by Robert McGarvey
Research via PhocusWright pinpoints what the company identifies as a major revenue opportunity for hoteliers – and what may become a major annoyance for us.
Here’s the punchy headline: A $28 Billion Opportunity for Hotels.
I shudder to think how annoying every hotel stay is about to get in an attempt to sell us all manner of ancillary services.
The model – the source of hotelier envy – is that airlines rake in billions selling us everything from beer to snacks, credit cards, and better seats. Airline estimated ancillary revenues are above $80 billion globally – the top 10 carriers alone took in north of $28 billion in 2017, more than tenfold more than in 2007.
A flight on many carriers in coach increasingly resembles a stroll down Canal Street in Lower Manhattan. Maybe without the counterfeit gear. But certainly with all the brazen hustle and salesmanship.
Do you want your hotel stays to be similar experiences?
PhocusWright sets the table this way: “[H]otels are increasingly turning toward the sale
of ancillary goods and services to help drive additional revenue. For hotels, the phrase ‘ancillaries’ typically refers to optional guest add-on products and services…. These may take the form of in-hotel ancillaries, such as room upgrades, food and beverage services, additional in-room amenities or spa/wellness/entertainment products offered by the property itself. Alternatively, ancillaries may also include in-destination ancillaries such as sightseeing tours, car rental, transfers or event tickets, typically provided by third parties.”
What do I want from a hotel room on a business trip? A place to sleep, a place to do some work (ideally a desk but I’m flexible – a decent chair and lighting will suffice), good WiFi, probably a lobby coffee shop (or – better still – one outside within a short walk), and that’s about it.
I have never bought spa/wellness/entertainment products from a hotel, at least never for myself. I have never bought sightseeing tours, not on a business trip (in London, yes, on vacation). I have never bought event tickets. And I generally seek to avoid hotel f & b, unless I am very pressed for time.
Color me a bad candidate for upselling.
What about you?
PhocusWright, which surveyed a large number of consumers, said that in fact we are eager to buy ancillary products and services. “A substantial potential market currently exists for both in-hotel and especially for in-destination ancillary products and services. Two types of on-property offerings – dining at the hotel and early check-in/late checkout – are the most popular services that consumers would be willing to pre-book from hotels. However, guests are also open to purchasing a diverse range of alternative, externally provided products and services, including museum/attraction tickets, sightseeing or other tours, event tickets and transportation.”
I read that and am speechless, almost. Very, very few hotel restaurants are so busy that it requires advance booking to snag a table and what’s hard about making one’s way to the Metropolitan Museum in NY or the Heard in Phoenix? A few museums make advanced booking highly desirable – I’m thinking of the Uffizi in Rome but we simply booked ourselves online a few days before.
*If* a ticket is hard to get – think Hamilton when it was Broadway’s darling – I would gladly have tipped, generously, a concierge who could have delivered seats, but PhocusWright seems to be talking about hotels acquiring easy to come by ducats and marking them up.
Who needs that?
PhocusWright continued: “Facilitating the pre-booking of in-destination ancillary products and services clearly represents an interesting opportunity for U.S. hotels. Eighty-one percent of respondents indicated that they had participated in a bookable in-destination activity during their last trip. The most popular of these activities were day trips, excursions and sightseeing tours (42%); visiting museums, galleries or cultural attractions (30%); and outdoor activities (28%).”
Mind you, iSeatz, which sponsored the research and just a few days ago replayed it on Tnooz, insisted that “the majority of business travelers surveyed are very interested in purchasing either on-site or off-site extras. The research also identifies business traveler segments and details the preferences on when, where, and what extras business travelers are interested in buying.”
iSeatz continued in Tnooz: “many business travelers are interested in booking products such as trip cancellation insurance (45%), high-speed wi-fi (41%), parking (41%), transportation options (23%), and museum/attraction tickets (25%) at the time that they are booking their stay.”
Nah. I just don’t buy this, and I don’t see business travelers buying much on this list. Okay, I can in fact see business travelers purchasing late check out or early check in, room upgrades, and airport transfers.
But most of the upsells are just annoyances.
That’s why my hope is that hoteliers bury this report and ignore its findings.
But – shudder – I doubt they will.