Room selling can be a tricky business in 2024. Airbnbs serve as stiff competition year after year. Moreover, in 2021, a total of 2,246 hotels opened around the globe. This number is forecasted to increase over the following years to reach 2,934 by 2023.
The rising number of openings serves as a major warning for existing hotels. New hotels come with a variety of digitized operations and convenient guest practices. Current independent hoteliers with brick-and-mortar systems may face a few difficulties catching up to these digital operations.
So how can hotels keep up?
By learning to upsell rooms and other services!
Oaky’s report on room upselling found that:
1. Ski resorts and hotels in the mountains generated an average of 38.39 euros of upsell revenue per room every month.
2. Hotels in these regions can lose up to 460 euros annually if they fail to upsell rooms.
Moreover, another report by Hotel Speaks discovered that:
1. Wellness offers as spa treatments accounted for 20.4% of services sold in hotels.
2. But hotels that don’t give these services have the most sales with room upgrades. For such hotels, they found that upselling rooms generates 20.2% of all hotel sales.
3. Upselling or offering room upgrades are the easiest methods of boosting revenue across all hotels.
Hotels can only benefit by incorporating upselling techniques in their room-selling process. But before we delve into that, let’s understand what typical room selling entails.
What is Room Selling?
Traditionally, room selling involves guests booking rooms for their stay. Hotels can offer a variety of rooms and services depending on the booking. Guests typically book rooms based on their price range and amenities.
Historically guests would book rooms at a hotel’s front desk or reception. But in the digital age, booking at the front desk is rarer than ever. Visitors often use third-party sites and OTAs to book rooms. And unfortunately, OTAs lead to a significant number of last-minute cancellations.
For example, this study found:
1. The cancellations on Booking.com are 104% higher than those through the direct channel.
2. The cancellations on Expedia are 31% higher than those through direct booking platforms.
OTAs come at a major cost. These cancellations add up eventually and negatively impact your bottom line. The internet has added a layer of convenience to a guest’s booking experience. But it created the opposite effect on hotels that make most of their revenue through direct bookings.
Digitizing hotel bookings and installing a booking engine is the first step to competing. Moreover, upselling is the ideal situation for hotels facing a loss of revenue due to OTAs.
What is Upselling?
Upselling in hotels refers to upgrades to better lodging or services for guests. It centers on convincing customers to purchase premium rooms and service upgrades. For instance, you may persuade your visitors to buy amenities like upgraded accommodation before they check into your hotel.
You can integrate upselling into your sales cycle in several ways. But the best way for hotels to utilize this strategy is by learning how to offer upgraded rooms. Some benefits of upselling rooms are:
Customers are ready to spend a minimum of 13% and as much as 18% for better experiences. Moreover, a study found that upselling enhanced visitors’ experience by a whopping 25%. Room upselling allows guests to experience a higher level of luxury. When your upgraded offers add genuine value to a guest’s experience, they’ll become permanent visitors to your hotel.
Greater possibility for positive reviews
As we’ve mentioned above, offering upgraded rooms can easily boost customer satisfaction. The same study also revealed that upselling has a significant impact on the quantity and caliber of positive customer reviews. The study results demonstrate that a strong upselling program is associated with a simultaneous increase in visitor happiness and online reputation.
Better room management
A great benefit of upselling rooms is ensuring the hotel is at full capacity. Hotels struggle with maximizing their occupancy. Upselling a premium room gives new guests the option to occupy the lower-tier rooms. Additional bookings are more likely to roll in for guests booking rooms at the last minute. Most guests booking at the last minute are not looking for premium rooms. These guests hope to find quick, cheap, and value-based rooms.
Helps capture information about the target demographic
Upselling rooms gives the hotel opportunities to figure out which kind of person/group is more likely to buy upgrades. Without implementing an upselling strategy, hotels will miss out on vital guest knowledge. Revenue is the ultimate benefit of the room upselling. But identifying the right audience for upgrades is essential to succeeding at upselling. Upselling can also help hotels identify where they need to invest money. Guests will generally prefer certain upgrades over others. For instance, some guests may opt for spa services or F&B. Whereas others may opt for a premium room or access to a conference room.
All these benefits are a solid indicator for you to start your upselling journey. So, what are some ways you can add value to your room selling processes?
How to Add Value to Room Selling?
- Offer and incorporate add-on services
Hotel wellness offers such as spa treatments account for 20.4% of services sold. These services are investments that help improve customer satisfaction. Typically, they also help bring in more revenue than you invested in the first place.
