Don't hide ancillary charges from your guests

06 May 2011
Don't hide ancillary charges from your guests

Hotels must not follow the example of airlines with the lack of transparency in their ancillary charges, says Janet Titterton, director at Collinson Latitude

For many years, travellers have grown increasingly annoyed by the "unbundling" of airline charges - separately pricing each aspect of the overall service - particularly when the results of this strategy seem to be extra costs and misleading pricing.

Now it seems that hotels are following the same path, with many offering a list of ancillary costs that is growing.

Airline passengers are most angry when they feel they are being charged extra for a service that used to be free, or at least included in a single fare. Of course, none of these services were ever really free, but passengers somehow felt they were basically paying for a flight from A to B and receiving, say, a newspaper and lunch as a bonus.

Here, hotels have a clear advantage over airlines. Hotels have traditionally unbundled many aspects of their services, far more so than air carriers. A perceived high cost of room service, telephone calls or items from the minibar might cause guests to grumble, but those guests have long expected to pay some kind of charge for those extras. So, if you can create a situation where guests feel they are receiving unbundled services for a reduced price - or, indeed, free - those guests will enjoy the sense of receiving a bonus.

Not all hotels have found the answers yet, but there are solutions to the conundrum. A subscription-based membership programme, for example, allows you to generate ancillary revenues, charging customers for access to a range of discounts, benefits and products. As the hotel operator, you know what specific services your customers want - such as car parking and wireless internet access - because they are already paying for those services as separate items on the bill. Discounts are therefore certain to be appreciated.

Better yet, build on your knowledge of your core customers - levels of income, careers, hobbies - to extend the scope of the membership programme, adding benefits and discounts beyond the services of the hotel itself. Involve non-competitive complementary travel, lifestyle, leisure and insurance providers in the programme: a portfolio of partners targeted at your customers' interests. The end result is that your customers enjoy regular benefits across many areas of their lives. As the hotel operator, you enjoy greater ancillary revenues. Everybody wins.

Sustained ancillary revenues are achievable in the hotel industry, but only by offering added value, not just by adding items to the bill. There is a chance here to execute a classic business coup - to take a problem and turn it into an advantage.

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