Hotels Can Unlock New Revenue Through Off-Property Experiences

By Elena Vasquez

In 2005, W. Chan Kim and Renée Mauborgne introduced Blue Ocean Strategy, a framework urging companies to leave crowded “Red Oceans” and create “Blue Oceans” with few or no direct competitors. For hotels, its practical application is not another room upgrade but off-property experiences co-created with local artisans and external partners.

What does this change for hotels?

Many hotel leaders treat growth as a zero-sum contest: when one property gains a customer, another loses one. That assumption pushes hotels to target competitors’ guests with familiar products, including accommodation, food and beverage outlets, event space and, in many cases, wellness facilities.

Under this approach, bigger guest rooms, fine dining and longevity treatments can improve the stay, but competitors can readily replicate them. The result is differentiation that often ends in price-based rivalry, a pattern described with Red Ocean Theory.

Kim and Mauborgne defined a “Blue Ocean” as “uncontested markets with few or no competitors and significant opportunities for growth.” Their 2005 framework now appears in business-school curricula worldwide, yet many businesses still concentrate on existing markets rather than creating new ones.

The case draws on Netflix, Uber and Airbnb as examples of companies that created new demand and growth through new business models. Netflix used technology to increase the efficiency and convenience of video rental; Uber and Airbnb pioneered disruptive models that helped popularize the sharing economy. Their histories frame the hotel question: what new value can a property create beyond lodging?

A route beyond existing revenue centers

Today’s guests value experiences over product. Hotels remain physical assets built around accommodation, food and beverage experiences, wellness programs, events and services delivered by people. Many design, control and brand each offering in-house, on the assumption that the property will deliver the strongest experience.

Promotional language such as “Discover our award-winning restaurant,” “Enjoy handcrafted cocktails in our bar” and “Relax with a rejuvenating spa treatment” reflects that conventional approach. Yet each revenue center can compete for the same guest and the same discretionary spending, while an on-property-only model can limit both the variety and authenticity of the guest journey.

The proposed alternative is to choreograph carefully curated experiences beyond the hotel with external organizations and experience providers. Properly managed, those programs can enhance brand value, deepen guest engagement and create distinctive offerings that competitors may find difficult to replicate. The aim is not to outsource the brand; it is to make the hotel the guarantor of a broader, coherent experience.

The ERRC operating framework

Kim and Mauborgne’s 2005 ERRC framework provides four actions. Leaders must examine which industry assumptions and overbuilt features no longer earn their place, then raise service standards and add genuinely new elements. Its practical value here is a disciplined way to move spending beyond familiar hotel revenue centers.

• Eliminate: Remove taken-for-granted assumptions, including that guest experiences can only be delivered on property.
• Reduce: Scale back products and services that exceed their value to customers.
• Raise: Elevate key services and experiences above industry standards, including authentic interactions from guest-contact employees.
• Create: Introduce offerings the industry has not offered and build exclusive collaborations for hotel guests.

Possible collaborations include rolling custom cigars with personalized labels, designing personal jewelry, blending a private collection of wines and creating a signature fragrance. These co-branded experiences would be available exclusively to hotel guests. When packaged effectively, the programs can generate additional revenue rather than merely redistribute spending among existing outlets.

The number and quality of experiences a hotel can deliver in-house is inherently limited, while the possibilities beyond the property are much broader. The range ultimately depends on creativity and the ability to design memorable experiences guests cannot easily find elsewhere.

Pairing an exceptional stay with a curated external experience can create a lasting impression, evoke emotion and prompt guests to share the moment with family, friends and wider social networks, extending word-of-mouth advocacy for the brand.

The operator and guest payoff

The article positions the concierge as the ideal coordinator for these packages. By working with local artisans, the concierge can assemble educational, authentic and distinctive experiences while keeping the hotel connected to the encounter. That coordination gives the hotel a reason to own the broader relationship and can encourage repeat visits.

For operators, the proposal could add a revenue stream through packaged experiences. It also seeks to strengthen the brand enough to encourage repeat visits. No cost, margin or revenue-share assumptions accompany the proposal, so the size of the economic gain remains unquantified. The case rests on additional revenue, stronger brand association and repeat demand rather than a demonstrated return.

The next test for hotels is whether concierge-led partnerships with local artisans can turn one-off encounters into repeat visits, additional revenue and brand loyalty that competitors cannot easily replicate.