- Send guests pre-arrival emails and messages on their chosen platforms
Thank them for selecting your hotel by sending them customized texts and emails. Ask them to fill out a form regarding any preferences, aversions, and needs before they arrive. You can also highlight any upgrades or add-on services in this message.
- Give guests a tour of your property and its different rooms
The best way to showcase the value of an upgrade is by providing visuals of how the experience differs. Upgraded rooms should not just be fancier or larger rooms. They should also come with an array of services that can elevate your guest’s experience. For instance, guests who opt for a luxury room could get a complimentary breakfast or lunch. These upgrades should not make the standard rooms look bad. Rather they should look like better options for people who have the money to invest in such services.
These are just some ways to add value to the upgrades you offer at your hotel. If you’re looking for how you can better upsell rooms, the next section delves right into it!
Top 6 Room Selling Techniques for Hospitality Businesses
1) Create special offers and discounts
This technique is the most effective when your guests see significant value for a small price. But be careful when you’re offering such deals. There are specific times when it makes sense to offer a discounted deal, some of which are:
1. Group Discounts on Booking
When it is a large group of corporate employees or wedding parties. The size of these groups guarantees that you’ll reach maximum capacity. This trade-off is ideal in slower-paced non-holiday periods when people travel less.
For instance, in India, months like June, July, and August are when schools and colleges reopen. There are few to no festivals that signify long weekends. If you get corporate groups or wedding parties during such slow periods, don’t hesitate to offer upgrades at a discount.
2. Holiday Discounts
The next opportunity to offer discounts and deals is during the holiday season. Now, this may sound directly in contrast with the previous point. But hear me out. The holiday season ensures a large inflow of guests and visitors. But this may well not mean full occupancy. A significant portion of guests will typically opt for a standard or basic rooms.
This leaves the higher-tier rooms unoccupied but leads to full occupancy in all lower-tier rooms. Guests who wish to book rooms at the last minute will likely be looking for a lower price and won’t book any high-tier rooms.
Offering guests with bookings a chance to upgrade at a discounted price is the best move in this situation. It enables you to free up standard rooms for late bookings and leads to higher occupancy.
Offering a hefty discount can serve as an incentive to choose an upgrade. This technique works particularly well when paired with the price anchoring tactic. Price anchoring refers to when you give visitors an initial anchoring price point. Then later, offer a lower price point to showcase the value of the discount.
For example, you could say, “The luxury suites generally cost $50 per night. But due to the large size of your group, we could offer it at a discounted price of $35 per night.”
The anchor price of 50 dollars is the price customers will use as a reference when deciding to buy a product. Doing this adds extra value to the product or service. People are far more likely to opt for a room upgrade when they know they’re getting a good deal.
2) Offer relevant upgrades
Upselling involves a great deal of negotiation and persuasion. But it doesn’t have to be that way all the time. Upselling to the right guest at the right time can make all the difference. The key to upselling successfully is knowing which guest is open to an upgrade.
For instance, guests traveling in large groups would prefer upgraded rooms. In contrast, a newlywed couple may prefer couples massages or spa treatments. If you don’t offer spa services or in-house food, offer packages that do.
You can collaborate with nearby spas, restaurants, taxi services, and more. Create upgraded packages that allow guests to use these services.
Offering the wrong upgrade can deprive your hotel of upselling opportunities and frustrate or annoy a guest. But several guests are more than ready to shell out for their dream stay. According to a recent study, 70% of Millennial travelers wish to invest significant money in leisure travel. This means the majority of Millennial visitors will be happy to upgrade their rooms for a better experience.
So, what’s the best way to offer such relevant upgrades? Implement a solution that identifies upselling opportunities! Deploy a CRM or data collection tool that segments your guests into different categories. For example, your CRM will segment guests based on demographic details. Some of which could be income, age group, family size and so on.
You can identify upselling opportunities based on the income information alone. But you can also create more categories related to your guest’s buying habits. Guests who often invest in luxury products and services are a likely candidate for room upgrades. Once you implement a CRM, it’ll be a breeze to identify guests who want exciting upgraded experiences.
3) Increase human touchpoints
Google’s study found that there are currently anywhere between 20 and 500 touchpoints in the typical consumer journey. To compete in the present market, hotels must invest in tools that help maximize these touchpoints.
The hospitality industry depends on creating and maintaining meaningful client relationships. The best way to nurture such relationships is to increase overall interaction with prospects and guests. There are several methods of incorporating such touchpoints into your guest journey, some of which are:
Marketing automation as the name indicates, automates a number of marketing processes. It helps users save time on several manual tasks and concentrate on strategy and boosts overall productivity.
