Uncovering new sources of ancillary revenue: The key to thriving in hospitality

Relying solely on traditional income streams like room sales and dining is no longer enough to stay competitive. As the industry becomes more complex, finding innovative ways to generate additional revenue through ancillary services has become a vital strategy for hotels aiming to increase profitability and guest satisfaction.

But what makes ancillary revenue so critical to a hotel's long-term success? And how can properties effectively identify and capitalise on these often-overlooked opportunities? This week, I want to explore the importance of discovering new revenue streams and how they can fuel growth and differentiation in today’s competitive market.

The financial impact of ancillary revenue

Operating costs in the hospitality industry have risen steadily in recent years, from labour expenses to energy bills and supply chain challenges. Ancillary revenue offers a significant financial buffer, helping hotels improve their bottom line without simply raising room rates, which may alienate price-sensitive guests.

A well-structured ancillary revenue strategy can add 10-40% to a hotel’s overall revenue, depending on the type of property and the market. Whether it's through personalised services, experiences, or leveraging partnerships, you can tap into previously unexplored revenue streams and create a more sustainable, resilient business model. The key is to go beyond conventional offerings and treat ancillary services as core to your business’ success.

Shifting guest expectations

Today’s travellers no longer seek just a place to sleep—they are looking for experiences that reflect their personal needs and preferences. Business travellers may expect seamless technology and convenience, while leisure guests often prioritise wellness options or immersive local experiences. This growing demand for personalised, differentiated services presents a valuable opportunity for your property to monetize by catering to these specific needs.

By offering tailored services—such as exclusive wellness packages, pre-arrival choice of room or family-friendly amenities—you can boost guest satisfaction while generating additional income. The more relevant these services are to individual guests, the more likely they are to engage, directly driving ancillary revenue.?

Leveraging technology to unlock new opportunities

Technology is revolutionising the way hotels discover and implement new ancillary revenue streams. From data analytics to mobile apps, technology enables hoteliers to better understand guest preferences and customise offerings accordingly.

By analysing guest behaviour data—whether from the booking process, past stays, or loyalty programs—you can identify patterns and tailor upselling opportunities that match specific guest profiles. For instance, a guest who frequently books spa services may be offered discounted wellness packages or in-room spa treatments. Personalization becomes much easier with the help of AI-driven tools that recommend services based on guest preferences in real time.

Mobile apps are another key tool in driving ancillary revenue. Guests increasingly prefer self-service options for booking in-room dining, spa treatments, or excursions through a mobile app. Offering these services via a mobile platform not only enhances convenience for guests but also creates an additional revenue stream for the hotel. In today’s digital age, seamless access to personalised services is no longer a luxury but an expectation—and one that can be monetized effectively.

Partnerships: an overlooked revenue goldmine

While hotels often focus on internal operations for ancillary revenue, strategic partnerships with external businesses can offer significant opportunities as well. Partnering with local vendors, tour operators, or entertainment providers allows hotels to offer value-added experiences without the heavy lifting of creating these services in-house.

For example, a hotel located near a popular tourist destination can collaborate with local tour guides to offer exclusive packages that include transportation and guided tours. Similarly, hotels in urban areas might partner with local restaurants, spas, or gyms to offer special deals or VIP experiences to their guests, with the hotel receiving a commission or flat fee for every guest referred. Not only does this broaden your service offerings, but it also enriches the guest’s experience, making the hotel a central hub for convenience and exploration, and it also differentiates it from the comp set.

Personalization as the future of revenue generation

The most successful ancillary revenue strategies are built around personalization. Hotels that tailor their services based on individual guest preferences can elevate the guest experience and significantly increase revenue. As the demand for bespoke, convenient experiences continues to rise, personalising everything, every step of the customer journey,? becomes an essential part of boosting revenue.

In the end, hotels that focus on discovering new sources of ancillary revenue and strategically leveraging technology, partnerships, and guest personalization are better equipped to thrive in an increasingly competitive market. Diversifying revenue streams not only helps cushion the financial impact of fluctuating room rates but also enhances guest satisfaction, ultimately leading to stronger brand loyalty and long-term success.

This article is an excerpt of my upcoming book: Mastering Hospitality ancillary revenue, which offers over 100 real life examples on how to optimise your revenue via ancillary revenue streams. Stay tuned, publication date coming soon!