasing decisions, hotels must position their websites as dynamic retail environments.
A hotel’s website has become the shop window and the digital experience is paramount in securing guest bookings. A report from Phocuswire cited consumers “want transparency, options, and a clear understanding of what their travel experience will be… Airlines with enhanced visual merchandising realise better branded fare upsells and the attachment of ancillary services that those airlines who do not.”
How airlines use retailing
According to the CarTrawler report airline ancillary revenue reached a record $117.9 Billion Worldwide for 2023. Book an airline ticket today, and your carrier will offer enhancements such as seat selection, cabin upgrades, additional or oversized baggage allowances, priority boarding, lounge access, onboard food and beverage, car hire, hotels and tours.
Offering extra products and services is not confined to so-called budget carriers; ancillary spending is a cornerstone of revenue generation even for legacy, premium carriers such as British Airways, American Airlines, and Emirates. Giving travellers control of their experience empowers them to shape their journey to their unique set of preferences, in turn providing them with a feeling of being understood by the airline, embedding longer term loyalty.
The airline ecommerce experience isn’t perfect - McKinsey found in addition to a predicted growth opportunity of $40 billion for ancillary spend by 2030 (chiefly through increased offerings and price reviews), airlines could improve their digital payment processes to reap an additional $14 billion - but as a whole, the sector is more advanced than hotels in retailing online.
Today’s hotel retailing experience
The gap between on-property retailing and digital is closing for hoteliers. During the pandemic, hotels discovered that selling items such as bedding and cook-at-home recipe kits were welcomed by the market, and since reopening their doors, have continued to expand the range of goods and services available online both during and outside of a guest’s stay.
Many hotels position themselves as a destination, highlighting the leisure offerings (such as spa treatments, golf, dining options or swimming pools), alongside enhanced room choices, pre-ordered drinks, in-room amenities and other traditional upsells. This is generally well received by guests, particularly those booking online with a hotel’s website, and highlights the traction ancillary services can have.
The future of hotel retailing
Learning from not only airlines but the wider retail community, hotels have a myriad of possibilities to broaden their online sales offering, such as:
Parking - applying the tiered location models from airports, hotels can offer premium, close to the property, parking slots. Electric car charging points also offer a differentiation point, with drivers happy to pay more (or pay at the point of use) to secure overnight charging.
Customised housekeeping - particularly at resorts where guests often encounter housekeeping services during the day, offer guests a guaranteed time slot for a fee, allowing them to plan their day around being undisturbed.
Rent a wardrobe - guests wanting to look the part of a country squire or stylish city dweller can hire anything from wardrobe essentials (enabling them to travel light) to special occasion wear. This offers opportunities for hotels to build creative brand partnerships with fashion labels, or work with existing rental companies such as Hurr Collective, My Wardrobe HQ or Hirestreet.
Enhanced toiletries pack - instead of cluttering a room with a wide range of items that a guest may not need, providing a personalised shopping list for items such as toothpaste, hair care, bubble bath and body lotion is an easy way of minimising waste and engaging with a guest’s unique preferences.
Conclusion
Presenting the right offer at the right time to the right guest is key in driving ancillary sales. Hotels have a deep pool of data available to them, and blending a real-time understanding of bookers with visual prompts throughout the booking process helps convert guests.
According to a report by Amadeus, “Online Travel Agents and other distribution channels lack the ability to deliver the breadth and depth of customised offers.” By using technology such as our Journey Ecommerce, hoteliers can provide an enticing online shopping experience for guests on their own website, providing further reason for guests to book direct and therefore reducing commissions payable to OTAs.
Read more about the future of ecommerce on our blog, or contact us to find out more.
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