Boosting Ancillary Revenue: White Label Operators & Robust Tech Stack

The Lobby of The Stock Exchange Hotel, Manchester (A TROO Hospitality Managed Hotel)

Julian Houchin, director of Travel Curious, explores the growing demand of independent white label operators and the importance of a robust tech stack to improve the overall guest experience to generate ancillary revenue. 

In the ever-evolving world of hospitality, independent third party white label operators are gaining significant traction. These operators offer a unique and alternative value proposition to hotel owners and asset managers by providing flexible management contracts and leveraging the power of modern technology stacks. This article will explore the growing demand for independent white label operators, the importance of flexible management contracts, and the role of a robust tech stack in improving operational efficiencies, reducing costs and improving the overall guest experience. 

The value of flexible management contracts 

The rise of third party operators is explained well by HVS, who argue there is an increased desire for flexibility from owners and a recognition that white label operators may drive higher profits and be more aligned with owner objectives. Traditional hotel management contracts often come with rigid structures and limitations, leaving little room for conventional operators to showcase their creativity and innovation. 

In contrast, independent white label operators offer flexible management contracts that enable them to tailor their approach to meet specific goals of each property and align with owner investment strategies. This flexibility empowers operators to implement unique branding, marketing, and operational strategies, ultimately enhancing the guest experience and driving revenue growth and profitability. 

The importance of getting the tech stack right 

There are a variety of tech options available today for hoteliers and getting it right can add tremendous value for operators, owners and investors. 

Jordan Hollander, CEO of Hotel Tech Report, explains how to navigate the complexities of hotel operations software and how to streamline the optimal tech stack offering some key areas for consideration. For many independent hoteliers however, a simple route might be to work with an independent operator who has already conducted their due diligence in this area. One of the key differentiators for independent white label operators is their ability to leverage modern technology stacks. By moving away from older legacy platforms, operators can improve operational efficiencies and reduce overall costs for hotel owners. 

A well designed tech stack enables seamless integration of various systems, such as property management, revenue management, back office administrative tasks and guest experience platforms. This integration streamlines operations, automates processes, and provides real-time data insights for management, allowing operators to make data-driven decisions and deliver enhanced overall performance and guest experiences. 

Two notable examples of tech-enabled independent white label operators

With differentiating factors like leaner teams, innovative technology, and social media know-how, the next generation of hotel management companies are giving legacy players a run for their money. Groups like Life House and TROO Hospitality are reimagining the traditional hotel model to provide more compelling results for owners and better service for guests. 

Life House is a US-based management company that describes itself as a tech-enabled lifestyle hotel company. The company believes they are building the future of hospitality and as a hotel operator and software developer, they are the customers of their own technology which enables them to create the right products and solve complex problems. Founded in 2017 by Rami Zeidan, Life House has created a tech stack that appeals to independent hotel owners enabling the company to scale to over 60 hotels in six years, cementing their status as the “go-to” management company for independent hotels in the US and Mexico. 

TROO Hospitality is an exciting hotel management company based in the UK and founded by Winston Zahra, an experienced hotelier who managed the sale of Island Hotels Group to Corinthia Group in 2015. TROO Hospitality comprises an experienced team of international hotel owners and operators who have vast experience in financing, developing and operating businesses in the hospitality industry. 

The company places their staff at the epicenter of their technology philosophy enabling staff to complete tasks quickly and efficiently resulting in a greater focus on their guests. Instead of being stuck behind a desk, distracted by a computer screen, TROO empowers their staff to engage more with guests, resulting in a better guest experience. 

TROO Hospitality is a prime example of an independent white label operator that has made its tech stack a key differentiator. By investing in cutting-edge technology solutions, TROO has optimized its operations, enabling efficient management of multiple properties. Their tech stack empowers the management team to monitor and analyze performance metrics, manage inventory and rates in real-time, and personalize guest experiences. This level of operational sophistication enables the management team to deliver exceptional guest satisfaction whilst maximizing revenue potential and adding value for hotel owners and asset managers. 

