Unlock hidden revenue: How technology supercharges your upselling strategy
Oaky
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Navigating the post-pandemic economy hasn't made profitability any easier for hotels. With the global economy facing new turbulence, it’s crucial for hotels to adapt to changing guest spending patterns. To guide you in uncovering hidden revenue opportunities through the integration of revenue science and the art of upselling, we had an insightful discussion with Julie Kahn, Director of Revenue Management at Hard Rock International, Anthony Rose, Director of Sales at IDeaS Revenue Solutions, and Allison Chambers, Sales Manager at Oaky.
Diving Deeper into the Real Value of a Room
To generate revenue, hotels primarily rely on room sales. To uncover hidden revenue, it’s wise to explore untapped opportunities within room inventory. This starts with answering the crucial question: “What is the real value of a room?” According to Anthony Rose, the value of a room is not static but fluctuates based on factors such as:
Date
Stay patterns
Booking time
Demand
The value of a room changes throughout the entire booking cycle, ultimately reflecting what a guest is willing to pay. But with various room types, how can one person account for all these factors? This is where technology and revenue science come in to optimize room inventory and reduce reliance on overbooking basic room categories to unlock hidden revenue.
Changes in Guest Spending in the Post-COVID World
As the world recovered from COVID, new challenges like inflation and rising costs started impacting the hotel industry:
Midscale and economy hotel segments in the US showed a decline in growth, with -6.50% and -4.50%, respectively, according to STR’s data from Q1 2024.
Upscale segments performed better, with growth of 3% and 0.4% respectively.
The trend of revenge travel is fading away, making it harder for hotels in the US to meet their financial goals.
Overall, guests are becoming more cost-conscious, meaning hotels need to adapt and find innovative ways to grow revenue. This is where technology becomes indispensable.
Merging Human Touch with Automated Technologies: Concerns and Benefits
To drive ADR growth in the current economic landscape, combining hotel tech with the human touch becomes a must. Automation brings threefold benefits, as highlighted by Julie Kahn:
Increased efficiency: Eliminates the need for spreadsheets to track booking trends and optimize pricing.
Improved guest satisfaction: Empowers hotel teams with guest preference information to exceed expectations.
Maximized revenue: Dynamic pricing and incremental upsells capture more revenue.
While many hotels fear losing control over pricing decisions with technology, it actually helps uncover revenue opportunities that manual processes might miss. Automated upselling software combined with revenue management systems ensures guests are aware of upgrade options at various price points, appealing to a broader range of budgets and preferences.
Combining Technology with Human Creative Thinking
Julie Kahn explains their approach at Hard Rock Hotels:
“We send a 'Surprise room upgrade' offer to guests who’ve booked a standard room, encouraging them to upgrade for $50 to a larger king room or one-bedroom suite, complemented with appealing pictures. It creates excitement and is one of our best-performing offers.”
Creating Memorable Guest Experiences at Check-in
Empowering front desk staff with automation tools helps create memorable experiences and boosts profitability.
Front desk agents equipped with upsell automation software can enhance revenue 2-3 times more than pre-arrival upselling.
While systems identify patterns and trends, front desk agents excel at upselling during check-in, validating guest choices and persuading guests to upgrade with enthusiasm.
Dynamic Pricing through Guests’ Eyes
Guests often book standard rooms, but receiving pre-arrival emails with dynamically priced room upgrades and clear benefits (e.g., an ocean view) creates a win-win situation for the guest and the hotel.
Contrary to popular belief that dynamic pricing is negatively perceived by guests, it actually creates opportunities for guests to elevate their experience at optimal rates.
Dynamic pricing provides flexible options to capture more price-sensitive guests.
The Role of Technology in Personalizing Guest Experiences
Technology creates a perfect synergy with the human touch in personalizing guest experiences:
Personalizing Offers: Technology and segmentation allow hoteliers to quickly tailor offers without extensive analysis.
Reducing Human Error: Technology eliminates human error, creating more relevant offers effortlessly.
- Multi-Level Upselling: Guests’ needs may change throughout the guest journey, allowing hotels to offer upgrades and experiences at different touchpoints. For example, a guest might book a certain room type before arrival and later book dining experiences via a pre-arrival email but may still be open to upgrading if a front desk agent highlights specific attributes of a better room. By embracing technology and merging it with human creativity, hotels can unlock hidden revenue, enhance guest satisfaction, and stay ahead in a competitive market.
