Unlocking ancillary Revenue in Hotels with Rory Sutherland's behavioral insights

In the world of hospitality, the pursuit of increased ancillary revenue is often driven by traditional pricing strategies and operational efficiencies. However, marketing legend Rory Sutherland offers a different perspective—one rooted in behavioral science, perception, and psychological value creation. Applying his teachings to hotel ancillary revenue can unlock hidden potential by focusing on how guests perceive and experience value rather than solely on what is being sold.

Let’s explore how Sutherland’s core principles—leveraging psychology, storytelling, and behavioral economics—can revolutionize upselling strategies, guest engagement, and revenue growth in hotels.

1. Perceived Value vs. Actual Cost: Selling the Sizzle, Not the Steak

Sutherland emphasizes that value is subjective and often created through perception rather than function. In the hotel industry, selling ancillary services isn't just about what is offered but how it is framed. A spa treatment, for example, isn’t just a massage; it’s an opportunity to "unwind and rejuvenate after a long journey"—a story that resonates emotionally with guests.

How Hotels Can Apply This:

• Bundle experiences instead of selling individual services (e.g., “Wellness Escape Package” instead of just offering a spa discount).
• Create exclusivity by offering VIP access to unique amenities, such as a rooftop lounge or personalized concierge services.
• Position services as experiences that guests "deserve," rather than additional expenses.

Example: Instead of promoting “10% off spa treatments,” reframe it as “Indulge yourself after a day of sightseeing with our exclusive relaxation ritual.”

2. The Power of "Choice Architecture": Guiding Guest Decisions Subtly

Sutherland argues that people make choices based on the way options are presented. Hotels can maximize ancillary revenue by structuring choices in a way that subtly nudges guests toward higher-value options without feeling pressured.

Strategies to Implement:

• Use decoy pricing by offering three options—basic, premium, and deluxe—to make the premium package more appealing.
• Leverage anchoring techniques by displaying the highest-priced option first to make subsequent choices seem more reasonable.
• Design the hotel website and in-room menus with contrast-based choices, highlighting value rather than cost.

Example: Instead of listing a single breakfast option, present choices such as “Continental Breakfast - €15, Full English Breakfast - €25, Gourmet Breakfast with Champagne - €40.” Most guests will lean towards the middle option.

3. Behavioral Triggers: Creating Emotional Connections

According to Sutherland, people buy based on emotions, not logic. Hotels can capitalize on this by designing offers around emotional triggers such as nostalgia, relaxation, social status, and exclusivity.

Hotel-Specific Applications:

• Craft storytelling into ancillary services by using nostalgic or emotional cues, such as "Rediscover the art of slow mornings with our breakfast in bed service."
• Offer social validation through user-generated content and testimonials to create FOMO (fear of missing out).
• Use personalization to make offers feel unique to the guest, enhancing their emotional connection to the experience.

Example: Instead of a generic "late check-out" offer, position it as “Extend your stay and make the most of your final moments with us—because every great getaway deserves a perfect ending.”

4. The Importance of Psychological Value Over Financial Discounts

Sutherland’s insights highlight that people value “free” more than discounted—a lesson that hotels can incorporate into their ancillary revenue strategy. Offering perceived value without cutting prices enhances guest satisfaction and revenue simultaneously.

Ideas for Hotels:

• Instead of offering discounts, include complimentary add-ons, such as free spa access with a premium room booking.
• Use tiered rewards to encourage direct bookings, where each higher-tier package includes additional value rather than discounts.
• Position services as complimentary “VIP perks” for guests who book directly, reinforcing the hotel's unique value proposition.

Example: Rather than a discount on parking, hotels could offer “Enjoy complimentary valet service when booking a suite, making your arrival hassle-free.”

5. Behavioral Friction: Reducing Barriers to Purchase

One of the biggest mistakes in upselling is making it too complicated for guests to say “yes.” Sutherland argues that frictionless experiences increase conversions and satisfaction.

Ways to Minimize Friction:

• Make upsell offers part of the booking process, with a single click to add.
• Train staff to recommend services conversationally, rather than pushing sales.
• Use familiar payment methods such as Google Pay or Apple Pay for ancillary services to minimize checkout resistance.

Example: When a guest books online, an upsell for a romantic package could include a simple “Add to my stay” button instead of navigating through multiple screens.

6. "Dare to Be Trivial": Small Details Matter

Sutherland emphasizes the importance of seemingly minor details in creating perceived value. Small touches can significantly impact guest satisfaction and drive ancillary revenue.

Practical Applications:

• Offer unique, small perks that guests will remember and share—such as a "pillow menu" with custom scents or a personalized welcome note.
• Introduce playful or unexpected services that delight guests, like a "midnight snack box" available via in-room ordering.
• Create moments of "unexpected joy," such as free dessert for celebrating guests or a handwritten note upon check-out.

Example: A hotel known for its wellness experience could offer “a sleep-enhancing tea ritual before bed”—a small but memorable touch that guests will talk about.

7. The Alchemy of Surprise: Exceeding Expectations

One of Sutherland’s key marketing lessons is that surprise creates delight, which leads to word-of-mouth and loyalty. Hotels can leverage this by adding unexpected elements to ancillary services, creating a strong emotional response.

How Hotels Can Apply This:

• Offer a surprise upgrade or complimentary add-on without prior notice, creating a wow factor.
• Gamify the guest experience by offering mystery rewards, such as an envelope at check-in that contains a random treat (e.g., free breakfast, spa access, or a bottle of wine).
• Implement random acts of kindness, such as offering a free upgrade on a rainy day to boost guest satisfaction.

Example: Instead of advertising free Wi-Fi, surprise guests with an upgrade to premium-speed internet upon check-in, exceeding their expectations without a major cost impact.

Conclusion: Reframing Ancillary Revenue for Long-Term Success

Applying Rory Sutherland's behavioral insights to hotel ancillary revenue is about changing perspectives rather than cutting prices. By focusing on perceived value, emotional connections, and seamless experiences, hotels can maximize guest spending without devaluing their offerings.

By thinking creatively, simplifying choices, and delivering unexpected moments of delight, hotels can increase revenue while enhancing guest loyalty and satisfaction.

What strategies have worked for you in boosting ancillary revenue? Let’s discuss in the comments! ??