How can hospitality organizations reliably increase profits in the face of inflation, staff shortages, and economic uncertainty?
The answer: upselling.
Upselling offers one of the most effective, proven ways to increase a hospitality organization’s income by putting its resources to good use.
In this article, our software partner Oaky will reveal the top benefits of upselling and the top six ways that hotels and other hospitality organizations can optimize their upselling strategies and maximize profitability in 2023 (and beyond).
Oaky will take it from here. Let’s get started.
The benefits of upselling for hotels & other hospitality organizations
As a hospitality professional, do you ever feel like you have too much to accomplish and not enough time? It’s a common feeling, so don’t worry.
In any case, your time is valuable. So, you want to ensure you’re putting your energy and effort toward initiatives with the most significant impact and highest ROI.
Your upselling strategy offers no exception—you ought to know for sure whether it’s worth putting effort into.
As a hyper-personalized upselling software company that serves hotels and hospitality organizations worldwide, we at Oaky know that upselling is worth the effort.
Here are some main benefits that make a robust upselling strategy worth the investment.
Benefit #1: Upselling can help elevate the guest experience
In their “Travel in 2022” report, TripAdvisor found that travelers are searching for new destinations and ready to splurge on exclusive experiences.
The report also concluded that about three out of every ten Americans say that splurging on a big trip is even more critical now than before 2020.
In the other four markets surveyed (UK, Australia, Japan, and Singapore) by TripAdvisor, over a quarter of respondents say that now is the right time to splurge while traveling.
So, upselling provides a great way to let guests splurge and have the lavish, exclusive experiences they’re looking for.
At the same time, many guests want to avoid planning each aspect of their vacations. So, if you can offer them activities to help fill their agendas as part of your upselling strategy, you can satisfy their needs while boosting your organization’s profit margins.
Benefit #2: Boost ancillary revenue for your hospitality organization
Hosting guests that are willing to splurge on new, unique experiences gives hoteliers the perfect opportunity to upsell products and services.
But successful upselling requires more than guests with a willingness to spend. Success in this area requires a strategic approach.
In other words, the success of your upselling strategy comes down to the following two factors:
- Your organization’s upselling potential (determined by the availability of inventory and resources)
- A codified, trained approach to upselling
Assuming each staff member will automatically promote the upsell given the opportunity equates to leaving money on the table.
Successful upselling requires hospitality organizations to put systems in place that work together to increase the rate and success of upselling efforts.
Systems that increase the success of upselling efforts include:
- Creating a well-thought-out upselling strategy that identifies each upselling opportunity across your organization.
- Training staff so that they can identify opportunities to upsell and then know what to say to pitch additional offerings to guests.
- Using software to guide your organization toward upselling opportunities and optimally pricing each offer.
Benefit #3: Strengthen your brand perception
Tapping into your guests’ needs offers the key to receiving more favorable online reviews, a healthier brand perception, and more referrals.
As mentioned before, people want to get away from the everyday stress involved with planning and orchestrating their working lives. They plan things at work, and they plan things at home.
So, by the time they finally get away from it all, they’re burnt out on planning. They want to relax and have a break from orchestrating schedules, meals, outings, and events.
So, if you can help guests plan their vacation time, you’re providing them with a HUGE service and removing their stress.
And if you’re removing stress from people’s vacations and helping to make those vacations more enjoyable, you’re more likely to receive more quality recommendations.
That’s the best type of advertising a business could hope for and one of the most effective ways to strengthen your brand’s positive reputation.
Benefit #4: Promote brand values & create a branded experience
Sometimes, upselling can help your business promote brand values and create a more branded experience.
As an example, one of the world’s most ecologically conscious hospitality organizations might offer guests the opportunity to dine at their onsite restaurant overlooking spring-fed bathing pools situated deep in the jungle.
When upselling the restaurant, the organization mentioned above can sell guests on how the restaurant sources its food locally from farmers practicing more sustainable forms of agriculture.
