SPOTLIGHT ON Patrick Pahlke, Chief Commercial Officer, Sage Hospitality Group


Interviews with industry experts often shed light on prevailing trends and challenges within a sector. In this exclusive conversation with Patrick Pahlke, a seasoned professional in the hospitality industry, we look at the intriguing dynamics of ancillary revenue generation within hotels. While airlines and cruise lines have mastered this art, hotels seem to lag behind. Pahlke offers insights into the factors contributing to this discrepancy and shares innovative strategies employed by Sage Hospitality Group to revolutionize ancillary revenue in the realm of hospitality. From tailoring services to guest demographics to forecasting future trends, Pahlke provides a comprehensive outlook on how hotels can strike the delicate balance between enhancing guest experience and maximizing revenue streams. 

While ancillary revenue generation has long been standard practice in the travel sector, hotels, despite their advantageous position, have been notably slower than airlines and cruise ships in fully embracing this strategy. What factors contribute to hotels lagging behind in maximizing ancillary revenue?

Hotels do seem to be missing opportunities when it comes to ancillary revenue compared to airlines and cruise lines. One of the biggest challenges is the guest journey – airlines and cruises have a more captive audience, where guests are limited in options for food/drinks and entertainment. Hotels (not all of them, but many) have traditionally encouraged guests to explore outside their doors, walk the neighborhood and shop local boutiques.

Hotels can also get stuck in the mindset that room rates are the main source of income, leaving money on the table. At Sage are working with our lifestyle hotels to create thoughtful ways to grow ancillary revenue across our portfolio through creative retail spaces and dynamic programming, or even in-room activations. We are enhancing this through our CRM strategies, thoughtful F&B programming and creative retail ideas.

How do guest demographics and preferences influence the types of ancillary services that hotels should prioritize?

Guest demographics and preferences play a crucial role in determining which ancillary services hotels should prioritize. Obviously we look at the age and style of guest: Gen-Z may prioritize a buzzy lobby scene, for example, while families may be more focused on connecting rooms. 

But we also need to consider why they are traveling and their budget; are these travelers splurging on spa treatments and tickets to a show? Or are they part of a corporate group that needs efficiency, a meeting room, fitness center and in-room dining? Our associates do their best to combine guest demographics with “old-fashioned” in-person hospitality to make sure that we are taking care of our guests and tailoring offerings to what will resonate most. 

We’ve seen big opportunities in upselling – this is an area that the airlines have been doing for years, and we’re just starting to have fun with this. For example, once a guest has booked their room at The Rally Hotel, shouldn’t they be invited to have drinks at our cocktail bar, Call Me Pearl? Perhaps they’d like to upgrade to a suite with mountain views, or arrange for flowers to be waiting in their room. We are working to create a frictionless experience for all guests, especially when it comes to “little luxuries” like a room upgrade. 

We’re also encouraging our hotels to expand their focus on traditional amenities to experiences. For example, guests of Hotel Commonwealth in Boston have the opportunity to learn how to row on the Charles River – how cool is that? We want to create these kinds of memorable experiences that people talk about well after they check out.  The goal is to create a more personalized experience that unlocks new revenue streams and boosts guest satisfaction.  That’s a win-win for the hotel and the guest. 

How can hotels strike the right balance between enhancing guest experience and maximizing ancillary revenue streams?

This comes down to three things: transparency (clearly communicating the cost and benefits to the guest), integration (making it easy for guests to upgrade, for example) and operational excellence (making sure that we are always focused on guest needs).

By Sharon Hirschowitz