How to increase hotel revenue: Why ancillary revenue is key

“You have blinders on!” That’s the last thing you want to hear when you’re trying to determine how to increase hotel revenue.

If anyone has said that to you before, you know you’re being called out for how you’re doing things because it prevents you from seeing the full picture. You’re too focused on one thing.

In the evolving world of hotel revenue management, you don’t want to have blinders on. In other words, relying solely on room bookings is no longer enough if you’re trying to find out how to increase hotel revenue. To truly thrive, hoteliers need to diversify their income streams — and that’s where ancillary revenue comes into view.

The reality is that surviving off occupancy alone leaves money on the table. Hoteliers are seeing a major shift in how revenue is generated, with a growing emphasis on ancillary revenue. And this is one trend you don’t want to miss out on.

Hoteliers who have removed the blinders and led with personalized guest experiences and strategic upselling have unlocked significant value that goes far beyond room rates — increasing their NOI and ensuring long-term success in a competitive market.

Do you want to be one of those hoteliers without blinders? Keep reading to learn how you can start increasing ancillary revenue today.

The problem with ‘heads in beds’ revenue models

Traditional hotel revenue management was all about “heads in beds” — filling as many rooms as possible at any given time. While that approach may have worked in the past, fluctuating demand, competition from OTAs, and changing economic conditions are now making this model completely unreliable.

Fluctuating demand will be an ever-present challenge for hoteliers as seasonal changes and unpredictable booking patterns put occupancy levels in a vulnerable spot. And a growing reliance on OTAs means that hotels are sacrificing a large portion of their revenue to commission fees. Continued economic shifts and global disruptions further add to the revenue uncertainty — leaving hotels exposed to external factors beyond their control.

Here’s what you can do to take control. Diving into how to increase hotel revenue starts with maximizing your guests’ wallet. As Jan Freitag, National Director, Hospitality Analytics at CoStar Group, points out on the Hotel Moment podcast, “There’s something that revenue managers together with marketing people need to figure out: Where is the customer going to pay additional? What can we just throw in to create the value equation?”

And when guests book direct, you can easily increase guest spend. Why? Because you provide value that OTAs can’t — personalized recommendations for a better guest experience.

How to increase hotel revenue: focus on ancillary revenue

You likely have a good idea of what ancillary revenue is and where it comes from at your hotel, but if you haven’t tapped into this river of hotel revenue goodness, then a refresher couldn’t hurt.

Ancillary revenue refers to any income generated from services or products beyond the room charge. From spa treatments to food and beverage sales, you have plenty of choices on how to increase hotel revenue.

Examples of ancillary revenue:

• Spa services: Offering packages, treatments, and wellness services that guests can add to their stay.
• Food and beverage: Upselling premium dining options, in-room snacks, and beverage packages.
• Room upgrades: Offering guests the option to upgrade their rooms for a more luxurious experience.
• Experiences: Providing curated local tours, private events, or unique experiences that guests can purchase during their stay.

And what’s the conduit for ancillary revenue? Hyper-personalization. As Marc Winchell, Corporate CRM at PHG Hospitality shares on the Hotel Moment podcast, “I think we’re gonna have guests looking for even deeper personalization, and hopefully in a way where we’ve convinced them to continue to book direct because we know that we can deliver a better guest experience for them if they do.”

Technology that supports hyper-personalization in your marketing communications on-property, or even pre-arrival, opens the door to upsell opportunities that guests feel are actually relevant to them. Know that your guest loves mocktails? This is how to increase hotel revenue — with an upsell for happy hour mocktails at your hotel restaurant. And when your guest books direct, you’re more likely to collect preferences like that to use for future upsells.

How hyper-personalization unlocks ancillary revenue

The fuel for hyper-personalization is your guest data. And more hoteliers are waking up to the fact that guest data informs which hotel offerings to present to the right guest at the right time to drive additional spending. Carlo Del Mistro, Chief Digital Officer at Ennismore, predicts on the Hotel Moment podcast, “The other thing that we are seeing is hyper-personalization” when comes to hotel revenue trends for 2025.

How you store, action, and manage that guest data determines the success of your upsells. With technology like a Customer Data Platform, all of your guest data is stored in one place, and ready for you to segment appropriately. So the next time you go to promote your new spa package, tapping into your guest’s profile that loves your spa’s coconut facial will be seamless. And because a CDP makes it easy to keep track of your guests’ preferences, it will also be easier to set up automated emails to let that coconut facial-loving guest know their favorite spa treatment will be available at your hotel again soon.

It’s that touch of hyper-personalization that drives hotel ancillary revenue and makes every guest stay memorable. John Burns, President of Hospitality Technology consulting urges hoteliers to ask themselves, “What would I do in terms of personalization of my property? What could I be doing to say, ‘Hello. Welcome back. We appreciate you. We’re glad you’re here.’” When you manage your guests’ data the right way, you can easily answer that question and generate an endless supply of hotel ancillary revenue ideas.

Direct bookings: The key to unlocking higher revenue per stay

Let’s be clear: Out of all the strategies to increase hotel revenue, direct bookings should be the cornerstone. Unlike bookings made through OTAs — the ones that eat up your marketing spend and hit you with commission fees — direct bookings allow your hotel to retain a higher percentage of revenue. But the true value of direct bookings lies not just in the immediate room rate, but in the long-term relationship that can be built with guests. That’s the answer for how to increase hotel revenue.

