In the lead-up to Australia’s peak holiday season, hoteliers across the country are looking at ways to maximise their revenues during this period of heightened guest demand. In such an environment, offering guests an opportunity to upgrade their room (or add additional services) is a highly effective tool that hotels can use to grow revenue and unlock additional profit.

While the practice of upselling is neither new to Australian hoteliers, nor necessarily complex, it becomes particularly effective during times with unsold inventory or when popular room categories are overbooked.  This overbooking often occurs during bustling summer periods, typically leading front office staff to offer complimentary upgrades to ensure all guests have a room to stay in. In these high-demand situations, properties can generate additional revenue that they may not have otherwise received by thoughtfully offering guests room upgrades at a dynamically priced discounted rate instead. 

Look beyond room upgrades to improve TRevPar performance

While room pricing is certainly a foundational ingredient in your revenue mix, smart hoteliers know not to overlook the services and other ancillary income streams that factor into the total revenue per available room (TRevPar) metric.

Put simply, upselling should no longer be limited to rooms upgrades. This practice should now include ancillary services and personalised offers based on a guest’s profile and preferences. With an automated upselling platform in place, hotels can find creative ways to package and present offerings that provide a TRevPar lift.

For example, after booking, guests can automatically be presented curated options for offerings like booking a round of golf, ordering breakfast for their stay or placing a reservation at an on-property restaurant. This can be a win-win situation for both the hotel and the guest: the hotel generates more revenue, and the guest enjoys a better experience.

Pairing a “total revenue” mindset with room-based upselling offers can provide additional flexibility for reaching this win-win state. For instance, a room upgrade upsell offer could take the form of a dynamically priced room upgrade that includes a tee time and a discounted round of golf that—in all likelihood—spurs additional ancillary revenue.

Consider when to upsell

A hotel guests’ willingness to make a room or service upgrade fluctuates. What a guest might perceive as an unnecessary upsell suggestion upon booking may sound more appealing on arrival when they can see the appeal of staying in a waterfront bungalow first-hand.

An advantage of promoting upgrades closer to check-in is that, with dynamic pricing, hotels can adjust upsell rates based on the anticipated demand for various room types. For example, if a hotel's inventory of executive suites is seeing a drop-off in demand during the guest’s stay, guests can receive a dynamically discounted upgrade offer that maximises both inventory and profitability.

That doesn’t mean that upselling offers should only be offered to guests at the last minute. Rather by getting an optimised room upgrade offer out early, hotels can free up space to get in-demand lower cost inventory booked. In other words, a hotel is not just selling the upgraded room and benefitting from a higher margin purchase—they’re also unlocking an opportunity to get the popular previously-claimed room type booked again sooner.

Have the right systems in place to support effective upselling activity

For many years, hotels have utilised technologies to prompt upselling offers during booking process (typically before checkout and payment) and via pre-arrival emails sent to guests. Over time, revenue management has evolved to include upselling strategies that enhance guest satisfaction and hotel revenue outcomes.

Effective automated upselling strategies depend on the seamless integration of data. A front desk worker who only has access to static upsell offers and rate discounts can make poor choices from a revenue perspective. Worse yet, they may be reluctant to even suggest offers if there’s uncertainty around how the offered price compares to the reality of the property’s booking needs.

By having a well-integrated and trusted pricing suggestion provided by an advanced revenue management system (RMS), front desk staff are empowered to propose accurate upsell opportunities the improve hotel business performance.

Utilise guest data to tailor offers

Revenue management supports hotels in upselling by analysing customer behaviour and preferences. By tracking guest data, such as their booking history, spending habits, and demographics, hotels can gain insights into which upsell offers resonate most. For example, if a hotel notices that guests who book a certain room category are more likely to purchase spa services, they can create targeted upsell offers for those guests.

Focus on staff training

For effective upselling in hotels, it's essential to provide ongoing training and support to the staff to ensure guests don't feel unduly pressured. While upselling requires staff to spot upselling opportunities and be persuasive, they should not be pushy towards guests. By providing staff with the right training and resources, hotels can ensure that they are making the best possible upsell offers without coming across as being overbearing. To help with this, hotels might provide staff with scripts and training on how to make upsell offers, as well as incentives for successful upsells.

Benefit from increased guest loyalty and business profitability

Upselling is no longer a simple sales strategy in the hotel sector. It's a sophisticated blend of data analytics, technology, and human interaction that aims to offer guests an enhanced experience while maximising revenue for hotels. And when done right, upselling offers Australian hoteliers the opportunity to benefit from increased guest loyalty and business profitability.

For more information on how your hotel can maximise its revenues from upselling, please visit: www.ideas.com

Written by: Tracy Dong, Principal Industry Consultant, IDeaS

The views expressed in this article are an opinion only and readers should rely on their independent advice in relation to such matters.

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