The push for hospitality suppliers to embrace more ancillary sales has been slow to gain traction. Even attribute-based selling (ABS) has struggled to find its footing, though that hasn’t stopped companies from continuing to try.
Part of the problem, in the view of consultant and hotel technology strategist Max Starkov, is that expanding beyond putting heads in beds hasn’t been a priority for many hotels.
“The mentality is we’re selling rooms. Period,” he said. “It’s all about the mentality. Because with the correct mentality, technology follows.”
And as experiential travel grows more popular and artificial intelligence offers new ways to manage data and enhance the personalization of guest stays, the technology is enabling a collective mind shift. More hospitality companies have been switching to cloud-based computing. More tech vendors are making it easier for hotels to monetize spaces beyond the bedrooms.
“I think that some vendors are being very proactive,” Starkov said of the tech advances. “On the other hand, the adoption rate in the industry is very, very, low.”
Yet those “proactive” vendors and technology partners have been pushing to change that too. Examples aren’t hard to find.
The opportunity for hoteliers to be able to retail anything beyond the room is huge. And I personally believe that is one of the biggest growth areas for the business.
Amy Read - Sabre
IHG spoke during its earnings call this month about how investment in tech and loyalty programs has helped drive more direct business and lead to more room upsell options. And at Marriott International, executive vice president and chief revenue and technology officer Drew Pinto told PhocusWire in May the company is replacing many systems as part of its ambitions to offer guests much more than a room.
The Texas-based global travel technology company Sabre has been developing technology to help hotels sell ancillary services and experiences within its booking platforms since 2019. Last year the company expanded its capabilities by acquiring Techsembly, which provides an automated e-commerce solution hotels can use to sell on- and off-property experiences and other add-ons in a centralized platform.
How’s that working so far? Sabre upped its prediction for 2024 revenue following a positive second quarter earnings performance that the company attributed to its travel and hospitality solutions segments, which includes the SynXis Retailing solution the company rolled out this summer.
In addition to selling ancillaries with room bookings, the platform now enables hoteliers to sell stand-alone offers beyond the room, a feature supported through the acquisition of Techsembly, said Amy Read, Sabre’s vice president of innovation and the former CEO and co-founder of Techsembly.
“The opportunity for hoteliers to be able to retail anything beyond the room is huge,” she said. “And I personally believe that is one of the biggest growth areas for the business.”
The combination of advanced tech and the deep data resources of companies like Sabre opens new opportunities for hospitality retailing, Read said. Her dream would unite the sense of personal service that travelers once got from a human agent with the 24/7 access and scalability of an online marketplace on hotel websites.
“That’s true personalization. That’s the biggest opportunity,” Read said. “And leveraging on the data that we have to support our customers, to be able to say, ‘We know that you came here before, and we know that you like cycling. We know that you like certain restaurants. Can we pre-book this?’ That is the ultimate customer experience.”
Shifting priorities – from RevPAR to RevPAM
Before the pandemic, Starkov recalled taking part in a research project that surveyed 700 hotels in New York City to learn how many offered tickets or packages for Broadway shows. He was shocked by the outcome. Only two of the hotels offered a show option.
“And 698 hotels [acted as if they] did not know that Broadway existed,” Starkov said. “And why is that? It was too much work, if you ask the hoteliers to give you their honest opinion.”
The problem holds today, he said, and it’s not because hoteliers aren’t working hard. Quite the opposite.
“All the hotels are understaffed. All of the corporate offices are understaffed,” he said. “People are handling typically one and a half jobs.”
Even if hotel managers find time to analyze what ancillary or retail offerings would be best suited for guests, where do they find the staff to fulfill them? Perhaps worst of all, Starkov said, most hotel staffs are rewarded for driving up average daily rates and revenue per available room – not higher ancillary sales.
“The prevailing mentality in our industry is that we are selling rooms … and we care about occupancy,” he said. “We care about ADR. We care about RevPAR and that's it. And the main reason is that that's how we are being evaluated by ownership.”
But some hotel companies and their technology partners are pushing broader perspectives, from RevPAR to RevPAM: revenue per available meter.
