HSMAI releases white paper on hotel upselling

The Hospitality Sales and Marketing Association International, in partnership with Nor1, released last week a new white paper entitled, “When More is More: Exploring Upselling as a Sales & Marketing Tactic.”

Authored by e-commerce and Internet marketing consultant Tim Peter, the paper asserts that employing upsell strategies can drive significant bottom-line growth and increase of RevPAR (revenue per available room) for many hotels. Upselling, the practice of offering add-on services or amenities to consumers for reasonable fees, has been used by a variety of industries and has played a major role in driving revenue growth for a number of properties around the world when put into practice in a hospitality setting.

“Add-ons for hotels can include room upgrades, Internet access, parking, customized restaurant menus, early check-in and more,” Peter said. “The best way to leverage upselling is simply knowing the customer and anticipate his or her needs. A solo traveler staying mid-week will almost certainly value different options than a family of five staying on a long holiday weekend.”

Peter explains hotel marketers and revenue managers must focus on four key areas when it comes to guest value, which resides at the core of any upselling program. These four areas include:

  • Process: Identify all products available for upsell. Review amenities in the hotel to best utilize assets within the hotel, including room types and views. Once identified, hotels must determine the appropriate time to offer these amenities and at what price to offer them.
  • Data: Identify guest preferences following repeat stays through business intelligence; use predictive analytics to suggest offers, timing and pricing based on guest behavior; capitalize upon real-time decision-making that relies on buyer behavior and transactional data to make dynamic offers in real-time. With the increase of mobile bookings, this model will fuel mobile offers.
  • Technology: Sophisticated technology available to hotel marketing teams can help track changing needs of guests and provides the right offers at appropriate times to capture the sale. 
  • Personnel: The final step necessitates every member of the hotel team to work together to provide the best experience possible to each guest during the reservation process, via pre-arrival email blasts, at check-in, during the stay and following the stay to ensure satisfaction.

In comparison, a poorly implemented upselling program can have negative effects on increasing revenue. When seeking to initiate an upselling program, Peter urges the hospitality industry to avoid the following mistakes:

  • Upselling before closing the initial sale: You must sell something to the guest first before you can upsell them. Presenting offers too early can risk the overall sale.
  • Focus on guests ‘gaming’ the system: Properties avoid upselling in fear that the guest will request and receive free upgrades on subsequent stays after enjoying premium amenities. However, selling upgrades can enlighten the guest to what all the hotel has to offer, and once they experience a premium service, they are likely to request it again.
  • Improperly valuing the upgrade: Consumers focus on the relative value of one thing compared to another, and price upgrades should come accordingly. Guests are unlikely to pay for a service that costs twice as much as their hotel room but may be enticed by an upgrade to a suite for a diminutive cost.
  • Not investing in the appropriate tools: It’s difficult to anticipate a guest’s needs without having known his or her purchase history and preferences.

Visit the HSMAI Knowledge Center to download the complete white paper.