The art of upselling using analytics can boost the bottom line
Coming up with upsell offers that pave way for incremental revenue for hotel companies isn’t new. But by counting on analytics to serve relevant, appealing and appropriate offers at various stages of a traveller’s journey - from the moment a booking is being finalised till a guest checks-out - hotels can reap economic benefits. Ritesh Gupta reports
When a traveller arrives at their hotel they may find themselves digging into their pockets for unexpected, paid-for services. These can range from additional wireless bandwidth to services such as early check-in or late check out. They may even be offered local tours or activities – which a hotel may earn a commission on. Clearly, hotel companies are constantly looking at different ways to drive incremental revenue, as what used to boost offers in the past doesn’t necessarily work today.
For instance, most brands today offer complimentary Internet access. In fact many guests see this as more important than having a minibar in the room. Considering the number of options to make free video or voice calls via the Internet, fewer guests now use in-room phones. Similarly, many brands provide complimentary breakfast to their guests. So hotels are looking at a variety of ways to get guests to spend more during their stay.
Talking about how to maximise non-room related revenue, Frederic Deschamps, vice-president global revenue optimisation at Carlson Hotels Worldwide recommends the following:
· The first step is to factor in the potential ancillary revenue when evaluating the booking request – not all revenue management systems are geared to do that.
· Secondly, unbundle the service and identify things that most customers may not want but some may be willing to pay for, so they can be added as an add-on.
· Finally, have a booking process, especially online, where add-ons are can be offered to the guest. The more intelligently this is done the better your chance of the guest accepting the offer. Remember there is a risk of crowding the customer with too many offers that simply causes them to tune out, even to relevant offers.
Spotlight on the direct channel
Often hotel companies talk about value disparity and how their offers need to compete with what online travel intermediaries generally offer. They acknowledge that distribution and revenue management executives have to improvise with their packages or value-add promotions that bundle room rates with food and beverage credits, parking garage credits, event tickets and so on.
Importantly, hotel companies are relying on analytics and algorithms to pave the way for appropriate up-sell opportunities to bring in incremental revenue.
So if a hotel company is creative enough, it can focus on raking in additional revenue by offering a differentiated experience and scoring high on guest satisfaction.
The question however is this: are brand websites delivering?
Unfortunately, most branded websites don’t offer the option to add on additional services such as late check out, early check-in and so on, says Liz Uber, vice-president of revenue management, Pillar Hotels & Resorts.
“There are some companies, such as Nor1, that have partnered with Hilton, and offer guests the option to pay a discounted rate to purchase an upgraded room type,” says Uber. “The great part with this, is that the upgrade is not guaranteed until check-in, so the hotel still has the opportunity to sell the premium room at its standard price.”
According to Uber, Hilton has seen some pretty good success with this platform, and has been able to drive additional revenues, as a result. Most brands or websites don’t offer the option to sell these types of ‘add-ons’ or ‘upgrades’, so having the ability to do so is a great way to get more money to the bottom line. “By increasing the capability to sell things such as flowers for an anniversary or champagne for a birthday, hotels will be able to drive more revenue,” explains Uber.
Upsell at the time of booking
Focusing in on the time the guest is confirming a room booking, if approached correctly, is one sure way to garner incremental revenue. Be it for relying on data or crafting an intelligent upsell offering, one can optimally work on the booking process, especially online, where add-ons are offered to the guest. Of course, hotel companies can also capitalise on the period between the booking date and the date of arrival, the time of check-in and also when a guest is staying at the property. But the danger of spoiling a guest experience with too many or irrelevant offers should be counted seriously.
For Uber, there are two great ways to offer add-ons to guests. The first is at the point of booking. If a website is able to offer additional services at the point of booking, it would be a great way to drive revenue and create a customised experience for each guest.
In addition, by sending a pre-arrival email to all guests to offer the option to book additional services, the hotel could capture those individuals that were not ready to make the commitment when they booked the first time. Both of these opportunities would require additional website upgrades and potentially additional staffing. However, it would also allow the hotel to do more than make up for the expenses, while creating a great experience for the guest at the same time.
If a guest can be served better while also driving up profits, there is a strong reason for hotel companies to focus on analytics-driven up-selling.