Why the model exists
For most of the last two decades, hotel commercial strategy has focused on one product (the room) and one metric (RevPAR — revenue per available room). Distribution strategy meant deciding which channels sell that room, and at what commission.
Three shifts made that too narrow:
- 1
The room stopped being the whole product. Lodging accounts for about 30% of total hotel-guest trip spending. TRevPAR measures total recognized hotel revenue per available room. It includes rooms plus recognized non-room revenue such as F&B, spa, parking, events and ancillary income. It does not automatically include all spending by hotel guests in the destination or the full GMV of third-party marketplace transactions. Revenue recognition, not whether a purchase takes place on-property or off-property, determines inclusion.
- 2
The hotel's physical assets became sellable to people who aren't guests. Meeting rooms, coworking space, pools, spas, parking, and event space have demand from locals, remote workers, and businesses — demand that was invisible while the only product was a room night.
- 3
Discovery moved to conversation. Travelers increasingly plan through AI assistants rather than search boxes. What an assistant can recommend and book is whatever is structured and bookable; a hotel whose inventory is a PDF menu and a phone number is invisible to that channel.
Destination commerce is the commercial response to those three shifts. Instead of asking how do we sell more rooms, it asks how much of the total economic activity generated by our guest relationship do we participate in?
The three inventory engines
A destination commerce model organises a hotel's sellable inventory into three engines. Most hotels are strong in none of them and unaware of the third.
[ ENGINE 01 ]
Everything you own — asset commerce
The property's physical capacity, sold beyond the room night and beyond the guest list: meeting rooms and boardrooms, event spaces and terraces, spa and treatment rooms, pool and cabana day passes, gym access, parking, coworking desks and lobby workspace. Much of this sits idle on weekday afternoons and off-season weeks while local demand for exactly that capacity goes unmet.
[ ENGINE 02 ]
Everything you host — experience commerce
Programming the hotel creates or runs itself: chef's tables and tastings, classes and workshops, wellness sessions, guided walks, seasonal events, packages that bundle a stay with something to do. These are products the hotel already produces, often sold informally through the front desk and never at scale.
[ ENGINE 03 ]
Everyone you vouch for — destination commerce proper
The curated local layer: restaurants, tour operators, museums, wineries, guides, rental and transport providers the hotel trusts and recommends. Concierges have made these referrals for a century without participating in the revenue. In a destination commerce model the referral becomes a booking made through the hotel, with revenue shared between hotel and partner.
The combination is what distinguishes the model. Selling spa appointments online is ancillary revenue. Recommending a restaurant is concierge service. Making the spa, the chef's table, and the restaurant all bookable in one place, under the hotel's brand, with the hotel earning on each — that is destination commerce.
The economics: room revenue vs. the guest's total footprint
The guest economy, by the numbers (U.S., 2024)
| Amount | Share of guest trip spend | |
|---|---|---|
| Total U.S. hotel-guest spending | $786.5B | 100% |
| Lodging | $235.5B | ~30% |
| Transportation | — | 24% |
| Food & beverage | — | 18% |
| Recreation | — | 12% |
| Retail & other | — | 11% |
| Gaming (on-site) | — | 6% |
| Total on-site guest spending (including lodging) | $352.3B | ~45% |
| Total off-site guest spending (including transportation) | $434.2B | ~55% |
Source: Oxford Economics, Economic Impact of the U.S. Hotel Industry, prepared for AHLA (January 2025, 2024 data), p.16; Longwoods International. Figures are approximate and category percentages may not total 100% due to rounding. On-site and off-site totals are a separate location breakdown, not additional spending categories. The off-site total includes transportation, including airfare. Lodging spending includes lodging taxes.
Lodging accounts for about 30% of hotel-guest spending. Hotels capture additional on-property spending beyond lodging, bringing total on-site hotel spending to approximately 45%. Roughly 55% of guest spending occurs off-property, including transportation. These figures describe the wider guest economy, not revenue a hotel can automatically capture. Destination commerce is a model for participating in more of that activity through relevant services and partnerships. See the Hotel Guest Spending research for the full breakdown and methodology.
What that means for one property
Consider an illustrative 250-key hotel at 70% occupancy — roughly 64,000 occupied room nights a year. The national ratio is approximately $106 in off-property spending for every $100 in lodging spending, including lodging taxes. That additional spending covers dining, recreation, retail and other goods and services, excluding transportation.
| Typical today | Under a destination commerce model | |
|---|---|---|
| What the hotel sells | Rooms, plus some F&B and spa on-property | Rooms + assets + hosted experiences + local partner bookings |
| Who can buy | Guests | Guests, locals, businesses, event organisers, remote workers |
| Where it's sold | Booking engine, OTAs, front desk, phone | One branded marketplace surfaced across booking, pre-arrival, in-stay, post-stay, and AI assistants |
| Revenue on a partner referral | $0 | Commission or revenue share on every booking |
| Revenue on idle capacity | $0 | Day passes, hourly space, off-peak packages |
| Primary metric | RevPAR | TRevPAR and revenue per guest relationship |
The second-order effect matters as much as the first: a guest who books room, dinner, a tasting, and a boat trip through the hotel has a materially deeper relationship with that hotel than one who bought a room night. Destination commerce is therefore also a loyalty and lifetime-value model, not only a revenue model.