Revenue per available meter (RevPAM) – a shift in key metrics? The most useful benchmark for hotel investment and hotel owners 

Operators continually seek innovative ways to maximize revenue, particularly in the current market where hotel owners and investors place more emphasis on increasing net operating income (NOI). Hotel operators need to be more creative in how they can extract more revenue from their guests to optimize every square meter of a hotel asset. 

Traditionally RevPAR has been the standard metric used by hotel asset managers, operators and investors to gauge the success of a hotel’s room inventory management. Hotel key performance indicators (KPI’s) have evolved into recognising the importance of TRevPAR and GOPPAR as other revenues are factored into the equation. If RevPAM is becoming a useful benchmark for hotel investment – for both revenue and GOP identifying a hotel’s total revenue or profit per available (square) meter – it begs the question whether RevPAM becomes part of a hotel manager’s dashboard. 

Hotel operators need to think like hotel owners and investors 

Hotel operators need to learn to manage the entire building they operate in and speak the language of real estate investors, who typically measure performance as an amount per square meter. Could this be a paradigm shift in the industry, where a hotel management company thinks like an owner again? Are management agreements and objectives aligned with owner interests to focus on RevPAM? 

In the case of TROO Hospitality, Zahra and his team operate with an “owner mind-set” having endured the gratification and pain of hotel ownership over the years, and so relate and empathize with hotel investors, owners and asset managers. Hotel operators are beginning to realize they are not just in the business of offering a bed for the night and that their guests expect more from a hotel stay. 

Hotel managers need to facilitate guest engagement through experiences which can generate additional revenue by selling ancillary services. Language such as “augmented hospitality” coined by Accor and “non-rooms ancillary revenue” is becoming part of the hotel vernacular placing more emphasis on RevPAM and improving the guest experience. The industry is introducing ancillary revenue managers whose responsibility is to optimize non-rooms revenue; so perhaps operators are thinking more like operational real estate asset managers after all. 

Seamless integration of on-premise experiences and tours and activities to generate non-rooms ancillary revenue and improve the guest experience 

Douglas Rice, managing director of Hospitality Technology Network, believes that experience matters. Hotel guests rarely travel just to stay in a hotel. Typically, they are traveling on business, for leisure or to see family. This presents an exciting opportunity for hotels to capture a portion of the estimated $252 billion in local experiences that will generate worldwide revenue in 2024, which represents approximately more than 60 per cent of the global hotel revenue by comparison. 

As Douglas points out, there are a variety of technology partners that can help hotels enable integration of on-premise experiences, tours and activities and this can be a great way for hotels to generate non-rooms ancillary revenue and enhance the guest experience. By offering guests a variety of on-site experiences and partnering with local tour operators, hotels can provide a seamless and convenient way for guests to explore the destination and enjoy additional services. 

Travel Curious has created a “one-stop” solution enabling hotels to curate their own on-premise experiences and local tours and activities on one platform. The technology enables seamless integration of all activities and experiences into the customer journey to increase revenue but also provide guests with a more comprehensive and enjoyable stay. Guests can easily plan and book their activities, making their overall experience more convenient and memorable. 

The demand for independent white label operators is on the rise thanks to their ability to offer more flexible management contracts and leverage technology to improve operational efficiencies and guest engagement. By moving away from older legacy platforms and investing in a robust tech stack, operators like Life House and TROO Hospitality can differentiate themselves and deliver exceptional guest experiences. 

Furthermore, by embracing technology to seamlessly integrate on-premise experiences and local tours and activities with companies such as Travel Curious, hotels can optimize every square meter of a hotel and generate additional non-rooms ancillary revenue. As the hospitality industry continues to evolve, independant white label operators are well positioned to thrive and cater to the ever-changing needs of hotel guests and align with hotel asset managers and their investment strategies.