Upselling In Hotels: Meaning, Benefits And Strategies
The Hospitality Industry is quite competitive, with the target audience demanding more from the hotels. For example, even budget travellers want spacious rooms and amenities with some sophistication. Customers want discounts, and upgrades and don't mind paying a little extra. This is where upselling in hotels is relevant.
Upselling in hotels is a great way to increase hotel revenue and also enhance the guest experience. This revenue generation strategy needs to be used along with other revenue and marketing strategies to gain revenue and hotel guests. Before we start discussing hotel upselling strategies and techniques, let us first understand the term.
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What Is Upselling In Hotels
Upselling is a marketing technique in which the hotel offers a room, service or amenity of a higher category than the one that was purchased or is about to be purchased. It is a form of hotel revenue strategy wherein the guest is offered a better product at some additional cost or no additional cost.
Upselling in hotels is known as an upgrade in popular terms, and it is used in other industries as well. If done right, upselling can be beneficial for both the hotel and the guests, the hotels can increase their room occupancy and gain more revenue and guests get an enhanced experience with some additional cost.
For example, You have a standard room costing ₹4000 while the Deluxe room costs ₹8000. You can offer the guest a Deluxe room at ₹6000. This way, you can regenerate higher revenue and also increase the occupancy of room categories that were not being filled, especially in off-season times.
Benefits Of Upselling In Hotels
Upselling in hotels has several benefits. Proper upselling strategies and techniques can bring rewards for the hotels and the guests - a win-win situation. Here are some of its benefits:
1. Enhanced Guest Experience
Hotel guests are no longer satisfied with mere discounts, they also want an enhanced guest experience which offers them something more. Upselling in hotels is the best strategy to build customer relationships. When you offer them a higher range product or a service with some additional cost, customers will gladly accept it since they consider it a “discounts + benefits” combo, which they love.
Hotel guests now expect personalized services and offerings. Hence, with add-ons and upgrades, you can offer them better services at a lower price for the guests. For example, you can provide a high-category room for a corporate guest that reflects his or her status.
2. Generate Additional Revenue And Occupancy
Hospitality is all about managing revenue and costs. Hotel upselling strategies consider hotel revenue to be a major factor. It is especially true during the off-season. During that time, the room occupancy is low, and you need guests to fill in the rooms. Upselling in hotels takes care of that.
You can simply offer a higher-grade room at some additional cost. This way, you can fill in rooms and not miss out on revenue. There is another technique which you can use - cross-selling. Cross-selling means selling additional perks along with the one that was chosen, but more on that later.
3. Helps In Understanding Your Guest’s Persona
With upselling and cross-selling, you can understand what the hotel guests really want out of a hotel. For example:
Do guests like a room with a Jacuzzi?
Do they like larger rooms?
Do they need a spacious desk and a seating area, if they are corporate employees?
Do they like rooms with additional services included such as an in-room spa service?
You will find an answer to these questions with the help of upselling. This can help you form a hotel guest persona and understand your guest better. Knowing your guests better than your competitors is the first step to excelling at customer relationship management.
4. Brand Management
Brand building and management are all about standing out from competitors. Upselling in hotels can increase the reputation of your brand. Guests love hotels that go beyond their usual offerings, and this is where hotel upselling strategies can play a crucial part.
You can use upselling to promote your flagship room amenities. For example, if your higher category rooms have a private pool, you can promote those rooms as a part of brand building and marketing strategies. This way, you can be a famous hotel offering private pools.
This way, you can market your USPs to gain more bookings and also increase your hotel revenue and profits.
5. Make Full Use Of Your Resources
With upselling, you can fill in rooms, increasing your hotel revenue along with making full use of your resources. During the off-season, your revenue generation opportunities get limited, and rooms and amenities remain unused. This is undesirable from a hotelier’s point of view, since, they still have to pay a fixed cost to maintain the property such as rent, salaries, and administrative expenses.
With upselling in hotels, you can make use of these resources by offering them at discounted rates. For example, you can divert guests towards your higher offerings at a cheaper rate, earning higher absolute revenue. You can use the same strategy for amenities as well.
What Is Cross Selling In Hotels
Another strategy that is often, and should be, paired with upselling in hotels is cross-selling. Cross-selling means offering something complementary to the service that the guest is about to avail or has availed of. For example, offering complimentary breakfast at some additional costs is cross-selling.
Cross-selling and upselling need to be used in tandem. For example, many guests don't want a higher room category, they just want additional services, such as a spa. You can offer them that as a complementary service. Not only that, you can use upselling strategies to encourage them to take better and more exclusive services in a spa!
The way upselling in hotels can be paired with cross-selling to create a package that guests will love! These can be integrated with other marketing strategies such as email marketing, social media marketing, hotel website and so on!
Hotel Upselling and Cross-Selling Offerings
As we have discussed the importance of upselling in hotels and cross-selling, let us now discuss what hotels offer in their upselling and cross-selling deals.
