The hotel industry has been gradually waking up to the potential of ancillary revenue in recent years and now it seems the youth travel segment also wants in.
The latest STAY WYSE survey 'Beyond the Bed' draws parallels with the low-cost airline sector and looks at progress so far from youth travel accommodation providers.
While bed sales still account for the majority of revenue, 78%, followed by food and beverage at around 16%, ancillary services currently accounts for the remaining 6%.
An average establishment earns Euro 200 per bed in ancillary revenue over the year, more for larger properties, with bike hire, event space and laundry ranked as the top three sources of revenue by youth travel accommodation providers.
In Asia, however, event space hire was the top revenue source while in Oceania, revenue from technology was ranked first.
Although the use of technology in the sale of ancillaries is generally accepted as important, and the potential for initiatives such as SMS and pop-ups are highlighted in the research, only 35% of accommodation providers use a revenue management system.
Those using revenue management systems say they achieve higher beverage and ancillary sales and claim all sales strategies are more effective than those without the technology.
The sector is also looking at the potential of commissions on sales for third party items which mean additional ancillary revenue as well as the opportunity to add value and provide useful information.
Currently only 40% of providers earn revenue via this source demonstrating the potential to increase sales in this area.
About three-quarters of ancillary sales are made during the stay and the remainder pre-stay showing the potential for providers to create offers in the pre- and post-booking phases that an online travel agency might not be able to.
The STAY WYSE survey also points to the airline sector and the idea of bundled services demonstrating the importance of knowing customers and targeting them with relevant offers.
For example, further reports from the organisation reveal that:
- 11% of youth travel accommodation guests are business travellers
- 10% are aged 35 or over
- 39% of solo travellers book a private room - the same percentage as those booking shared accommodation
Beyond the Bed is available to download for a charge.Further reading:
Forget bums on seats, personal bundles will be key to future airline experience
In-depth: how hotels are slowly climbing the mountain of ancillary sales
Youth travel booking window reduces as mobile plays a key role