4 ways to increase hotel ancillary revenue

Key takeaways

• Hotels that rely solely on room bookings limit their revenue potential, so diversifying into services like dining, upgrades and events is key to stronger profitability.
• Promoting ancillary services at the right moments during the guest journey, from booking to check-out, significantly increases the chances of conversion.
• Hotels can leverage technology and well-trained staff to automate upselling, deliver personalized offers and monitor performance metrics, enabling continuous growth in ancillary revenue.

Are your guests checking out without spending beyond their room rate? For hotel revenue managers and general managers, relying solely on room bookings is a missed opportunity.

A growing number of top-performing hotels derive a large percentage of their revenue from ancillary services, but many properties still fail to capture this potential. Guests are willing to spend on dining, upgrades, activities and added conveniences, but only if you make these options visible and easy to purchase.

If you're wondering how to increase your hotel ancillary revenue, this article covers four practical strategies to help you diversify income and boost profitability across your property.

What is hotel ancillary revenue?

Hotel ancillary revenue is the income generated by a hotel from sources other than room reservations. It can come from services, products and activities designed to increase profitability and improve guest experience. Effective marketing, paired with upselling and high-quality services or products, can significantly boost your financial success.

Why is ancillary revenue important in the hotel industry?

Ancillary revenue is important in the hotel industry because it boosts overall profitability by generating income beyond room sales. Ancillary revenue also enhances the guest experience.

In a competitive market, hotels that manage and promote ancillary offerings well are more likely to achieve their financial goals. Careful planning and promotion of ancillary offerings can increase hotel revenue by turning everyday services into meaningful profit opportunities.

What are common examples of hotel ancillary revenue?

Hotel ancillary revenue includes a wide range of services, products and activities offered at an extra fee. Let’s explore ways to boost your hotel’s ancillary revenue, even for guests staying just one night.

Activities and entertainment

Leisure guests want to explore the surroundings and experience the city or destination like a local. To meet this need, hotels can offer guided tours, recreational activities like golf, tennis or hiking trips, live performances and themed events.

Meetings, events and co-working spaces

Meetings, events and co-working spaces are a great way to generate additional income. Whether it's a wedding, a business event or a conference, the organizers are willing to pay a premium to rent conference rooms and halls. Offering a wider range of in-house services, such as AV equipment, event planning and catering, directly contributes to higher ancillary revenue.

Gift shops or coffee shops

A gift shop or a counter with branded merchandise can help you maximize revenue from your lobby. You can sell souvenirs, clothing and accessories that spread word-of-mouth marketing. When someone sees a water bottle or sweatshirt with your hotel's name on it, it might spark a conversation, leading to more future guests.

In-room services and amenities

Mini-bar items such as snacks, wine or soft drinks are among the most popular in-room amenities that drive ancillary revenue. You could also charge a premium price for room service or partner with local food delivery providers.

Room upgrades

Room upgrades, including premium rooms and suites with scenic views, can substantially increase the average spend per night. Encourage upgrades by presenting the option during booking, at check-in and in pre-arrival emails.

Late check-out and early check-in

Check-outs and check-ins generate revenue by charging fees for arriving early or checking out late. Besides improving guest satisfaction through flexible check-in and check-out, it also raises revenue per booking without affecting earnings from later arrivals.

How can hotels increase ancillary revenue effectively?

To boost ancillary revenue, hotels should implement effective strategies that will help maximize profit and diversify revenue sources.

Let's look at the top four strategies:

1. Diversify your food & beverage (F&B) offers

F&B is an excellent starting point for boosting revenue. You can enhance on-site dining through restaurants, bars, room service or catering, or attract both guests and locals with unique experiences like themed dinners, parties and happy hours.

2. Don't just target leisure guests

To boost revenue from events, focus not only on leisure guests but also on the corporate sector, which offers significant opportunities. Business travelers and event organizers are more likely to spend more. Don't forget that corporate travelers are more likely to travel during the low season, helping you generate profit all year round.