1. Hotel Room Upgrades
Room upgrade is the most popular hotel upselling strategy, due to rooms being the highlight of a hotel. It involves offering a higher room category from the one that the guest has booked or is about to book, at some additional charge. For example, you can sell a deluxe room at a rate which is only slightly higher than that of standard rooms.
This is better than discounts because the guests get something more than discounted rates, they have better services. You can use this strategy based on prices, demand and availability. For example, being too generous with it can lead to revenue loss.
2. Food And Beverage Upselling
This hotel upselling strategy is used in restaurants as well. Here, you offer better food and drink options at a slightly higher price than the one that was availed or about to be availed by the guests.
For example, if the guests choose a 4-course meal package at the time of booking, you can offer them a 6-course option with some upgradation charges. This will enhance the guest experience. You can also offer discounts on your higher range of alcoholic drinks to encourage them to purchase those rather than the standard ones.
3. Spa And Wellness Upsellling In Hotels
A new popular upselling strategy emerging is for spa and wellness. Nowadays, hotel guests are not satisfied with rooms, swimming pools and restaurants, they want something more. This is why spas and wellness centres in hotels are gaining in popularity.
Massages and therapies are the best ways to relax for guests who want to take a break from their monotonous life. Using upselling in hotels for spa and wellness can be a great revenue booster. Hoteliers should give guests opportunities to pamper themselves. You can offer spa services as cross-selling services as well.
4. Extra In-Room Add-Ons
Hotels can offer additional add-ons for the hotels as well. For example, you can offer them a mini-bar setup, or offer them an additional bottle of wine in the room as a part of the deal. Many hotels also offer complimentary cakes when guests book their stay for special occasions.
Upselling in hotels can also involve offering room decorations during anniversaries and birthdays, with no additional charge or some additional charge.
Hotel Upselling Strategies And Techniques
To make upselling in hotels successful, one needs to follow some techniques and strategies to achieve some goals. We have listed the best strategies for hotel upselling that will help you generate additional revenue.
1. Target Audience
Before you formulate any hotel strategy, you need to identify and segment your target audience. Without that, any strategy you formulate will surely fail. Your target audience will help you determine which hotel upselling strategies to utilize.
For example, you would not want to promote very expensive rooms to budget travellers, because luxury rooms, even at discounted rates, do cost way more than a budget room. However, you can target these luxury rooms to those who like 4-star hotels, since the cost differentiation will not be that much.
2. Keep Revenue And Costs In Mind
Upselling and cross-selling strategies are great, however, let us not forget the most important aspect of any business, revenue and costs. Profits equal revenues minus costs. Your strategy implementation should take care of revenues.
Don’t be too generous with upselling and cross-selling, otherwise, you can lose out on hotel revenue. Upselling and cross-selling in hotels are the means to an end, not the end itself. Revenue and profits, along with customer satisfaction should be your priority.
3. Use Social Media Marketing
Everyone is on social media nowadays this is where you need to be too! Social Media Marketing has now emerged as one of the major pillars of digital marketing. You can use various platforms, such as Instagram, Facebook, Twitter etc, to promote your property.
Picture-based platforms like Instagram work the best because hotel marketing is all about tempting the guests to stay in your hotel. One can only do that by the audio-visual medium. Instagram also allows users to make reels and videos, which adds to social media marketing campaigns. You can use it in your hotel upselling strategies.
Youtube is the best platform for video content. It is especially great for long-form content. This is especially useful to give a wider picture of your property.
4. Guest Loyalty Programs
Guest Loyalty Programs are among the best strategies for hotel upselling. It can also be used effectively to increase repeat guests and cultivate customer loyalty. Loyalty programs can be formulated after understanding your guest's personas. You can then promote upselling in hotels based on them.
Guest loyalty programs should encourage customers to stay at your hotel in exchange for perks and benefits like room upgrades with less/no additional cost, complimentary breakfast/lunch and dinner.
5. Email Marketing
Email Marketing can be used to promote upselling in hotels. It is among the best mediums to reach the guest directly. You just have to ensure that you are not spamming them. You can send them personalized upselling offers after guest segmentation. This way, you will be able to promote your strategies better.
6. Promote It On Hotel Website
Another way to promote hotel upselling is to promote it on your hotel website. Your hotel website is the best source for direct bookings. You can increase your direct bookings by offering hotel upselling and cross-selling on these platforms.
Your hotel website should have a booking engine as well, so that the guests can book your room directly on the website, rather than being dependent on OTAs and travel agents. You can save on commission and also offer a more integrated marketing experience to your actual and potential guests.
With these steps, you can promote upselling in hotels to make your property a revenue generator by attracting guests. Bigfoot Hospitality is the one-stop solution to all your revenue management and hotel marketing needs.
Read our blogs to know more about the concepts, trends and challenges of the hospitality industry.