Hotel upsells are not only beneficial for your hotel business’ revenue, but it also affects the overall guest experience positively. Hoteliers tend to overlook the importance of seeking upsell opportunities actively - I am not talking about pushing it too much, but there are certain ways to investigate whether a guest is open to an upsell.
In this article we’ll discuss how you too can easily apply upselling techniques in your hotel business. It’s important to note that upsell opportunities are beyond the scope of room upgrades solely, but it can include a number of other things like late-checkouts, or pet fees.
Upselling premium rooms
During my work, I often come across hotel owners and managers who are so overprotective of their premium room categories and treat them so separately that they often remain unsold. Every hotel professional knows that the most expensive hotel room is an empty room, especially if it is in the premium category.
What is so special about premium rooms?
Simply put: nothing. Of course, this doesn’t mean they don’t provide a fantastic experience, but in terms of operation, they are special, mainly due to the extra daily income. An empty suite can actually be a financial burden. While the overall occupancy of standard rooms is high, the under-utilisation of premium rooms and the optimisation of ratings rarely preoccupy operators.
However, the pandemic has revealed previously unperceived weaknesses in hotels, including the fact that some rooms place a heavy burden on the balance sheet. Covid has forced everyone to be more creative and flexible in maximising revenue and increasing product efficiency.This means a suite that has so far produced only a 20% occupancy throughout the year is now expected – following a changed strategy due to the pandemic – to account for a better share of RevPAR growth.
One of the biggest challenges in hotel upselling is that OTA sales strategies shift guests to budget-friendly room types. Typically, the cheapest, ‘room only’ room type is placed at the top of the list, meaning these room categories fill up first. However, once you have won the guest, you have the possibility to upsell.
The importance of upselling in your hotel business
Apart from the obvious added revenue, hotel upsells have other benefits that’s important to take into consideration.
First of all, finding the right upselling opportunities is beneficial for the guest as well, and thus can improve the overall guest experience and satisfaction. If the guest feel as you are looking out for them, they will perceive your intent as kindness, and might even write about it in a guest feedback or review. This experience can also lead to guest loyalty.
By leveraging this internal revenue source, your business will be less sensitive to fluctuations in the market. In the long run, this strategy can help your business to survive unforeseen events, like what Covid was.
Differences between upselling and cross-selling
Cross sells are products or services outside of your property, while upselling happens within your property. Basically, when cross-selling, the added revenue goes to another business, while when upselling, the added revenue goes to you. However, both of these strategies are actually very important for you and other businesses in the area.
Hoteliers can leverage cross selling opportunities to expand their offers without investing into amenities or resources. Therefore, by setting up partnerships with other businesses in your area, hotels can keep the costs low while further improving the guest experience.
Upselling techniques to use in your hotel business
There are certain techniques you can use to boost upsells in your hotel. We collected the best ones below.
1. Ask the right questions and understand your guest
There will always be guests who really want to stay in the cheapest possible room, but there are also some who can be convinced to book the premium category. If you know your guests well and segment your target markets appropriately, you will have a good chance of starting to upsell.
Useful tip: most guests booking through OTAs are unaware of what your hotel has to offer. Ask them if they have any special needs during their stay? Are they on holiday? Or is their visit for business purposes? Are they traveling with kids? Depending on their answers and needs, an upselling opportunity may arise.
2. Rationalise sales
Booking a standard or budget-friendly room does not mean that the guest does not want to stay in a nicer and more spacious room. Maybe they are just waiting for the opportunity to upgrade their stay at a discounted rate. You don't have to worry about the discount making your room look less special. Since a hotel stay is usually a short-term purchase, guests do not associate such discounts with lower quality, but look on it as a great bonus.
Always inform the guest about the discounted options. For example, “This Junior suite can be booked for €100, but today I can give you a special offer of €50.” This price reduction - especially if you emphasise it - can tempt guests to choose a higher category.
3. Highlight the price difference only
When trying to upsell, don’t include the full amount, just highlight the price difference. Instead of saying the total price of the junior suite is €200, say you can get a higher category room for just €50 more. Specify what benefits the higher category comes with: more spacious room, higher level of comfort and service, better view etc. Emphasising that the added value exceeds the price difference can be convincing.
4. Create package offers
Package offers are tempting for many guests, so it can be an effective tool for upselling. Such package deals usually include a higher category room type, extra services and programs. A romantic package in a deluxe room with champagne and dinner can be perfect for couples who have recently got married or have just started dating.
5. Rule of three, with a decoy
Rule of three theory basically says that things presented in threes are more attractive than any other number. Offering 3 different offers to your guest when upselling gives them a sense of a relatively wide freedom of choice while keeping the decision-making process relatively simple.
This can be combined very well with the decoy effect, which is that people are more likely to choose one option over another if there is a third, less attractive alternative. This strategy is exemplified by the pricing of popcorn in cinemas (the next time you go, don’t forget to check it out), but it’s also great for hotel prices.
If you want to upsell a higher category room, you can also specify a third option somewhere in the middle, at a price slightly lower than the upsell price you actually want to achieve.
Let’s say you sold your Standard (20 m²) room for €100 and you want to upsell your Junior suite (35 m²) for €150. Here you can easily add a decoy to the mix, for example, with a 22 m² Superior room for €140. As the price difference between the the Superior and the Junior Suite is only €10, the Junior Suite with a much higher expected value will seem way more attractive to the guest.
Why don't you leverage hotel upsells?
Remember that upselling hotel rooms and services is a great option for both the guest and the hotel. While the guest generates more revenue for the hotel, they receive more value during their stay, making it more special. A memorable stay can create returning guests and a better online reputation, which in turn can drive additional sales.
The key is to know what value your potential guests are looking for, and make sure your offer reflects the right type of upselling opportunities. So the task is to identify what your guest wants, create it, and then offer it to them!