The basics of upselling in the hotel industry
Upsell(ing) in the hotel industry is the addition of services (also known as "extras") to a stay, increasing value for the guest and enhancing the experience. Upgrades are examples of upsells in the hotel and airline industries.
When you take into account the effort and cost involved in all the resources put in place to be listed and stand out against your competitors, it is in the hotel's interest to optimise each stay by implementing upselling. Upselling makes it possible to capitalise on every guest who comes through the door.
Upselling is therefore a strategy for increasing revenue, as well as bringing other benefits: when it's done well, it can significantly improve guest satisfaction.
The importance of personalised upselling
Personalising the services offered is essential to boost revenue flow. Automating this process is a way of easily generating additional sales prior to the guests' arrival, and during their stay when they are not in contact with reception.
The paradox of choice
The study "The Paradox of Choice, Why More is Less" by Barry Schwartz highlighted that offering customers a long list of choices does not result in as high a conversion rate as a short list of choices..
The guest may feel overwhelmed by the multitude of options, or even feel unable to make a decision, which reduces sales as well as satisfaction. The obvious caveat to this paradox is not to limit choice too much either, because guests are used to personalised experiences over which they have control.
With a limited (and tailored) choice, guests are more likely to make a decision and feel satisfied with their choice and purchase. This is where personalisation is crucial in the selection of products and services offered to the guest, to reduce choice while remaining relevant.
Personalisation is crucial in selecting the services offered to your guests to reduce choice while remaining relevant.
The ABCs of personalising services
So, to offer the right services to the right guest, you need to gather as much information as possible about the guest, in order to determine their preferences, expectations and needs. In addition to the pre-checkin form for gathering important information, guest-facing teams are an excellent way of gathering expectations or feedback that should be recorded.
All this guest data needs to be collected, processed, centralised, consolidated and organised, and then the challenge is to configure the segmentation and targeting of guests to provide relevant offers for each booking. The aim is to enable guests to craft their own experience.
Automating the services offered enables you to easily generate additional sales for all your guests. With the right settings, the type of service, the amount and the timing can be adapted to the guest's profile, so as to offer relevant services at the right time.
In this way, the upsell is optimised at the optimum time, between booking and arrival, which is difficult to do without a dedicated tool. Having already been asked to check in, guests may be asked at this point to add additional services to enhance their stay and arrival.
The benefits of effective personalised upselling
Increase hotel revenue
It goes without saying that upselling generates additional revenue for the hotel. No hotel can afford to miss out on an upsell strategy. As many studies have shown, guest acquisition costs are on average five times higher than loyalty costs. In recent years, some reports have even estimated a 60% increase in acquisition costs between 2013 and 2022: where a new guest used to cost $9, they now costs $29, an increase of 222%.
🛎️ Personalise your stay
As the products and services on offer are tailored to the guest's profile, their expectations are met, without the need to ask for them to be. You give them control over their stay, making it an exceptional, tailor-made experience, and even turning it into an unforgettable memory. Don't wait for your guests to ask you for recommendations, suggest them yourself!
🧳 Improving the experience
Enhancing a stay with additional services is a way for guests to increase the quality of their stay, improve their comfort and create a memorable experience. Additional services must be seen as added value for the guest. Upselling gives guests the choice to upgrade all aspects of their stay (room comfort, itinerary, experience, etc.).
🔙 Increase guest loyalty
Guest satisfaction has a direct impact on guest loyalty. The more satisfied guests are, the more likely they are to come back, especially in the case of a tailor-made holiday where all their expectations have been met.
Improve guest knowledge
Personalised upselling enables you to identify the services that appeal most to your guests, either more generally or by type. Based on the conversion rate, you can learn more about what appeals to them and adapt your service offering accordingly.
⏱️ Reduce workload
Automation reduces the workload for your teams, without compromising the guest experience. Your teams will still be able to upsell on their own, when they have the opportunity to do so. By interacting with guests face-to-face, they will even be able to detect needs or desires that would not otherwise have been picked up on, and be able to advise guests in greater detail.
♟️ Adapting sales strategies
By mastering the sale of services from A to Z, you can have a clear idea of the sales potential at of each guest at different stages of their stay. With this data, you can determine the key moment and the service best suited to your different types of guest, based on concrete figures.
Pricing a service is always complicated (beyond the required ROI). Determining the price of a room is an entire process in itself, so why shouldn't the price of a restaurant, spa or other service follow a similar strategy? This is what personalised upsell management can provide: a tool for testing prices or setting price ranges.
🎯 Identify your best guests
It's not always easy to identify guests with high spending potential. To do this, you need to encourage them to come forward, by offering them additional services, and why not, with an attractive offer or special services available above a certain price.
By monitoring upsells, you can build up a list of high-potential guests to whom you can suggest dedicated offers, which would not be offers with big promotions but rather offers with specific services (early booking, top-of-the-range/VIP services, etc.).
✨ Develop or strengthen your brand image
Offering a personalised journey and elevating the experience keeps guests coming back to you, and recommending you online or to friends and family. Positive guest reviews (posted online or by word of mouth) fuel your brand image. So you can improve your e-reputation with no effort at all, and in the nicest possible way: by delighting your guests.
Offering a tailor-made experience also enables you to stand out from the competition, especially if you convey brand values linked to CSR, by adapting your services in this direction, for example: offering guests the option to opt-out of daily room cleaning (with or without compensation), donating part of the profits to a charity of their choice, planting a tree, offering local produce, etc.
The importance of timing: When to upsell?
The pre-stay period as a complement to upselling during the stay
The pre-stay phase is the most important period for upselling. However, this does not mean that upselling at reception is not necessary. However, for upselling to be effective, teams need to be trained to use the guest data at their disposal to offer relevant services.
For example, a guest who has not upgraded prior to arrival may be tempted to stay in a higher-end room. However, it is not particularly advisable to offer extra services at check-in, especially if the hotel is very busy. Guests, tired from their journey, will only have one thing on their mind: getting to their room.
Using instant messaging, reception can get in touch with guests who stay in their rooms and don't tend to visit reception. In this way, they can automatically or manually sell services via chat, WhatsApp or SMS.
Automation to complement live upselling
In addition to pre-stay automation to suggest additional services to guests, automation can also be used to prompt guests during their stay when they are open to suggestions and proposals. If they have visited the spa page on the hotel's guest portal several times, offering them the chance to try out the baths with a discovery offer could be a good way of initiating a purchase.
Automated upselling complements the manual upselling carried out by teams, who cannot always satisfy those guests who are not in direct contact with reception or who may be overwhelmed by the operational side of the business. Automating upselling helps to avoid missing opportunities that could generate additional revenue.
Automation in no way takes away from the human side of guest relations - quite the opposite, in fact. It allows you to reach guests at times when they are not in direct contact with your teams.
Last but not least: the guest's history
As mentioned above, personalising your stay increases guest satisfaction, and thus guest retention. However, it is essential to record your guest's preferred services, so that you can offer them to them on their return. Collecting feedback (positive and negative) using a satisfaction survey or review is one way of keeping track in an automated way, but it can also be done manually by teams at guest touchpoints.
You can't offer a more personalided stay than a list of services and products approved by the guest themself. Whether in the case of an independent establishment or a group, sharing history is important for pooling guest knowledge and optimising additional revenue.
To set up an upsell strategy in your establishment, download our free guide to 10 tips for optimising your upsells, with a complete list of easy-to-implement best practices.
White paper: 10 tips to optimise upselling
In this guide, you'll find practical advice, user cases, concrete examples and a list of ideas for services you can offer your customers.