For instance, marketing automation helps send instantaneous alerts and notifications to leads who’re in the sales cycle. Without it, marketers will have to manually send these alerts which will eat up a good amount of their productivity.
With the aid of marketing automation, hotel marketers can:
1. Create customized, targeted campaigns,
2. Automate the reservation process, and collect bookings from every source,
3. And streamline operations that boost Customer Lifetime Value.
These campaigns will help promote your hotel to potential, current, and old guests in a seamless manner. They serve as essential touchpoints in every customer journey, especially if you have any ongoing offers or deals.
This research found that with marketing automation, hotels experienced the following advantages:
1. Online revenue growth thanks to virtual hotel tours
2. Decrease in visitor complaints
3. An improvement in customer ratings
Apart from this, every hotel should have a team of call center agents, ready to respond to any customer inquiries. Call center management and offering these agents centralized information regarding guests is a total game changer.
Guests often call when they’re facing issues or have concerns. You must empower your agents with tools that give them insights into the guests’ needs.
4) Front-desk upselling during check-ins
You can integrate upselling into your sales cycle in several ways. But the best way for hotels to utilize this strategy is by implementing it at the front desk. There are several approaches you can use while upselling at the front desk, some of which are:
This is an absolute necessity for front-desk upselling. For instance, when your guest arrives, ask them about their journey to the hotel.
- Engage them in a conversation about their stay at your hotel and their plans in the city.
- Inquire about their expectations and experiences while traveling and staying at hotels.
While you may wish to skip right to asking whether they would like an upgrade, that may not be the best move. Always listen to your guests and figure out if they are open to upgrading or would like to rest immediately.
Actively listening to your guests at the front desk opens up far more opportunities for room upselling. For instance, if a guest states that they’re looking for unique experiences, you can recommend a room that offers one.
Handling walk-ins at the front desk
Always provide walk-in customers with a variety of choices when showing rooms. Without proper training, front desk staff members frequently give guests only one type of room.
Usually, this is the cheapest or most basic room. Instead, give walk-in visitors a choice of lodging options and prices. Walk-ins are more likely to be open to exploring all the alternatives than last-minute internet reservations.
The front desk offers several opportunities to upsell, you can read about more of these techniques here: An In-Depth Guide to Upselling at the Front Desk (With Scripts + Examples)
5) Improve and enhance booking processes
In a study conducted in 2018, the researchers found:
1. Direct website reservations accounted for 66.7% of bookings
2. Marketplace bookings accounted for 9.1%,
3. And third-party service bookings accounted for 24.3%.
This emphasizes how vital it is to have a digital presence that will help you connect with your target market. OTAs are vital to a hotel’s sales and conversions. But they negatively impact your revenue overall.
Moreover, you can’t upsell rooms or offer hotel upgrades with an OTA or third-party site. These sites directly impact your revenue by robbing you of the opportunity to upsell online. To experience greater sales, you must decrease reliance on third-party aggregators and OTAs.
Direct bookings also allow you more control over your guest’s experience. The first step to achieving this is implementing a robust lead management solution.
Your hotel needs a system that streamlines booking information from every single source. This way, you can reach out to interested leads at opportune moments. For example, if you receive a form with a lead’s email, you can immediately send an email in response.
In it, you can detail your standard rooms and fees, with upgraded offers or discounts. Before you implement a marketing automation solution, you need a lead management system to identify interested prospects.
“You might have the best product in the world and the best sales team. But without leads, it is like a car without fuel and that car is not going to go anywhere. That’s exactly why you need a lead management partner that can integrate your leads directly with a lead capture form.”Dr. Joseph Britto, Co-founder and Director of Acron Homes and Hospitality
Upselling opportunities requires a lead first. You can’t upsell if you don’t have enough prospects to do so.
Note: The most crucial step in the booking process is to create a website that makes hotel bookings seamless and convenient. Your website interface should be navigable and filled with images of the hotel. Ensure that you include testimonials as well, as it boosts your credibility in the eyes of any browser.
6) Implement post-stay loyalty programs
Your hotel retention rates depend on your post-stay communication processes. Once your guest has left, ensure you reach out to them to enquire about their experience.
The post-stay communication helps with retention and customer acquisition. They give you opportunities to figure out how you can create better experiences. They also help you figure out if your services make a genuine difference.