What could otherwise be seen as a pretty typical offering (an onsite restaurant) becomes something more when it’s imbued with the values of the larger organization. In this case, that’s a heightened emphasis on sustainability.
So, when you create an upselling strategy, think of how each upsold product or service connects to your organization’s values, whether that’s the value of sustainability, hospitality, community, adventure, art, cultural exploration, or more.
Benefit #5: Improve your TRevPAR
If you have a limited understanding of TRevPAR, its importance, and how it relates to upselling, pay close attention to the following few paragraphs.
The acronym “TRevPAR” stands for “total revenue per available room.” Like RevPAR, this metric tracks the total revenue a hospitality organization makes on a per-available-room basis.
To calculate TRevPAR, divide total revenue by the total number of rooms available.
Here’s another way to visualize the equation:
Total revenue / total rooms available = TRevPAR
So, how does TRevPAR relate to upselling, and how can upselling increase TRevPAR?
In the case of TRevPAR, “total revenue” goes beyond a rooms-only focus to include all revenue produced by rooms, food and beverage, meetings and events, and other departments. It also includes other assorted income, such as income received through cancellation fees.
Upselling and cross-selling can help increase TRevPAR since these methods apply to all revenue streams and the different phases of the guest experience, including the pre-stay period, the check-in period, and during the stay.
By selling room upgrades before your guests arrive, for instance, you gain the opportunity to resell your standard-category rooms to new guests.
To discover additional ways to increase TRevPAR, check out Oaky’s article What is TRevPAR and how to boost it at your hotel.
Six easy ways to maximize the profitability of your upselling strategy
Now that you understand the benefits of upselling, it’s time to explore how you and your business can practice it. The methods listed below will help you maximize your efforts.
Method #1: Personalize your offers
Simply put, personalized offers lead to more deal conversions and higher profits.
In the case of Apex Hotels, the organization used segmentation information gathered through Oaky to send tailored messages to guests before they arrived. These messages offered custom services that helped amplify the guest experience and remove friction from their stay.
In this case, personalized promotions and messages led to higher conversion rates and boosted ancillary revenue for Apex. Plus, the personalization enriches the guest experience, which fuels recommendations and positive reviews.
To discover additional ways your business can increase the effectiveness of its segmentation and personalization efforts, check out “A 7-step guide to effective hotel market segmentation.”
Method #2: Train your team on upselling
An upselling strategy’s success depends on your team’s unity and willingness to get on the same page.
But what’s the best way to accomplish this goal?
Luckily, we at Oaky put in the hard work of figuring that out for you.
Check out our practical guide to conducting a successful upsell meeting to align your departments by clicking here.
This guide will help you delegate ownership of various upselling tasks across different departments, distribute the upselling workload, devise creative ideas that boost upselling results, make upselling a team effort, and help your revenue rise.
Method 3: Make upselling automation your ally
Although it’s well worth the extra effort, an upselling strategy consumes a fair share of time for it to succeed from start to finish.
However, by using an upselling software solution specifically designed for the hospitality industry, organizations can streamline the efficiency of their upselling strategies.
So, what can upselling software help hospitality organizations accomplish?
Ideally, upselling software helps:
- Streamline the upselling process by setting up deals and automating deal send-outs that guests receive before arrival.
- Increase the average bill of in-house guests with the help of an in-stay upselling functionality that encourages guests to book experiences and special deals with one tap of their smartphones.
- Group guests by persona and distribute only relevant deals to each segment.
- Increase the care of loyal guests by crafting special offers and return rates.
- Integrate with your property management system and revenue management systems so that your team doesn’t have to spend time manually updating multiple systems.
“Depending on the season, our hotel attracts an ever-changing mix of business and leisure hotels. By being able to automatically send different offers to these groups, we have been able to increase conversion and guest satisfaction because our upsells are relevant to the guest.”
Jelle Landman, General Manager at Grand Hotel Ter Duin
Method #4: Apply dynamic pricing to your room upgrades
Demand and market conditions constantly fluctuate, business segments shift, and booking trends change, which makes a dynamic upselling program critical to success in the hospitality industry.
