Ancillary Revenue: Hotel Profits Beyond Room Sales

In today’s bustling hospitality world, relying solely on room bookings just doesn’t cut it anymore. With online travel agencies (OTAs) taking hefty commissions of 15-25% and the unpredictability of economic shifts impacting travel, hotel owners are discovering fresh ways to boost their income. That’s where ancillary revenue steps in — helping hotels make the most of every guest interaction beyond just selling a room.

Ancillary revenue is becoming a game-changer, often making up 20-30% of a hotel’s total income. This extra revenue stream not only helps cover those OTA commission fees but also smooths out cash flow during slower times and offers guests memorable experiences that keep them coming back and willing to pay a little more.

In this guide, we’ll explore tried-and-true ancillary revenue strategies, clever ways to implement them, and tips for optimizing your offerings — all designed to help your hotel increase profits while delighting your guests.

What is Ancillary Revenue?

Simply put, ancillary revenue is the money your hotel earns from services and products beyond just room bookings. While selling rooms remains your core business, ancillary revenue comes from those extra touches — upgrades, special experiences, and additional services that guests choose to enjoy during their stay.

These ancillary income streams cover a broad spectrum. From classic offerings like spa treatments and delicious dining options to innovative ideas such as co working spaces and authentic local experiences, these services complement your main offerings. They not only enhance the guest experience but also help your hotel stand out and improve profitability.

Here are some common hotel ancillary revenue examples:

• Room upgrades — think suites or premium rooms that offer extra comfort
• Spa services — relaxing treatments, wellness packages, and fitness center access
• Food and beverage sales — from your in-house restaurant, bars, room service, to mini-bars
• Transportation services — airport shuttles and local rides to popular spots
• Meeting and event hosting — spaces for corporate events, weddings, and special occasions
• Retail merchandise — local crafts, souvenirs, and branded hotel products
• Premium amenities — high-speed internet, late checkout, concierge services, and more

The beauty of ancillary revenue is that it leverages what you already have — your hotel’s infrastructure and guest relationships. Unlike building more rooms, many ancillary offerings require little upfront investment but can bring in higher profit margins.

Why Ancillary Revenue is Critical for Hotels in 2025

Hotels today face a unique set of challenges that make ancillary revenue more important than ever. Economic ups and downs, evolving guest expectations, and fierce competition from both hotels and alternative accommodations mean that relying solely on room sales is risky.

Battling OTA Commission Fees

Online travel agencies are convenient for guests but expensive for hotels. With OTAs taking a big slice of your room revenue, it’s essential to find new revenue streams to make up the difference. Ancillary services like spa treatments, local tours, and premium dining are usually sold directly to guests — no middlemen, no commission fees.

Keeping Revenue Steady During Tough Times

Room bookings can be unpredictable, especially during economic downturns or off-seasons. But guests who do travel often still want to spend on experiences and premium services. Offering strong ancillary services means your hotel has multiple ways to earn income, helping keep cash flowing even when rooms aren’t full.

Standing Out with Personalized Experiences

Smaller hotels and independent properties may not have the marketing muscle of big chains, but they can shine by offering personalized, unique experiences. Local partnerships, curated cultural activities, and boutique amenities let you charge premium prices and build loyal guests who appreciate what only you can offer.

Boosting Revenue Per Guest

Hotels with well-crafted ancillary revenue strategies see higher revenue per available room (RevPAR) than those relying on rooms alone. As it gets more expensive to attract guests, making each stay more profitable becomes a must.

Top-performing hotels treat ancillary revenue as a core part of their business. They know today’s travelers want experiences, convenience, and personalization — and they’re happy to pay for it when it’s done right.

Top Ancillary Revenue Streams for Hotels

Knowing the full range of ancillary revenue opportunities helps you pick the right services for your hotel’s style, guests, and resources. Here are some of the most effective revenue streams, grouped by category.

Food and Beverage Services

Food and beverage is often the biggest slice of ancillary income, sometimes making up 30-50%. With great margins and multiple chances to connect with guests, it’s a natural place to focus.

