Ancillary Dynamic Pricing: Why can’t we make (more) progress?

Dana Cariss, Vice President, Revenue Strategy + Distribution, CoralTree Hospitality, HSMAI Revenue Optimization Advisory Board Member

The hospitality industry has been struggling with making progress on ancillary revenue optimization (RO). Many businesses are still using manual processes and basic systems for pricing outside of room rates, such as in their restaurants, bars, and catering services. However, there are opportunities for improvement and creativity in this area to drive more revenue. I brought this topic to the HSMAI Revenue Optimization Advisory Board to discuss.

Top 5 takeaways from the discussion:

  1. Many businesses in the hospitality industry struggle with optimizing ancillary revenue, particularly in areas like F&B and spa, where manual processes and basic systems are still prevalent.
  2. Building internal business intelligence (BI) platforms can provide valuable insights from data, but businesses need to act and implement changes based on those insights to drive revenue.
  3. Third-party systems can offer more sophisticated pricing solutions for ancillary services, but challenges such as turnover within staff and training for dynamic pricing may need to be addressed.
  4. A top-down approach with leadership support and measurement of goals is crucial in driving engagement and implementation of dynamic pricing strategies in F&B and other departments.
  5. Leveraging technology, such as working with third-party vendors, can be a way to overcome challenges and make progress in optimizing ancillary revenue, ultimately boosting overall revenue for hospitality businesses.
  6. Some businesses have started their journey towards optimizing ancillary revenue by building internal business intelligence (BI) platforms. These platforms allow them to ingest data from various sources and visualize it to gain insights. However, many businesses have not yet made changes to their processes or pricing strategies based on the data they have at their fingertips.

Further Reading: Why restaurants are finally adopting dynamic pricing strategies

Questions to ask your team:

  1. What are the challenges that prevent progress?
  2. Is there belief within your organization this is valuable?
  3. Who is doing something unique in this space? What companies should you be watching?



Categories: Revenue Management
Insight Type: Articles