What destination commerce is not
It is not upselling. Upselling sells a better version of what the guest already bought — a room upgrade, a late checkout. Destination commerce sells things the guest would otherwise buy from someone else entirely. Upselling is one tactic inside the model.
It is not experiential hospitality. Experiential hospitality is a design philosophy — building stays around memorable activities. Destination commerce is a commercial model; it asks who earns on those activities and through which channel. A hotel can be highly experiential and capture none of the revenue.
It is not a digital concierge. A concierge tool answers questions and takes requests. It becomes part of destination commerce only when guests can complete purchases inside it and the inventory extends beyond the hotel's own services.
It is not listing on an OTA or an experiences platform. Listing a hotel's tours on a third-party marketplace distributes them; it does not make the hotel the marketplace. In destination commerce the hotel owns the storefront, the guest relationship, and the economics.
It is not a loyalty programme. Points reward repeat purchase of the same product. Destination commerce deepens the relationship by widening what the guest buys from the hotel.
What a hotel needs to practise it
- 1
Structured, bookable inventory for all three engines — with live availability, pricing, and rules — rather than menus, PDFs, and phone numbers.
- 2
One branded storefront where guests and locals discover and buy, and which the hotel's booking engine, pre-arrival communications, in-stay surfaces and concierge all draw from.
- 3
Partner onboarding and payouts — a way for local businesses to list, set terms, and be paid automatically, so the curated layer scales beyond a handful of hand-managed relationships.
- 4
No integration required — because most inventory offered lives outside the hotel, there's no need to integrate with the existing CRM, POS, or other on-property systems.
- 5
Machine-readable inventory — structured data that lets search engines and AI assistants discover and recommend what the hotel sells.
- 6
A total-revenue view — measuring TRevPAR using recognized hotel revenue alongside RevPAR and revenue per guest relationship, while tracking marketplace GMV separately.
Software platforms built for this model — including DestinationCommerce.ai — package these components as a white-label hotel marketplace. See how the model maps to ancillary revenue, direct bookings, the guest experience, and the local partner marketplace.
Frequently asked questions
- What is destination commerce?
- Destination commerce is a hospitality business model in which a hotel participates economically in everything its guests do — selling not only rooms, but the spaces it owns, the experiences it hosts, and the local businesses it vouches for, through its own branded marketplace.
- How is destination commerce different from ancillary revenue?
- Ancillary revenue is any non-room revenue a hotel earns — spa, F&B, parking, upgrades. Destination commerce is the broader model that produces it: it extends what the hotel sells to include hosted experiences and curated local partners, extends who can buy to include non-guests, and puts all of it in one hotel-owned storefront. Ancillary revenue is the result; destination commerce is the strategy.
- How is destination commerce different from experiential hospitality?
- Experiential hospitality is a design philosophy about building memorable stays around activities. Destination commerce is a commercial model about who earns on those activities and through which channel. A hotel can be highly experiential and still hand the revenue to third-party platforms.
- What can a hotel sell under a destination commerce model?
- Three categories: assets it owns (meeting rooms, event space, spa, pool and cabana day passes, parking, coworking), experiences it hosts (tastings, classes, chef's tables, wellness sessions, events, packages), and local partners it vouches for (restaurants, tours, museums, wineries, guides, transport).
- Who buys from a hotel marketplace besides guests?
- Local residents, remote workers, businesses booking meeting or event space, day-pass customers, and travelers staying elsewhere — anyone with demand for the hotel's capacity or its curated local offerings.
- How do hotels measure destination commerce?
- Track TRevPAR alongside room-only RevPAR and revenue per guest relationship. TRevPAR measures total recognized hotel revenue per available room. It includes rooms plus recognized non-room revenue such as F&B, spa, parking, events and ancillary income. It does not automatically include all spending by hotel guests in the destination or the full GMV of third-party marketplace transactions. Revenue recognition, not whether a purchase takes place on-property or off-property, determines inclusion. Measure marketplace GMV separately from the revenue the hotel recognizes, such as partner commissions or fees.
- What share of hotel-guest spending happens off-property?
- U.S. hotel-guest spending totaled $786.5 billion in 2024. Lodging accounted for $235.5 billion, or about 30%. Hotels capture additional on-property spending beyond lodging, bringing total on-site hotel spending to $352.3 billion, or approximately 45%. Roughly 55% of guest spending, $434.2 billion, occurs off-property, including transportation. Non-lodging spending is not the same as off-property spending. Source: Oxford Economics for AHLA, Economic Impact of the U.S. Hotel Industry (January 2025, 2024 data), p. 16.
- Do hotels need new software for destination commerce?
- Usually yes for the marketplace layer — structured inventory, partner onboarding, payouts, and a branded storefront are not functions of a PMS or booking engine. The model is designed to sit alongside existing systems rather than replace them.
Source: Oxford Economics, Economic Impact of the U.S. Hotel Industry, prepared for the American Hotel & Lodging Association, January 2025 (2024 data), p.16; Longwoods International. Percentages may not total 100% due to rounding.