As a tour or activity company, your main product and subsequent source of revenue are places on your bus tours, boat trips or pub crawls. It’s pretty straightforward – the more places you sell, the more money you make.This is all well and good, but we all want to generate as much revenue as possible for our business. To do this we need to look at other ways to increase our turnover. One way to create new revenue streams is by trying to generate sales by way of ancillary revenue.
What is ancillary revenue?
Have you booked a flight recently where you had to pay to check a bag in? That’s ancillary revenue.
It’s a product (or service) a company sells that isn’t their primary product.
It can be sold as a standalone entity with its own page or as an add-on during the booking process. Or both.
Most business, particularly those in the travel space, are engaging in this practice mainly because so many products compliment their product. This could be travel insurance, accommodation and more. The more products you sell, the higher chance you have of increasing revenue from it.
What sort of products can you sell?
In the travel space there are lots of opportunity to generate revenue from ancillary products. If your website is an ecommerce one where people can book your product online, do you offer the facility to book accommodation also? If not, why not?
Balmer's Herberge is a good example, as a hostel in Switzerland that sells tours and activities as add-ons to room bookings. You can read more of our case studies and spotlight interviews here.
You’re in the travel space so you should be selling all things travel related. Whether it’s hostels, homestays or hotels, the main players in all these spaces have ancillary programmes.
Other products to take into account are luggage, insurance, rent-a-cars, public transport… and the list goes on.
These are all products that you could sell online though – there are many more that you could sell offline. T-shirts, videos and photos are examples of items you could add on to your tour or activity and ones you could sell in your retail space or on the actual tour itself.
How do I sell these products?
There are two things to think about here – virtual selling and traditional selling. Obviously the traditional methods focus on offline products and your success comes down to one thing – sales skills. If you are good at sales you’ll sell well.
When it comes to online selling though, things get a little bit more complex. You need to set the requirements for the ancillary programme. You might even need to implement some online changes and optimise your website for online bookings.
Would you like to know how TrekkSoft's booking software can help your business grow ancillary revenue streams?
Published by Colm Hanratty
Colm is Founder and Managing Director of digital marketing agency Sixtwo Digital. After running Hostelworld.com’s content and social media for almost 11 years he felt it was time to branch out on his own, using all his experience to educate others in the travel space.