5 Tactics for Turning Hotel Overbookings into Revenue
If you want to fill all your hotel rooms and achieve maximum occupancy, overbooking is a strategy worth implementing. Like it or not, it’s one of the most effective ways to ensure the desired occupancy and competitive rates.
While it's a common practice, it also comes with downsides and risks. By upgrading guests due to overbooking to a bigger room or luxury suite at no extra charge, you’re leaving money on the table.
Conversations with revenue managers from big-sized hotel chains reveal that overbooking results in approximately 1,622 EUR in lost revenue per room per year. Hotels lose out on millions of revenue by overbooking and giving away free upgrades. The more room types a hotel has, the more revenue it misses out on.
The challenge lies in effectively selling these higher-tiered rooms to offset potential losses. You want to encourage guests to spoil themselves with a more expensive room when they book. From hotel upselling to standard discounts, here are five tried-and-tested tactics to add to your hotel revenue strategy.
1. Start upselling rooms pre-arrival
Pre-arrival upselling can be an effective tool to sell high-tier and premium rooms and maximise revenue. By making your guests aware of available upgrades in advance, you’re planting a seed.
They’ll have time to think about the potential of enjoying an even better stay, increasing the chances for conversion. On the other hand, if they’re pushed to make a decision on the spot at check-in, declining such an offer is easier.
In fact, you might have plenty of guests willing to upgrade. However, they might not know how to do it or feel it will be too much of an effort. If you take the first step and introduce the possibility of upgrading their room, they’ll be only too grateful
How pre-arrival upselling works in practice
It's crucial to reach out to guests before their arrival and present room upgrades and ancillary services. It can be done effectively through the use of pre-arrival emails.
According to Oaky’s data, the optimal timeframe for reaching out to guests is 7 to 10 days before arrival. Then, you can send another email 3 days before arrival to present additional offers and remind guests about services and available upgrade opportunities.
Say goodbye to manual upselling. Set it on autopilot
To make the process less laborious and time-consuming, you can opt for hotel upsell software like Oaky. The best part is that it connects to your PMS, ensuring a two-way data flow.
Here's how it works — Oaky pulls your reservations directly from your PMS and presents personalised upgrade options to guests in an automated way so your team doesn’t have to reach out to each guest individually, saving valuable time and resources. If upgrades are booked, data is pushed to your PMS and the guest reservation is updated without your team’s involvement.
💡 Pro Tips
- When reaching out to your guests with pre-arrival emails, offer a limited selection of upgrade options to avoid analysis paralysis (3-5 per guest segment).
- Use appealing photos, including a photo of the bathroom (it’s crucial for higher conversion rates, according to our data).
- Shift your focus from selling the room features to the experience guests can look forward to.
2. Train your team on front desk upselling
While it’s highly recommended that you start with the upselling process before arrival, you should also upsell room upgrades when your guests check in at the front desk.
Check-in still remains a great moment to communicate your additional offers, including room upgrades. Face-to-face communication helps to build rapport and showcase interest, making it easier to position room upgrades as an exclusive and personalised offer.
How front desk upselling helps to boost room upgrade sales
Empowering your front desk team with effective upselling techniques is paramount to boosting room upgrade sales. You’ll need to train your team to become confident in upselling. They’ll need to learn how to analyse the situation, read nonverbal clues and ask the right questions to understand the purpose of your guest’s stay.
Automation can come in handy at this step, too. It can streamline the process, giving front desk teams more confidence. For example, by using automation at the front desk, your team can get access to all the specific details of your guests' bookings as well as info on available room upgrades and services, along with the pricing. What’s more, it will also display real-time prompts, making it easier to recommend relevant deals.
Once a room upgrade is selected, the automation seamlessly syncs the data back to the PMS, ensuring swift and accurate updates without manual intervention. This harmonious blend of human expertise and automated assistance empowers your front desk team to deliver exceptional service while maximising room upgrade sales effortlessly.