Restaurant and Special Dining

Your hotel’s restaurant should be more than just a place to eat — it can be a destination itself. Hosting wine tastings with local vintages, chef’s table dinners, or themed events can draw locals and guests alike, creating memorable experiences and boosting revenue. Pair these with displays of local artists’ work to add cultural flair.

Room Service and In Room Dining

Today’s in room dining goes beyond the usual menus. Think breakfast packages with local flavors, late-night snacks, or celebration bundles for birthdays and anniversaries. The key is offering convenient, high-value options that guests see as worth the extra cost.

Bar and Beverage Sales

Craft cocktails, partnerships with local breweries, and specialty drinks can make your hotel bar a hotspot. Events like outdoor movie nights with signature drinks can attract both guests and locals, extending your revenue beyond meal times.

Spa and Wellness Services

Wellness tourism is booming, making spa services a top ancillary revenue source. These offerings also add value to your guest experience and support premium room rates.

Treatments and Packages

Spa treatments have excellent profit margins, especially when bundled. Think couples massages, pre-wedding beauty services, or seasonal wellness specials aligned with your location’s vibe.

Fitness and Wellness Programs

Go beyond a basic gym by offering personal training, yoga classes, or outdoor gear rentals. Corporate wellness programs can also attract business travelers focused on health.

Transportation and Convenience Services

These services meet real guest needs and provide steady extra income with relatively low overhead.

Airport Transfers and Local Rides

Working with trusted transport providers lets you earn commissions while making travel easier for guests. Airport shuttles, local shuttles, and rides to attractions add value and revenue.

Convenience Extras

Valet parking, luggage storage, early check-in, and late checkout are simple ways to boost revenue and guest satisfaction with minimal extra effort.

Room Upgrades and Premium Amenities

Room upgrades are some of the highest-margin ancillary services since they use existing rooms but bring in extra income.

Suite and Premium Room Upgrades

Offering upgrades at check-in, via mobile apps, or bundled in packages can increase revenue per guest while enhancing their stay.

Premium In-Room Amenities

High-speed internet, luxury toiletries, premium bedding, and special welcome gifts can all be offered as paid upgrades. Pet-friendly or family-focused amenities tap into growing market segments willing to pay more for comfort.

Innovative Ancillary Revenue Ideas for 2025

To stay ahead, hotels are exploring fresh ancillary revenue ideas that set them apart and appeal to today’s travelers.

Local Partnerships and Experiences

Partnering with local artisans and businesses creates unique experiences that guests love and that generate extra income.

Art and Cultural Collaborations

Offer in-room art sales, pottery workshops, or painting classes with local artists. These authentic experiences appeal to travelers seeking a genuine connection to the area and provide commission-based income.

Culinary Experiences and Food Tours

Cooking classes, guided food tours, and farm-to-table dinners let guests dive into local culture while boosting your revenue. Collaborate with local chefs and farmers for exclusive offerings.

Adventure and Outdoor Activities

Renting bikes, offering hiking guides, or outdoor gear taps into the adventure travel trend. Partnering with local outfitters keeps investment low while meeting guest desires for active experiences.

Event Hosting and Space Rental

Making the most of your hotel’s spaces can bring in significant revenue, especially during slower seasons.

Co Working and Day-Use Spaces

With remote work on the rise, offering day-use rooms or dedicated co working areas attracts business travelers and locals needing a quiet place to work.

Meeting Rooms and Conferences

Beyond big conferences, offer smaller meeting spaces for local businesses, networking events, or workshops. These generate rental fees plus food and beverage sales.

Outdoor Venues

Use outdoor areas for weddings, retreats, fitness classes, or community events. Seasonal happenings like summer concerts or holiday markets add revenue and build local ties.

Retail and Merchandise Sales

Turning your hotel’s public spaces into retail spots offers convenient shopping for guests and extra income.

Local Product Marketplaces

Showcase local crafts, artisanal foods, and handmade goods. Commission partnerships reduce inventory risk and give guests unique souvenirs they can’t find elsewhere.

Branded Merchandise

Sell high-quality branded items like robes, bedding, and toiletries that guests can take home. Online sales extend this revenue beyond the hotel stay.

Seasonal and Limited Editions

Rotate seasonal products or limited-edition collaborations to create excitement and urgency. This works well for resorts and boutique hotels with strong brands.