3. Train your staff to upsell services

Training staff is a revenue-increasing strategy. Since trained staff know all about your hotel's products and services, they can find creative ways to upsell and cross-sell. Remember: the money invested in staff goes toward improving profitability because they become better at their jobs and more successful at driving revenue.

4. Partner with your local community

The more involved you are in the local community, the easier it will be to drive additional revenue. Make your hotel "the place to be" by curating cool events, a unique gastronomic offering or a space for local artists to display their work. Partnerships help you develop alternative revenue streams in the low season, improving your profit margin and keeping your hotel profitable year-round.

When should hotels promote ancillary services during the guest journey?

Timing the promotion of ancillary services is just as crucial as choosing what to offer, as every stage of the guest journey provides a unique opportunity to increase spending.

The table below breaks down where your efforts will have the most impact:

Hitting every touchpoint manually is neither practical nor scalable. Automated systems allow you to trigger relevant, personalized offers at each stage without adding to your team's workload, keeping the promotion cycle consistent and conversion rates healthy.

How can hotels measure the success of ancillary revenue strategies?

Without a clear measurement framework, it is difficult to know which ancillary revenue strategies are actually working. Start by tracking these key performance indicators (KPIs), which together give you a complete picture of financial impact and operational efficiency:

• Ancillary revenue per available room: Divide your total ancillary income by the number of available rooms to gauge overall performance.
• Ancillary revenue per occupied room: Measure how much each occupied room night contributes through additional services.
• Attachment rate: Track the percentage of guests who purchase at least one ancillary service during their stay.
• Average ancillary spend per guest: Divide total ancillary revenue by total guests to understand individual spending behavior.
• Service-specific conversion rates: Monitor how many guests purchase each type of ancillary offering to identify your strongest performers.

Most properties generate 20-30% of total revenue from ancillary services, so if your numbers fall short, review low-performing offerings monthly and redirect focus toward what your guests actually want.

How can hotel technology help increase ancillary revenue?

The right technology makes it easier to promote, sell and track ancillary services across every stage of the guest journey.

Here are the four key tools that can help your property drive stronger ancillary revenue:

1. Revenue management systems

A revenue management system (RMS) optimizes pricing across all ancillary offerings, adjusting rates based on real-time demand to maximize revenue from each service category. This ensures you are never underpricing high-demand services or missing out on revenue during peak periods.

2. Integrated platforms

Integrated platforms bring multiple capabilities under one roof. They trigger upsell prompts at the right moments during booking and check-in, track ancillary inventory in real-time, personalize service recommendations based on guest history and simplify payment by letting guests add services directly to their folio. Performance dashboards also reveal which offerings generate the highest returns.

3. Mobile apps

Guest-facing apps allow travelers to browse and purchase services directly from their devices, making the process more convenient and driving higher conversion rates than traditional promotion methods.

4. Digital check-in kiosks

Kiosks showcase ancillary options visually, allowing guests to see images of room upgrades, spa treatments or dining experiences. This makes these services far more enticing than simple text descriptions.

Boost ancillary revenue with the Mews hospitality operating system

Increasing ancillary revenue requires the right system to promote, sell and track additional services efficiently.

The Mews hospitality operating system brings together property management, payments and revenue management under one roof, giving you the tools to turn every guest interaction into a revenue opportunity.

Here's what it delivers:

• Automated upselling: Trigger relevant upgrade and add-on offers at the right stage of the guest journey
• Embedded payments: Let guests add services to their folio quickly and without friction
• Atomize RMS: Optimize ancillary pricing in real-time based on live demand signals
• Guest portal: Allow guests to browse and purchase services digitally without front desk intervention
• Performance analytics: Track conversion rates and revenue contribution by service type

Book a demo to see how Mews can help you diversify revenue streams and grow ancillary income across your property.

Download our guide "How to Diversify Hotel Revenue"

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