Marketing Review — Fall 2008 - (Page 32)

control the activities and hence the guest experience: “We have a vested interest in the service aspect of how it’s done so rather than hooking up with an ice-skate rental vendor, we’d rather control the total guest experience to the extent possible.” There are exceptions. With six miles of river running through the property, Suncadia has aligned itself with several fly fishing schools and outfitters to provide equipment and lessons to guests. “We won’t delve into areas where we aren’t confident we will do well. That’s the type of expertise that we don’t have on staff and until we determine that it’s profitable enough for us and we can master it easily, it’s something we should leave to an outside vendor or partner,” explains Schmidt. Kayaking, canoeing, and horseback riding also will be offered through outside vendors. package that incorporates the spa as something that encourages additional revenues from a segment that might not be thinking of you. We’re doing the same thing with the guys’ getaway package. We’re packaging poker chips, and amenities that guys like, In addition to more traditional activities such as golf or tennis.” Suncadia offers many specialized classes at its fitness facility, such as spinning and yoga, which also generate incremental revenue. “Those are money-makers that a property with a spa or fitness center can profit from if they market to enough leisure customers.” While some hotel brands like Best Western International, headquartered in Phoenix, Arizona, profess to have few may include dining operations). A lot can be done with restaurants to generate even more incremental revenue, says Estis-Green. Hotels have gotten creative by offering a chef’s table in the kitchen, private dinners with the chef, and themed menus. “Those things tend to be experiential in nature,” she says. “People want experiences so they’re willing to pay for anything you can give them that’s unique.” For example, the Sagamore on Lake George in New York invites guests to be chef for a day and see what goes on behind the kitchen doors. More than 130 people took advantage of that program the first year it was introduced, declares Estis-Green. Ultimately, the amount of ancillary Don’t Drop Shopping When fully built out, Suncadia will feature up to 3,000 homes, most of them costing $1.5 million or more, that can go into a luxury vacation rental program. Because there will be so many homeowners at the resort, and many of the rooms in the lodge also have kitchens, Suncadia has developed a package whereby the resort will purchase groceries and stock refrigerators for guests. Estis-Green applauds the shopping services that some resorts are offering, citing them as emerging sources of ancillary income. “I think resorts have dispensed with being concerned about getting everybody in the restaurant all the time,” says Estis-Green, “and they realize that by providing that service they also can make quite a bit of money.” Estis-Green feels that a shopping service doesn’t take away business from on-site dining venues because in a villa setting people are going to eat some of their meals in, so hotels might as well generate revenue by providing convenience.shopping. Schmidt’s advice to properties that might not have the attractions of Suncadia is to develop ancillary income through packaging. “If you’re in a desirable destination there are things that can be done that are relatively simple. For example so many hotels have a spa, so it’s easy to put together a girls’ weekend or girls’ getaway 32 E G ADVANTAG NS ON TAKIN OR ALSO PLA MED OUTDO “SUNCADIA OSTING THE GE BY H ER WAY TO F ITS ACREA JUST ANOTH O GROUPS. IT’S VENUE.” PARTIES FOR ILLARY RE OF SALES P THAT ANC PICK U L DIRECTOR NT, REGIONA ESIDE ESORTS IDT, VICE PR OTEL AND R —JACK SCHM STINATION H TING, DE AND MARKE avenues for generating ancillary income (“We don’t nickel and dime our clients,” says Troy Rutman, Best Western’s director of external communications, noting that high-speed Internet, and often breakfast, are free), they can still look to full-service food and beverage, widely regarded as the number one source of ancillary income. Making the Most Out of F&B Some hotels have opted to outsource the operations of their restaurants, often working with headlining chefs. Suncadia has no intention of outsourcing its restaurants. “Our philosophy within DH&R is to operate our own food and beverage,” says Schmidt (although he does note that Suncadia is building a “town center” which will be leased to some outside vendors that income any property can generate, observes Estis-Green, “is dramatically based on what your ancillary revenue centers are.” In a resort property that has golf or a spa “you can pretty much double your room revenue. If you look at ancillary revenue in a casino obviously the rooms are the least of it. A casino has a focus not on room plus other but casino plus other, so for them a room is almost ancillary revenue.” Things like the size of the spa and fixed rent on retail that’s not operated by the house can limit capacity. Estis-Green, who authored a 250-page HSMAI report on generating ancillary revenue for resorts, “Generating Ancillary Revenue: Creative Techniques for Expanding Resort Revenue Streams,” notes that one of the key findHSMAI MARKETING REVIEW • FALL 2008

Table of Contents Feed for the Digital Edition of Marketing Review — Fall 2008

Marketing Review – Fall 2008 Contents The Online Marketer Success Stories Forecasting Trends Ian Schrager: The Revolutionary Man Leaving No Stone Unturned: The Quest for Ancillary Revenue Gaga Gadgets for Execs on the Go: Functional New Portable Technology to Make Life and Work on the Road More Hospitable Effectively Weathering the Ups and Downs of the Economic Cycle Experiments in Podcasting Higher Transportation Costs and a Slowing Economy Shift Hotel Room Demand

Marketing Review — Fall 2008

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