One of the buzzwords we heard a lot in 2018 was “ancillaries” – meaning all of the extra services and products linked to the travel experience. Ancillaries include tours, local experiences, room upgrades, spa treatments, checked bags, rental cars, restaurant vouchers, and so on.
We’ve been hearing, specifically, that hotels need to get serious about selling ancillaries. AirBnb sparked fresh discussion around this issue when it unveiled the “experiences” arm of its booking portal in 2017. It was a natural progression in which the company’s experience-centric hospitality model expanded to include curated activities. The company also introduced restaurant reservations that year, and is still mulling over the construction of a proprietary flight-booking engine.
Of course, the fact that AirBnb sells ancillaries doesn’t necessarily mean that hotels should follow suit. A far better argument is the fact that ancillaries were worth AUD$114b to the global airline industry in 2017. Airlines are obviously concerned with selling seats on flights, but they are also symbols of lifestyle and travel. In-flight magazines are a good illustration of this – they give us travel photography, editorials, celebrity interviews, and ancillary offers. Airlines have patiently strengthened their identity as facilitators of the overall travel experience; and in the 10-15 years since ancillary offers became common practice amongst them, returns have grown to significant proportions. This all comes from selling everything from car rental, to day tours to of course, if you are Qantas, both hotels and AirBnB!
To understand why and how this matters to hoteliers, we have to step back and look at the bigger picture. Ancillaries earned their name because they were extras, add-ons, upsells – things people could take or leave. Increasingly, these extras are being discussed as an end unto themselves. As the “experiences over things” Zeitgeist continues to play out, consumer habits continue to shift. We want unique experiences; but we also appreciate convenience and seamlessness in the research and booking phase.
Conducting endless online research to organise all the pieces of a trip can be a drag for many people. Part of the travel experience itself – part of the “experience first” philosophy – is the extent to which the brands you choose act as meaningful portals into the other parts of your travel experience, be it for business or leisure. Brand loyalty may increasingly be derived from internal questions like: How much value did this brand add to my trip overall? Did it provide meaningful options for a dynamic and personalised travel experience?
It’s also worth noting that a sizable portion of ancillary profits will continue to come from business travel, which underscores the need for an approach that is carefully managed and consistent. A recent whitepaper on how hotels can implement ancillaries is available here.
The 10,000 foot view on ancillaries
Airplanes are fascinating. They take us above the clouds, capture our imaginations, and open the doors to the world. As such, they have been uniquely positioned to sell ancillaries. They have done so for over many years, and now the action is considerable.
Let’s not forget though that hotels are fascinating too. They are intersections of life and ambition where anything seems possible. They are a lifestyle proposition, and a central pillar to the travel experience. As such, we too are uniquely positioned to leverage ancillary sales – but our efforts will not be successful if we think of it as a mechanical exercise. The offers and partnerships put forward to guests are a statement on the identity of a hotel – perhaps even a statement on the identity of the industry at large.
We have to understand that ancillaries work by tapping into an impulse, an idea, a feeling. Done right, this could take a hotel beyond its core offering and create a bigger identity that is more relevant to the entire customer journey. Done wrong, it could result in wasted resources and a diminished brand identity. That is why, as ancillaries gain traction in the hotel business, our commitment to that core offering should be all the more clear.
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