Why Offering Local Tours and Activities Is A Huge Revenue Opportunity for Hotels

11 October 2018

Why should hoteliers consider offering local tours and activities?

The commoditization of the hotel product, in which hotels are forced to compete with the OTAs strictly based on rate, leaves the hotel little opportunity to communicate the value of the hotel product to potential guests. To combat this and “sell on value” as opposed to “sell on rate,” hoteliers need an effective merchandising strategy, including offering a vast range of experiences as part of the property website offerings, in multichannel and seasonal campaigns.

Travelers are fully onboard: 98% of survey respondents (tnooz) said having “local experiences” in a new city was important.

The direct online channel offers limitless opportunities for the hotelier to present the hotel as the “hero of the destination” and the perfect choice to stay while exploring all the destination has to offer such as museums, galleries, family attractions, shopping, dining, nightlife, entertainment, and more. Combine this with a strong website merchandising program, focused on the uniqueness of the hotel product and its value proposition, and you have a successful strategy!

Hotels are local businesses and this is a major advantage over the OTAs when selecting and contracting local tour and activity operators, monitoring their performance and customer service, and ensuring timely payments.

So, what makes hoteliers best suited to offer their guests local tours and activities?

  • Hoteliers know their guests and their preferences much better than the OTAs, allowing them to customize and tailor the local tours and activities accordingly.
  • Hoteliers know their local neighborhoods and immediate destinations far better than the “far and away” based OTAs.
  • Hoteliers know the local tour and activity providers much better than the OTAs. In many cases hotels have been using trusted local operators for many years now.
  • Locals unite: local properties can connect to local operators on an emotional level, as local business operators, something that is completely absent in any big OTA-small operator relationship.

How can hoteliers make money from local tours and activities?

By positioning the property as the “hero of the destination”, hotel marketers will make the hotel more attractive thus increasing occupancy, an indirect revenue effect.

In the same time, there is a strong direct revenue benefit for hoteliers:

  • Bundling local tours and activities with hotel accommodations: city tour, family, museum, theater, shopping and weekend packages, girls and romantic getaways, etc.
  • Referral fees and commissions from sale of local operators’ tours and commissions. Hoteliers can easily negotiate a reasonable commission for offering a local operator’s tours and activities: advance sales, at the front desk and by the concierge. Typically, the OTAs are charging local tour and activities operators commissions to the tune of 20%-35% to enable and sell their offerings on the OTA online platforms, so there is plenty of room for negotiating a fair reward for the hotel.

Action plan for hotels to launch local tours and activities:

Hoteliers are uniquely positioned to offer tours and activities and work closely with fellow local business operators. So, where should they start?

  1. Develop the product:

Based on property specifics such as location, bandwidth, and richness of the local destination, create both:

  • Packages bundling together hotel accommodations with local tours and activities.
  • Experience add-ons, which can be added to a hotel reservation, in advance, upon arrival or while the guest is on property.

In both cases the packages and special offers around activities and attractions in the destination should be tailored to fit the demographics and preferences of the hotel guests.


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Source : Hospitality Net