Packages are an integral part of the hotel and travel industry. Yet, it is also seen as one of the more underutilised elements in hotel promotions. What can you do as a boutique hotel to maximise revenue through packages?
A – What is a hotel package?
A package involves the pre-arranged combination of two or more components bundled together and offered for sale at an inclusive price. When offered by a hotel this tends to be a combination of accommodation and an experience at a hotel or destination.
When offered by an Online Travel Agency (OTA) like Expedia, it tends to be more of a combination of flight and accommodation. The most popular package combination on Expedia is hotel accommodation combined with air travel.
In the UK, packages including flights are protected by Air Travel Organiser’s Licence (ATOL) a financial protection scheme that protects most package holidays sold by UK travel businesses.
The newly enhanced European package travel directive also protects the consumers in a similar way and hotels in the European Union (EU) should review the expectations of this directive.
B – Why are hotel packages important
1. A popular product with high impact
Packages are popular. And typically the travellers who book packages tend to book in advance. They also tend to spend more and stay longer. And as packages are mostly non-refundable due to the value it offers, cancellations are low. There is also enough evidence to indicate that the average length of stay for packages tends to be higher than those who book room only stays. This, in turn, has an added bonus for a boutique hotel that has add on services and experiences like spa and wellness or other experiences.
Of course, the impact of packages is location-dependent and resort destinations will tend to have a higher volume of package bookings. So if you are a boutique resort hotel, then well-designed packages can have a high impact.
It can also help increase occupancy during low season.
2. Community and Partnerships
Building unusual and authentic packages require working closely with the community and develop partnerships that help spread the message about your hotel wider and also offer additional opportunities for cross-selling.
3. An opportunity to emphasise authenticity
With more travellers looking for an experiential stay, boutique hotels can showcase their creativity and authenticity by designing special packages that allow guests to experience the hotel and destination in a way that differentiates you from the competition. Whether that takes the form of wine tasting or food tours or a destination-specific cultural immersion experience depends on your hotel and destination.
4.A story to tell
Unique packages allow you to tell a story and weave in a narrative that appeals to your target audience. And this helps achieve wider visibility through social media engagement and word of mouth. Ultimately, the added value a package brings to your hotel will be driven by how appealing and relevant it is for the booker.
As a hotel, you have the opportunity to enhance and change these to encourage repeat visits too.
Travellers seek convenience and time-saving opportunities while arranging a holiday. Of course in the luxury boutique hotel segment, bookers tend to be picky and your standard packages will not appeal.
However, if you were to analyse the average number of purchases that guests make during a stay, what will you find? The average guest will need transport, dining out options, possibly wellness or activity related outings and more. Which of these can you bundle in a way that you can sell more while saving travellers time?
Think about the number of times that guests ask you about where they should eat or where the most popular restaurant for locals food is.
6. Enhanced value proposition
As a boutique hotel, packages offer an opportunity to promote value adds without taking a discounting approach
C – How to create a hotel package that works
Identify a clear audience: As a boutique hotel, you already have a niche. However, you may need to further identify the target market for each package that you develop. You should look to your top source markets, both domestic and overseas. Remember the hotel’s ability to promote a package to any audience and its marketing costs are a crucial factor as well.
Segment the audience by behaviour patterns: You could also break it down further to segment their behaviour at the property – what are their patterns? Where do they go? How do they spend their time? How many transactions do they have once at the hotel? What are the most frequently asked questions?
Study travel patterns: Understand the key booking and travel periods for the main source markets
Choose the right partners: Based on your understanding of what your travellers are looking to do and their lifestyle needs, choose appropriate partners with a similar niche approach
Consider hotel level add-ins: Identify a set of add-ons that the hotel can provide that can enhance the value of the package at a lower cost. This could be meal inclusions, access to a spa or high-speed Wi-Fi.
Time it right: Hotels will do well to look at airline-related package trends when it comes to promoting packages on OTAs like Expedia. According to one of their studies “like ADRs, Average Ticket Prices (ATPs) start declining 10 months out, hitting their lowest price one to two months prior to booking on average, with an uptick one-month out from booking. This trend shows that hoteliers should try to load package rates a minimum of three months in advance, to take advantage of the lowest flight prices, offer the best value to consumers, and avoid the discounting that inevitably happens for last-minute hotel deals.”
In addition, timing it in a way to meet your need periods is also important. Minimum length of stay (MLOS) restrictions can also be helpful in maximising occupancy and ADR.