Remember when we mentioned NOI earlier? Well, the best way to increase that number and increase hotel ancillary revenue is with direct bookings. As we discussed, direct bookings are a clear path to personalization, allowing you to accumulate guest data that would otherwise go to OTAs. That kind of first-party data you get from guests is what you’ll use to turn them into loyal bookers that take advantage of your ancillary services.

Jan Freitag, National Director, Hospitality Analytics at CoStar Group, explains it best when he says, “An interesting word there – book direct. I think that is critical for the hotel. I don’t want you to come from any other channel. I want you to come to me directly, and then I’m willing to value that loyalty.” The value-add is your hotel’s superpower. In fact, 76% customers gravitate towards brands that personalize offerings because guests notice when brands notice them, and that’s a loyalty bond that’s hard to break.

Find out how you can drive more direct bookings at your hotel.

Smart upselling strategies for maximizing total stay value

“It’s absolutely critical to understand — what’s the total spend? We’ve talked about the total lifetime value of a customer, but I think there’s a total stay value of a customer. Yes, they pay for the room, but then what else can we offer them where they’re like, ‘Oh, I don’t want to go off-site, let me just eat right here,’” Jan shares. And this is exactly what we mean by “revenue beyond the room.” Hoteliers must shift focus to ancillary services for effective hotel revenue management because there’s more money to be made outside of room bookings.

So when it comes to elevating ancillary revenue, remember that upselling, timing, and personalization are everything. The right offer at the right moment can significantly increase total guest spend. And if we think about the stages of the guest journey, there’s a touchpoint to insert an upsell at every stage as you work through how to increase hotel revenue:

• Pre-arrival offers. Send guests tailored room upgrade offers or experience add-ons prior to their arrival, which is when they are most likely to consider them. These guests just made their booking, so leverage their guest data with offers that will get them even more excited that they’ll be receiving a personalized stay.
• On-property upselling. Did you know your guests are just a text away? Nearly every guest has a smartphone in their hand. As a result, a hotel messaging app like Revinate Ivy is a primary hotel ancillary revenue tool you can use to offer real-time upgrades or experiences during the guest’s stay.
• Post-stay upselling. Your guests just wrapped up a memorable stay with you. So, while that experience is fresh in their minds, consider sending an automated email not only encouraging them to review their stay but also offering a discount to book again. Or maybe present a free meal offer at your restaurant next time they book because you noticed they were frequent in-house diners.

5 steps to implement an ancillary revenue strategy

If you’re not used to leaning on ancillary revenue, then starting that process can be daunting, but here are five actionable steps to implement a successful ancillary revenue strategy:

1. Audit your current revenue streams

Take stock of all the revenue opportunities beyond room bookings. Identify which hotel services or amenities are underperforming or could be enhanced. Do you notice a large percentage of your business travelers taking advantage of your golf course? That’s a sizable guest segment for upsells to maximize their on-property spending.

2. Leverage guest data for hyper-personalization

Guest data is the fuel for hyper-personalization. You can’t effectively create a unique experience for each guest without it. Utilize your hotel CRM or CDP along with a consistent segmentation strategy to ensure that the right offer reaches the right guest at the right time.

3. Encourage direct bookings

Direct bookings is the ticket to stronger guest loyalty. The connection you can establish and the guest data you can collect from a direct booking is far superior than what you can outsource to an OTA. Use your guest data from direct bookings to further personalize the upsells you aim at each guest so that they’re more likely to book with you again having realized their unique preferences.

4. Align sales, marketing, and revenue teams

Ensure that all departments work together to create a unified approach across every touchpoint to drive ancillary revenue. Each department should understand how guest data is being used to capitalize on guest preferences to drive on-property spending.

5. Measure and optimize

Track your revenue per guest beyond just room revenue. That way, you can see how your ancillary revenue strategy is performing and determine which hotel amenities guests are most interested in. Use those analytics to continuously optimize your strategy and feed future marketing communications as you continue to refine upsells offers so that they resonate with each guest.

Key takeaways

As you work out how to increase hotel revenue, it’s essential to look beyond the traditional model of filling rooms.

• The path to sustainable profitability includes a deliberate focus on driving ancillary revenue by upselling guests on hotel amenities like spa services, food and beverage, and personalized experiences.
• Hoteliers who prioritize direct bookings, not only increase their bottom line revenue, but also lend themselves more opportunities to use the guest data collected from direct bookings to craft targeted upsells.
• Hyper-personalization is a must-have for any ancillary revenue strategy in order for the right guest to resonate with the right upsell.

For more insights on optimizing your hotel revenue management strategy, listen to the latest episode of the Hotel Moment podcast and hear firsthand from industry leaders.

About Revinate

Revinate is a direct booking platform that leads the hospitality industry in driving direct revenue and increased profitability.

Our products and our people combine to give hoteliers the superpowers they need to crush their goals. With Revinate, hoteliers shift share away from OTAs and drive tangible results across an individual property or a portfolio. Our industry-leading, AI-powered, customer data platform collects, unifies and, synthesizes data giving hoteliers a foundational advantage.

Hoteliers gain critical intelligence – guest lifetime spend, stay preferences, ancillary revenue, and more. With our Rich Guest Profiles database, hoteliers don’t need to guess who their most profitable guests are, or how to drive conversions across email, voice, messaging, and digital channels.

Revinate’s direct booking platform and omnichannel communication technology powers 900+ million Rich Guest Profiles across 12,500+ hotels to drive over $17 billion in direct revenue.

Sanjana Chappalli
VP of Brand Marketing and Communications
Revinate, Inc.

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