Implementation Strategy for Ancillary Revenue

Rolling out new ancillary services takes planning, staff training, and smooth integration with your current operations. Start simple and build up.

Guest Segmentation and Targeting

Know your guests — who they are, what they like, and what they’re likely to buy.

Data-Driven Insights

Look at your booking data to find guest segments that are most likely to purchase extras. Business travelers might want express services and work-friendly amenities, while leisure guests may prefer relaxation packages and local experiences.

Timing is Everything

Offer ancillary services at the right moments — pre-arrival emails, check-in, mobile apps, and in-room tech all provide chances to showcase relevant offers.

Personalization

Track guest preferences and past purchases to recommend the right services, increasing conversion rates and guest satisfaction.

Pricing and Packaging

Set prices and bundles that maximize revenue without turning guests off.

Market Research

Check local prices for similar services to stay competitive. Look at what other hotels and standalone providers charge.

Bundles and Value

Package complementary services to boost sales and offer perceived savings — like a romantic package combining room upgrades, spa treatments, and dining.

Dynamic Pricing

Adjust prices based on demand, season, and occupancy. Charge more during peak times and offer promotions when business is slow.

Measuring and Optimizing Performance

Keep an eye on how your ancillary revenue efforts are doing and tweak as needed.

Key Metrics

Track total ancillary revenue as a share of overall income, aiming for that 20-30% sweet spot. Measure revenue per available room (RevPAR) improvements linked to ancillary services and attachment rates for each offering.

Guest Feedback

Balance revenue goals with guest happiness. Monitor reviews and repeat purchase rates to ensure your services add value and don’t annoy guests.

Profit Margins

Focus on high-margin services and find ways to cut costs without sacrificing quality.

Technology Tools

Use modern platforms to automate upselling, personalize offers, and make booking easy. Integrate with your CRM to track guest preferences and lifetime value.

Overcoming Challenges

Rolling out ancillary revenue programs can come with hurdles, but they’re manageable.

Staff Training and Culture

Your team needs to be confident and motivated to offer ancillary services.

Training Programs

Teach staff about the benefits of these services and how they improve guest experiences. Role-playing and product knowledge sessions help build confidence.

Incentives

Reward staff for successful upsells while keeping guest satisfaction front and center.

Team Coordination

Make sure everyone knows their role — front desk, restaurant, spa, and housekeeping all play a part.

Guest Experience Balance

Offer extras without making guests feel pressured or nickel-and-dimed.

Clear Communication

Be transparent about pricing and focus on how services enhance the stay.

High Service Quality

Deliver top-notch ancillary services to justify the cost and encourage repeat business.

Natural Integration

Make ancillary offerings feel like helpful options, not sales pitches.

Scaling Operations

Expand carefully to maintain quality and manage costs.

Start Small

Begin with simple, high-impact services and grow gradually.

Partner Up

Work with local providers to offer services without big investments.

Automate

Use technology to streamline bookings and payments, reducing staff workload.

By tackling challenges head-on, your hotel can turn ancillary revenue into a major competitive advantage, driving sustainable growth while delighting guests.

Conclusion

Ancillary revenue is more than just extra income — it’s a vital part of building a thriving hotel business in today’s competitive market. Making up 20-30% of total revenue, these additional income streams help offset OTA commissions, stabilize cash flow, and create memorable guest experiences that foster loyalty.

The best hotels approach ancillary revenue with hotel revenue strategy and care, focusing on services that truly enhance the guest journey and generate meaningful profits. Whether it’s classic spa treatments and dining or innovative co working spaces and local adventures, the possibilities are vast for those willing to invest in smart planning and execution.

Remember, success comes from balancing revenue goals with guest satisfaction. The most effective ancillary services feel like natural extensions of your hospitality — not pushy add-ons. Use data to personalize offers, maintain high quality, and continuously optimize your approach.

Start by understanding your guests and identifying the ancillary opportunities that fit your property. Begin with simple wins and build from there, ensuring your team knows that ancillary revenue is about enriching guest experiences as much as it is about boosting your bottom line.

Hotels that embrace ancillary revenue as a core part of their business will be the ones that thrive, offering unforgettable stays that justify premium pricing and build lasting relationships with their guests.