You can upsell better when you’re aware of your customer’s thoughts after their stay. These are some steps you can take toward building customer loyalty to upsell more:
- Create referral programs
The best way to upsell is to have someone else do it for you! Jokes aside, the most credible source, for hospitality services, is our family and friends. Chances are, if they had a positive experience, they’d be happy to refer your hotel to a friend. Upsell rooms using these referral programs as you’ll benefit greatly. For instance, you can offer upgraded rooms to any guest who refers a friend to a room at your resort.
- Revisit programs
Now these require a good amount of data collection and analysis. You must figure out which guests will likely come back to the same place. For example, guests visiting a temple or pilgrimage will generally revisit the same spot. Offer them discounts or deals and upsell a room or service during their next stay.
- Marketing other branches
If you’re a hotel chain or have different hotels in different regions, market those as well. Upselling rooms to a re-visiting guest is far easier than upselling to a new one. This works particularly well if your guest gave positive post-say feedback.
One thing connects all three programs—personalization. You need detailed guest information to offer such personalized upgrades. Additionally, you need customer data, such as feedback forms, to identify future upselling opportunities.
And with that, we reach the end of this section. Now that you know the different ways to upsell, these are some obstacles to avoid when upselling.
Obstacles to Avoid when Upselling
Scattered or inaccurate guest information
Picture this, your marketing team sends a pre-arrival email with a form asking guests about preferences and allergies. Once they receive the response, they forget to hand it over to the rest of the departments. When the guest arrives, if you serve food they’re allergic to, there’s a high chance they won’t return. You must relay guest information to every concerned department. For instance, if you offer both online and physical check-ins. Your front-desk staff should be ready to handle guests opting for the physical one. The front desk presents you with several upselling opportunities. All of these require guest data to identify where those opportunities lie.
Lack of consolidated lead capture systems
Lead leakage causes more harm than most people realize. Every hotel needs a solution that helps them capture leads at every source. Be it OTAs, third-party sites, social media, and so on. For instance, imagine your current lead management system fails to track and capture a guest from third-party sites. Third-party sites are responsible for over 24% of bookings. You’d miss out on this significant portion of guests if your lead management system does not capture these leads. As I’ve mentioned, there won’t be any opportunities to upsell if you lack leads. Implement a tool that guarantees zero lead leakage and boosts lead generation.
Lack of personalization
A study by Epsilon found that over 80% of respondents preferred interacting with businesses that offer personalized experiences. Your upselling strategy necessitates a sizeable amount of guest information. This is because upselling differs from one individual to another. Some guests may have the budget and the desire for upgraded experiences. Others may want to rest and relax and have no thoughts of upgrading. Identifying who’s who and personalizing their experiences can create a world of difference. Even your email marketing campaigns will benefit from a well-targeted outreach. For example, you’re more likely to convert leads if you send them campaigns when they’re looking for hotels in your location. Sending out several email campaigns with no such information will be ineffective and can lead to losses in the future.
Not testing offers and opportunities
A/B testing your upselling methods is non-negotiable. You can upsell using several techniques, but only some may find success. Reinvesting your time, money, and effort in these techniques will increase revenue automatically. A CRM is an ideal tool for this as it can utilize guest data and interactions to figure out what upselling technique is the most effective. For instance, if your hotel offers online check-ins, front desk upselling may not bring much success. In contrast, upselling or promoting upgrades over email can lead to more revenue in this scenario.
Personalized upselling opportunities are the key to avoiding any of these obstacles when upselling. If you’re wondering how you can personalize your upselling, look no further!
Try LeadSquared’s robust sales and automation CRM. With LeadSquared, you can digitize several manual tasks and increase efficiency. These are some of its best features:
- Booking management
LeadSquared’s CRM offers in-depth sales and lead activity tracking. They also provide several templates to capture leads and bookings from your website. This helps reduce your hotel’s dependency on third-party sites and OTAs.
- Lead capture and zero lead leakage
LeadSquared guarantees zero lead leakage and capture leads from every available source. It immediately distributes these leads to relevant sales or call center agents.
- Marketing automation
Send relevant messages to leads based on their inquiries, preferences, and position in the buying cycle using LeadSquared’s powerful marketing automation.
- Call center management
The CRM integrates with several popular call center solutions and telephony apps. Every phone call – inbound or outbound, is captured and recorded in LeadSquared. Currently, the CRM offers seamless integration with SuperReceptionist, CallRail, CallTrackingMetrics, and other call-tracking software.
If you’re interested in a demo, click here and start your upselling journey!