Cross-Sell Your Way to Profit - Amadeus commissioned Forrester report

Great news for the travel industry! Ancillary revenue is on the up, and predicted to grow by an impressive 30% over the next 5 years. And hotels are ideally placed to capture additional income from TWO ancillary channels.

Cross sell your way to profit - click here

So what are Ancillary Services?

In short, Ancillary Services are the optional, non-core products and services, usually provided by a third party, which can be added to a customer’s travel arrangement. For example, in the case of a hotel customer, these might include: travel insurance, a rental car, sightseeing tours or theatre tickets. The way these services generate income is from booking commissions or fees paid by ancillary service suppliers.

There is a tremendous buzz in the industry surrounding this topic due to the under-explored revenue potential. So, to find out more, Amadeus commissioned Forrester Consulting to delve deeper into the opportunities and characteristics of this fast-evolving travel service. The resulting report conclusions drawn are exciting, particularly for the hotel industry:

  • Ancillary services revenue will account for 2.5% of total revenue for travel providers by 2015, growing 10 times faster than general travel industry sales.
  • New ‘extreme’ services such as virtual reality tours and digital concierges will transform the customer experience over the next 10 years.
  • Ancillary services provide customers with the ‘add-ons’ that can change a trip from a traditional segmented arrangement to a memorable ‘total’ travel experience.
  • Advancements in mobile and web technology will make it possible to provide these services ‘on the go’ – throughout the journey and across channels.

What are the opportunities for hotel companies?

The hotel business benefits from a unique position in that the ancillary revenue opportunity is two-fold: hotel rooms are themselves an ancillary service for airlines and rail companies, whilst at the same time, your hotel guests are the perfect consumers for many third party ancillary services.

So new income can come from:

  • Additional hotel bookings generated from other suppliers booking your hotel rooms.

  • Commissions and fees generated from booking on and off-property ancillary services for your hotel customers, i.e. spa treatments, restaurant reservations, theatre tickets, city tours, golf rounds.

What will make ancillary revenue work for you?

The future of ancillary revenue is largely dependant on sellers opting for the right technology infrastructure that can manage a comprehensive mix of third-party ancillary services. It is then equally important to learn to engage with travellers, and understand what they expect from their trip, so you can deliver relevant service offers before, during and after the journey. i.e. a weekend stay could trigger a hotel to propose destination services, sent via email and received on the customer’s mobile device.

Amadeus already offers numerous online and offline booking solutions, and with our impressive track record in IT innovation, you can expect some interesting technology developments for the future. In fact, whilst many suppliers anticipate that their own direct channels will be their most productive sales outlets, others believe that by 2015 their most effective retail channel will rely on a technology that has yet to be invented!

To access the full Forrester Consulting Thought Leadership Paper entitled – ‘Cross-Sell Your Way to Profit’, please click here.