What Hospitality Can Learn from Digital Retail Strategies: Elevating Guest Expectations to Boost Ancillary Revenue
In today's tech-driven world, guest expectations are at an all-time high, and forward-thinking hotel brands are tapping into digital retail strategies to not only meet but exceed these demands. By leveraging data, personalization, and streamlined user experiences, hotels are unlocking new revenue streams while delighting guests with tailored services.
A Tech-Savvy Guest Experience: The New Norm
Guests now expect the same seamless, intuitive interactions they experience with top-tier retail brands like Amazon and Starbucks. From mobile check-ins to smart room technology, hotels that embrace these digital solutions are positioning themselves to meet these elevated expectations.
In fact, 80% of hotel guests indicate a willingness to use mobile apps to manage their stay, including check-ins, room service, and even local experiences. The rapid pace of innovation is pushing the hospitality industry to adopt tech solutions that improve not just operations but the guest experience.
Hotels that successfully integrate mobile apps and smart technologies are not only satisfying guests but also streamlining operations and boosting revenue.
The Retail Revolution in Hospitality
What’s happening in hospitality is nothing short of a “retailization” of services, as hotels adopt the best practices of digital retailers. Just like major e-commerce platforms, hotels must focus on two key areas to create a modern guest experience: a user-friendly interface (UI) and data-driven personalization. By mimicking retail interfaces, hotels simplify the user experience, making booking and buying as effortless as placing an order online.
More than just offering products or services, successful hotels are curating personalized experiences. Through mobile apps, guests can access in-app purchases, personalized offers, and tailored promotions that drive revenue. For example, hotels that have implemented mobile dining apps have reported a 40-50% increase in food and beverage revenue, proving that retail-inspired, on-demand solutions work.
Data-Driven Personalization Drives Loyalty
In the digital age, personalization is the secret sauce to increasing guest satisfaction and driving revenue. By utilizing both first-party and third-party data, hotels can tailor services and offers to individual guest preferences, ensuring a more personalized and memorable stay. This is especially effective in catering to different guest types, such as business travelers versus vacationing families.
Take the example of a Phunware customer, a luxury Caribbean resort. By using a seamless digital interface that offered personalized experiences and promotions, the resort saw a 39x return on investment. Personalized offers powered by the app not only drive guest engagement but also significantly increase on-premises spending
Maximizing Ancillary Revenue with Digital Solutions
Mobile apps are proving to be a game-changer for increasing ancillary revenue in hospitality. By enabling direct, personalized communication with guests, hotels can seamlessly upsell additional services and experiences at the point of discovery. A significant percentage of hotel guests are more likely to spend more when they can use a mobile app to streamline their experience. According to research, nearly 48% of hotel guests said they would be more likely to visit the hotel restaurant if they could order via the app.
Personalized push notifications and in-app recommendations are particularly effective in driving revenue. For instance, a Caribbean resort saw a 225% increase in app-generated revenue from 2022 to 2024, largely due to targeted marketing efforts that encouraged guests to book in-app services and experiences.
The Future of Hospitality is Personalized and Digital
As technology continues to evolve, hotels that fail to embrace personalized, easy-to-use digital experiences are leaving money on the table. The future of hospitality lies in delivering seamless, retail-like guest experiences that anticipate needs, remove friction, and encourage increased spending. The bottom line? Personalization isn’t just a nice-to-have; it’s a must-have for staying competitive and boosting revenue.
About Mike Snavely
Mike Snavely is the CEO of Phunware, a leading mobile technology company helping brands deliver personalized mobile experiences. He has held key leadership roles in various tech companies and holds a BA from the College of Wooster and a J.D. from The Ohio State University.