Locals can drive ancillary spend at hotels
30 NOVEMBER 2015 8:46 AM
Additional hotel revenue can be found outside hotel guests, with hoteliers marketing to nonguest revenue centers such as gym classes, spa services and more.
REPORT FROM THE U.S.—Hoteliers have numerous opportunities to lure nonguests to their property in hopes of generating extra revenue.
“It’s become a nice way to augment the slow periods,” said Kory Keith, spa director at The Ritz-Carlton Spa in Los Angeles, where locals take advantage of daylong wellness retreats and after-work pedicures and cocktails in the adjacent beauty salon.
When Keith took the reins in 2012, Los Angeles natives comprised about 25% of the hotel’s spa business. The secret? By keeping the spa-treatment list fresh (and even seasonal—some of its facials use herbs and fruits from the hotel’s rooftop garden), she has increased that ratio to 50/50.
“Local guests don’t want the same offerings all the time,” she said.
While lucrative and popular, nonguest revenue doesn’t need to be limited to spa treatments, said Jon Makhmaltchi, owner of hotel branding and consultancy firm J.MAK Hospitality. He cites Cavallo Point Lodge for its popular cooking school at its San Francisco location. He also credits its sister property, the Post Ranch Inn, for its sought-after boutique, the Mercantile.
“It’s a great shopping experience with great local items—not just hotel-branded material,” Makhmaltchi said, adding that the Mercantile is also close in proximity to the hotel’s art gallery.
While at the Post Ranch Inn, nonguests must specifically request to visit the Mercantile. At Cavallo, “they don’t go up to people and say, ‘We’d like to see your room key,’” Makhmaltchi said. (He is especially turned off by this, he said, recounting a story of a rooftop bar at a posh New York City hotel asking to see his reservation before taking his drink order.) The Mercantile hosts wine tastings for guests and nonguests, too, seeing it as an opportunity to plant a seed.
“They have a couple glasses of wine,” Makhmaltchi said, “and it could turn into a stay.”
Megan Licata, marketing manager of Hyatt Regency Orlando in Florida, said the hotel’s partnership with the ever-popular ClassPass since December 2014 means locals can frequent its fitness center and take classes such as spinning or yoga.
“It allows you to fill only the space you need—which means it’s not just filled with nonguests,” Licata said. “It’s great for slower weeks, too, or when certain guests will not have time to take advantage of these facilities.”
Marketing to locals
Licata said fitness-inspired social events like Wine & Align—to which the hotel invites well-connected tastemakers and bloggers—are key in marketing to nonguests.
“This has really boosted local traffic,” Licata said. “Locals talk to people who are here for conventions, and hotel guests enjoy getting their recommendations.”
As for the Ritz-Carlton, Keith said offering a free, Saturday morning rooftop yoga class for anyone with a spa treatment booked that day has proven more effective than print advertising. Like the Hyatt in Orlando, Keith said the Ritz-Carlton is “a business hotel Monday to Friday, and guests usually have a lot of meetings or conventions scheduled,” meaning little to no time to spend money onsite.
To encourage more locals to visit during those times, the Ritz-Carlton’s Local Luxury Program offers a discount on spa treatments from Monday through Thursday to guests who can show proof of Los Angeles residency.
Licata said the Hyatt Regency further boosted its nonguest traffic by reaching out to trendy fitness studio Pure Barre, placing a 10% spa discount coupon in several studios.
“That led to a good spike in attendance,” she said. Though she estimates only five to 10 visitors to its fitness studio each week are nonguests, she insists that number is fine. “We’re not looking for 100 people,” she said.
While capturing revenue on the spot is attractive, Makhmaltchi said, hoteliers must understand that it’s about more than a quick buck.
“Maybe somebody doesn’t have the budget this trip, or are staying with family and just came over to check the place out,” he said. To be treated kindly and welcomed regardless of whether they’re paying for a room, is “an investment in the future,” he added.
The idea that welcoming locals will anger guests might give some hoteliers pause, but Makhmaltchi said the belief that hotel guests don’t want locals roaming among them is largely mistaken.
“Part of the attraction of a local hotel is the local community,” he said. “Without it, most hotels wouldn’t make it. You always want a nice mixture of different kinds of people so it feels attractive and warm.” He has even seen some hoteliers invite guests from other, nearby hotels over for a cappuccino—again, just to plant the seed.
In Orlando, guests of the Hyatt often say they want to feel like a local—“not just like they’re in a hotel,” Licata said, adding that changing pool rules helped ease the flow of nonguests. Since spring 2015, outdoor pool access has been permitted for hotel guests and locals purchasing a spa service. (Before then, the hotel didn’t allow pool access to nonguests at all.)
Keith had to take a similar tack. When she came on board at the Ritz-Carlton, one of her first moves was to eliminate spa day passes for locals, which had been going on for 18 months to two years, and had at times overcrowded the facilities.
“(Our spa is) not big enough to support that,” she said, “and it wasn’t enough revenue to justify it. People who had paid upwards of $200 for a massage were waiting to use the shower.”
Keith said locals will keep returning if they have traditions to look forward to. The Ritz-Carlton’s twice-yearly Spa Soiree—every summer and December, locals come to enjoy mini spa treatments, food and drink—“functions like an open house,” she said. “When people come, they bring new friends. That’s organic, word-of-mouth advertising.”
Luckily, nonguest-related issues such as parking or locker-room crowding haven’t been an issue for Licata, but she is aware some hoteliers have concerns that marketing to locals could increase those complaints. To prevent those problems, she said, timing is key.
“We carefully manage our promotions so that we’re not driving locals to visit with us over dates where we expect to be busy,” she said. “That’s a win-win for both our guests and locals—because locals don’t want to walk into a crowded hotel, either.”