We have to essentially create this new paradigm for how hoteliers should be thinking about what their job is. Because it isn't to be the custodian of eight hours of somebody’s time. It's to be the custodian of 24 hours."
Richard Valtr — Mews
The thinking behind the shift is that rates based on room sales don’t capture the full financial performance of a property. Calculations based on square meters or feet extend the perspective to also account for conference areas, restaurants, spas, parking lots and other spaces or services.
That fuller picture suits the team at Mews and founder Richard Valtr, who says part of his motivation for founding the hotel management software company is his belief that hospitality “is and should be much bigger than it actually is as an industry. We need to be able to cater for what we think our customers will want to ask us.”
The vision didn’t align with the technology available a decade ago — though the gap is closing. Still, even as some property management systems stretch beyond charging only for nightly room rates, the industry hasn’t reached Valtr’s original vision.
“We have to essentially create this new paradigm for how hoteliers should be thinking about what their job is,” Valtr said. “Because it isn't to be the custodian of eight hours of somebody’s time. It's to be the custodian of 24 hours, 72 hours and a 365-day experience and then, ultimately, maybe a 50-year relationship that somebody has.”
That expansive view aligns with Read’s dream for Sabre and the efforts other hospitality tech companies are making. But Starkov worries that the staffing problems will present an obstacle to more widespread adoption. It’s not enough for hotels’ tech partners to enhance websites and make it possible to tack on experiences and services.
“It has to be fully automated and not just the sales. That's the easy part,” Starkov said. “In the future, such retailing or ABS needs to be fully integrated into the operation, not only for you to be able to book it, but for the hotel to be able to fulfill it. This is where the industry is lagging behind.”
Broadening hotel websites’ offers
Fulfilling orders is something that Sabre had in mind with its rollout of SynXis Retailing. Nuvola, another of the company’s recent acquisitions, is a task management platform that integrates with hotels’ property management systems to provide automated ticket creation, scheduling and notifications to facilitate the fulfillment of orders.
Coming next year, the company plans to begin enabling marketplaces to re-sell third-party offers.
“Hoteliers can basically be as innovative as they want,” Read said. “They can even collaborate with third parties and bring very unique experiences. And that's game changing when you push that into the booking flow or post-stay because so many people actually want to go to a property to have an experience, whether it be afternoon high tea, a spa day. And those are the things that we can cater for.”
Getting creative enough to find activities to offer guests is not a problem at Casa de Campo, a 315-room resort with a few dozen private villas on 7,000 acres in the Dominican Republic. Among the resort many amenities: golf, tennis, horseback riding, a shooting center, water sports, spa – just to name a few.
“We have so, so many activities, sometimes we've heard it from guests that they spend five days here, and they don't even know half of the activities that we offer and didn’t get to try them,” said Gitti Hernandez, the resort’s e-commerce manager.
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It’s a good problem to have, made even better through SynXis Retailing’s efforts to highlight options on the hotel’s website and reinforce the message with post-booking communications that can be personalized as much as the data will allow.
“For us, this is a great way to showcase our experiences and activities before [guests] arrive,” Hernandez said. “We do a lot of work to highlight them in the website itself, and once they book their room we want to show them as much as possible that they can add to their stay.”
Once all the pieces are put together, the system can leverage predictive analytics powered by machine learning to make targeted offers to guests in hopes of offering recommendations likely to produce higher booking conversions.
Read foresees guests relying on the retailing platform much in the same way guests once did with a hotel concierge in a pre-digital era for recommendations on activities, restaurants and much more.
“I think going forward guests won’t necessarily come to a hotel and then add on experiences,” she said. “Sometimes they're going to the hotel because of the experiences.”
Experiences that, if the data and tech and marketplaces come together as planned, can all be booked together on a hotel website, with offers that match guests’ tastes and interests.
“The solution can be tailored to any star, any hotel,” Read said. “Everybody deserves that personalization, and it doesn't matter what hotel you're at. It's being able to just tailor what you need and being able to make sure that we deliver it for you.”
The Phocuswright Conference 2024
Hear from Sabre president and CEO Kurt Ekert at The Phocuswright Conference in November as we dissect, debate and (yes!) define what travel will look like in the years ahead.