Comment: Effective ancillaries will help hoteliers tap into lucrative local tours and activities

Smartvel CEO Iñigo Valenzuela discusses why they should considered part of the product, not ancillary offerings

Iñigo Valenzuela
Iñigo Valenzuela

Increasing your booking value in the hotel world means growing your ancillary revenue and there are lots of ways hoteliers are already doing this. Check into a hotel today and you’ll find additional things you can purchase, from their cellar wine to the sheets and wallpaper that adorn your room.

This is all great but the big revenue opportunities are in local tours and activities. This is a multi-billion-dollar business and big industry brands have made it no secret that they are investing more money and resources in this growing sector. Trip Advisor and Booking Holdings acquired tours and activities software developers last year and Expedia announced that it is growing its sales fivefold in the local activities business. In 2017 it reported that revenue from their Local Expert brand was just over US $500 million. With a total revenue in 2017 of around $10 billion.

The potential revenue opportunities for hoteliers are clear, but to make a serious move into this market, there needs to be an effective marketing and customer experience strategy. Guests book an experience, not just a room, and what to do or see when they are staying at a hotel is all part of that. If you consider local activities as something that sits outside of this then you have less chance to influence their decisions. Don’t think of these as ancillaries but as your product. They make up the total guest experience and that’s what you’re selling. 

Implement a destination marketing strategy

By working with other tourism business professionals in the area you are able to promote the region as a whole. A destination marketing campaign allows you to target powerful inbound tourism markets and drive more traffic to the general area. Identifying and evaluating large events taking place throughout the year gives you opportunities to develop promotions that coincide with the activity.

Many travellers, particularly the millennial generation, value the opportunity to earn rewards with companies they do business with. A guest sales strategy that rewards for purchasing activities often generates repeat bookings. 

However, to capitalise on the potential of the tours and activities market, hotels will have to overcome several complications. Phocuswright reported that while spending on tours, activities, attractions and events accounted for 10% of global travel revenue, more than 80% of the bookings were still being made offline. The main problem is that this sector is hugely fragmented. OTAs have been acquiring industry suppliers such as reservation systems because this sector isn’t set up the way other travel businesses are.

That said, you have to remember that hotels are local businesses. This is their major advantage when selecting and recommending local activities, restaurants and experiences. If a hotel proposes a plan that includes accommodation, a tour, a cosy restaurant, and some places in the city where you can take the best selfies, it will make a difference. Destination content technology companies such as Smartvel provide local information in real time. The information they provide enables hotels to enhance the customer experience, allowing customised plans for travellers but also opportunities and scope to negotiate a fair kick back from subsequent bookings and reservations.
 
Hotels can proactively offer local tours and activities at all touchpoints throughout the booking phase – from the initial search through to room reservation. Technologies such as Smartvel's provide hoteliers and other travel segments with a complete destination content solution that includes, not only the top things to do at any destination, but also all the up-to-date events taking place. Hoteliers are also able to add their own services, ancillaries and partnerships with tours & activities providers. This makes the hotel the focus of the destination for advance bookings.

The tours and events market is huge and has become a multi- billion dollar global industry. By positioning the hotel as the focal point of the destination and offering this as part of your product, hoteliers will increase revenue and room occupancy while gaining competitive advantage in this global market. 

Iñigo Valenzuela is the CEO and founder of Smartvel, a B2B2C solution for destinations, cities and travel companies.

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