To stay ahead of your competition and keep up with the speed of commerce today, consider using upselling and revenue management systems that integrate to ensure your pricing remains relevant and accurate at every point of the guest experience.
Automatically flexing prices for room upgrades based on market demand helps your business optimize rates across all selling channels, reduce upgrade denials for guests, and boost incremental revenue.
Method #5: Give front desk upselling a go
While it might seem challenging initially, front desk upselling is worth the effort since it can generate up to 5% of RevPAR contribution.
In most cases, hoteliers find their attempts to introduce front desk upselling unsuccessful for the following reasons:
- Lack of practical communication skills
- High staff turnover
- Tired guests rushing to get to their rooms after long, exhausting journeys
However, hospitality organizations can increase the success of their front desk upselling efforts by training staff on the following six skills:
- Reading the situation & noticing body language: Understand the implicit message customers are conveying through their non-verbal actions and the tones of their voices.
- Show confidence: Master your body language, facial expressions, and tone of voice.
- Be a subject matter expert: Offer services and upgrades by selling their value.
- Always be honest: Don’t act like you know everything.
- Don’t give up: Be persistent, not pestering.
- Work on your pitfalls: Ask for feedback from your colleagues.
Automation can also help front desk staff boost their upselling efforts. For example, Oaky is building a tool that prompts front desk agents to promote offers to guests as they check in. Oaky bases these offers on the reservation data of each guest.
To discover more ways Oaky creates real-world business impact through its upselling automation software, click here.
Method #6: Roll out deals that generate the most profit
Different upselling deals generate different profit percentages.
But what deals, items, and categories typically generate the most revenue for an upselling program?
Top upselling performers include:
- Breakfast deals: At least for now, most people start their day with breakfast, which means this is an upselling opportunity that guests will likely purchase one way or another, whether that’s at your restaurant or another off the property. Breakfast commands such popularity and demand that Oaky found this meal to account for 29% of the total ancillary revenue generated by our customers when offered as an upselling deal.
- Parking: If you own or manage a parking lot or can make a deal with a local parking business near your property, you can include parking as an ancillary service to your upselling deal selection. Having parking options nearby gives guests peace of mind, which explains why upselling parking deals make up 16% of the ancillary revenue earned by Oaky customers.
- Attribute-based selling deals: Attribute-based selling allows guests to choose rooms by their characteristics and the experiences they offer (rather than selecting rooms by categories). This gives guests more control over their stay and allows them to select amenities, room features, and facilities to help them enjoy their stay even more. For instance, a guest might want to customize their stay by upgrading to a king-sized mattress for an extra $40 an evening. Give them that option.
- Food and beverage deals: Dinner reservation deals account for 15% of the additional revenue earned by clients of Oaky. So, by including dinner in your pre-arrival upselling deal selection, you can entice more guests to dine at your restaurant and earn more revenue. Other food and beverage-related upselling options include offering a bottle of wine or champagne, a fruit platter, a wine-tasting session, or a gift basket of local foods, including snacks and alcoholic beverages.
- Transportation: While transportation isn’t a key service for hospitality organizations, it is still among the most requested services. Offering your guests a hassle-free shuttle service from the airport to your property can help your brand score positive reviews. And it’s not hard to do. You can, for instance, make an agreement with a local shuttle service company to share profits and referrals.
To discover more ways each item listed above can boost the revenue of your upselling program, check out “Top 5 hotel best-selling upsell deals to generate profit all year round.”
Bonus tip: Partner with industry experts
When you work with industry experts, you amplify your odds of success.
So, why not leverage your odds even further by partnering with two of the most seasoned experts in the hospitality software industry—Oaky and IDeaS?
To discover more ways IDeaS and Oaky each help their customers succeed, check out “How Radisson Hotel Group’s hotels in the Netherlands benefit from Oaky” and “Loews Hotels & Co Realizes Highest Catering Revenues in Company History with Smart Strategies and IDeaS Function Space RMS.”