HOTEL

Why Total Revenue Will Power the Future of Hotel Retailing

Skift Take

Most hospitality brands consider revenue per available room (RevPAR) as their primary success metric, but this measurement is limited to occupancy and rates. To generate greater revenue and increase guest satisfaction, hoteliers need to focus on total revenue, which includes experiences that go beyond the room.

As more and more travelers shop for hotels online, hospitality brands need to get smarter about their retailing strategies so they can power increased revenue growth and satisfy evolving expectations. They need to go beyond the room and create personalized choices for guests — add-ons like concert tickets, destination experiences, branded products, multiple cancellation options, and any other ancillaries at the point of booking.

The current market environment and emerging technologies are pushing hoteliers to shift focus from optimizing occupancy and room rates to capitalizing on these ancillary revenue streams. With personalized offers and tailored experiences now expected among consumers, selling these more relevant products has been shown to increase bookings and drive additional revenue per guest.

Building a Successful Retailing Strategy

According to Scott Wilson, president of Sabre Hospitality Solutions, building a winning retailing strategy involves two key areas: agile distribution and holistic retailing.

“As travel demand returns, there’s a great need for agile hotel distribution,” said Wilson. “Hoteliers are looking for ways to drive growth and increase demand for hotel services again. It’s about understanding who is traveling now and why, and how to best target those segments.”

With the right strategy and technological support in place, hospitality brands can not only target relevant offers to those markets and segments but also understand the most effective time to target those who plan to travel in the short- and longer-term future.

When Wilson talks about holistic retailing, he means going beyond attribute-based selling to sell anything that can delight customers, no matter their needs, likes, or preferences. “It’s more than selling access to a higher floor, ocean view, or late check-out. It’s about merchandising on and off property, creating new spaces for reservation, partnering with local attractions, and truly creating an authentic, memorable experience, limited only by the hotel’s imagination.”

The Power of Total Revenue

Shifting the focus from RevPAR to total revenue introduces many more levers for hoteliers. Beyond volume and rates, they can offer merchandise, monetized policies, services, attributes, and additional space.

“This level of retailing leans into each property’s creativity and creates authentic personalized experiences that allow them to grow, differentiate themselves from the competition, and open up an endless array of additional revenue opportunities,” Wilson said. “Seamlessly creating more unique, memorable, and meaningful experiences also results in more satisfied guests, which, in turn, strengthens brand engagement and guest loyalty.”

According to Mykola Sheludko, vice president of product management at Sabre, solving for total revenue is a preferred growth strategy given the natural limits of RevPAR improvements. “When we travel, most of the time we look for experiences that go beyond the room. In this context, hotels can be viewed not only as physical assets with certain utilization but as access points to billions of itineraries including purchases of ancillary goods and services. Shifting a portion of the total spend of travelers into the digital marketplaces managed by hotels unlocks total revenue for hoteliers.”

The Results: Accelerating Revenue and Increasing Guest Satisfaction

Initial feedback has been positive for Sabre’s newest product, SynXis Retail Studio, which gives hotel revenue managers the flexibility to maximize total revenue by offering customized products beyond the room.

“One of our early adopters built a virtual storefront of more than 15 unique ancillary offers within a few days,” Sheludko said. “They achieved more than an 80 percent increase in ancillary revenue in the first month of using Retail Studio compared to retailing through other means before.”

The direct integration of ancillary offers into the booking flow has proven to be a convenient way for guests to shop. Sheludko said it drives substantial growth in the share of bookings with an ancillary purchase, as well as in the total number of unit transactions for ancillaries. “The biggest impact is realized when a hotel fully utilizes the ability to retail anything matched with the flexibility of the content management in Retail Studio,” he said.

In a recent study where users were asked to complete a set of tasks in SynXis Retail Studio and by using Dynamic Packages, Sabre’s former way of booking ancillaries, 80 percent of users preferred the new Retail Studio shopping and booking experience. They were also 24 percent faster in finding what they were looking for, suggesting that the layout and flow are more intuitive. One study participant responded that the Retail Studio website is “clearly marked with different categories to make it simple for you to look for the right options that best suit your budget and trip requirements.” Another participant said that it “saves a lot of headaches.”

“The results from our early adopters and recent UX study serve as proof points in understanding the drivers of the transformational changes in hospitality,” Sheludko said. “Many industries have already shifted to extreme personalization. In line with this trend, hotel guests expect personalized experiences based on unique choices that are fulfilled seamlessly. SynXis Retail Studio and the broader ecosystem of our products allow guests to personalize their stay by putting the choice in their hands along with convenient booking tools. The UX study has validated high usability metrics for Retail Studio, and we already see how creative our early adopters are in curating unique experiences. This opens up new possibilities for deeper brand engagement, guest satisfaction, and retention, making Retail Studio a strategic capability for any hotelier.”

What’s Next for Total Revenue?

Within the next five years, Wilson expects to see more innovation and an even greater expansion of hotel revenue streams.

“Artificial intelligence and machine learning will enable hoteliers to experiment with packaging and build new revenue streams quickly since they’ll be able to deploy and test multiple new and unique product offerings and quickly gain insight into the market’s response,” Wilson said.

He envisions an ecosystem of software that is accessible anywhere, provides a new level of interoperability, learns from guest and user behavior, and is intuitive to use — “all on a platform that works so well it feels as if it’s faded into the background.”

Given the advanced capabilities of SynXis Retail Studio, it seems that this future is not far off.

For more information about Sabre Hospitality’s SynXis Retail Studio, and to request a demo, please click here.

This content was created collaboratively by Sabre Hospitality and Skift’s branded content studio, SkiftX.

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