Hotel Rival’s tenfold surge in Front Desk Upselling
To give you an idea of the kind of contribution this software can make, Hotel Rival saw a tenfold surge in upselling in three months with the help of Oaky’s Front Desk Upsell automation feature and its Mews integration. Aside from driving profitability, it has also refined the guest experience.
Learn more about Hotel Rival's results with Front Desk Upselling
3. Enhanced personalisation of room upgrade offers
While upselling can (and, ideally, should) be automated, it doesn’t mean that the offers should be generic. They should contribute to and enhance guest experiences. This way, you can increase the likelihood of successful upsells of room upgrades. To do this, you’ll need to embrace personalisation.
In the hospitality industry, it means that you’ll use the information you have about a guest and adapt your offerings to meet their needs. In the case of selling room upgrades, it means that you’ll upsell a larger room with bunk beds to a family instead of a solo business traveller who will be more interested in a room with a dedicated workspace.
How personalisation drives more room upgrade sales
To personalise your offers, you’ll need to use segmentation so that you can deliver the right offer to the right guest. Using your guest’s stay history and other personal details, you can control which offers are relevant to them, increasing the chances of conversion.
An ROI of 18 and amplified personalisation
Elite Hotels, a popular destination among leisure and business guests, exemplifies the triumph of segmentation and personalisation. The team tailors offers to different guest segments through segmentation strategies. Since Ronja McMullen, Assistant Director of Revenue Management, started using segmentation, room upgrade and service sales increased by nearly 29%.
💡 Pro Tips
- Gather data about your guests to identify common patterns linked to each segment. It will help you to shape different room upgrade offers in terms of content and pricing.
- Apply segmentation to match your segments that are most likely to upgrade with the right offerings based on the gathered patterns.
4. Use dynamic pricing for room upgrades
If you’ve enabled hotel upsell software and use a revenue management system, it’s time to merge them together to maximise your revenue opportunities and minimise free upgrades. In fact, according to our data, dynamically priced room upgrades can boost the upgrade conversion rate by 35%.
How upsell software and dynamic pricing solutions work together
If you already have an RMS and use dynamic pricing to adjust prices for rooms, you can extend it to your room upgrades. This way, your rates will always correspond to the current demand and ensure more sales at better rates.
You can also create an entirely new strategy for your room upgrades for maximum returns.
💡 Pro Tip
- Integrate room upgrades into your hotel's loyalty program. Offer exclusive upgrade options or discounted rates to loyal customers, incentivising repeat business.
5. Apply discounts
If you see that a certain type of room has been booked by a certain percentage, but your higher-tiered rooms remain unbooked, it’s time to apply discounted rates. It’s better to upsell a room upgrade at a discounted rate than to give it away for free.
How to implement discounts on room upgrades
First, you’ll need to determine a discount structure. The best approach is to establish a tiered discount structure where the discount percentage correlates with the level of the room upgrade. This encourages guests to opt for more significant upgrades while still paying a premium, helping you to sell those higher-tiered rooms.
You’ll also need to set criteria for discounts, as they should be triggered using specific criteria. Examples of criteria you can use include a certain period or extended stays. You can also include discounts as part of a special package.
💡 Pro Tip
- Pre-arrival and front desk upselling can come in handy if you have set up a discount structure and your whole team is updated.
Key Takeaways
Upselling, dynamic pricing, and discounts can all be used to minimise the loss of revenue and help to implement a hotel overbooking strategy with confidence. Your goal is to sell as many of your higher-tiered rooms as your hotel offers. To do that, guests will need a little bit of encouragement and reminding.
Some guests might not be aware that these rooms even exist. Some guests might know that you offer them but don’t know how to change their booking. Then, you’ll get guests who've browsed your luxury suite several times online but could never quite afford it.
Upselling room upgrades can appeal to all these guests. With the help of software and data, you’ll be perfectly equipped to do it in a way so that it doesn’t appear as if you’re just trying to push another sale.
