Revenue Management and Yield: Upselling & Cross-Selling (podcast)

Revenue Management and Yield: Upselling & Cross-Selling (podcast)

Revenue Management Book

As the demand for leisure and business travel is continuing to increase, hotels are adapting their business models and internal procedures to make guests feel comfortable and confident to book. The times are very challenging and traveler behaviour is changing rapidly in a very uncertain environment.

In this context, there is an increasing talk in the hotel and hospitality industry on two key issues: 

  1. Contactless interaction with guests and
  2.  Financial survival during the COVID19 crisis and beyond. 

Number one: Contactless interaction with guests is pretty self-explanatory and we won’t go into much further detail.

Number two: From our experience as partners in the hotel industry, the constant growth in tourism globally led many owners, managing teams and revenue management departments to be rest assured that no innovation is required since there is ever-growing demand. The Covid19 crisis gave way to hoteliers and managing teams to go back to the drawing board and find solutions to financially survive and drive more sales. Many revenue opportunities are now examined with more diligence by revenue managers. Revenue and yield management are key areas to improve but let’s jump into the basics of upselling and cross-selling.

Upselling in the hotel industry

Typical upselling tactics involve trying to sell room upgrades, guest services and hotel facilities to guests upon arrival at the reception desk for check-in.

Some hotels tend to allow overbookings in busy periods so they can make up for no-shows or last minute cancellations and in the same time increase their revenue by accepting guests to extend or just walk-in directly to the hotel (that is a common airlines’ practice).

Many marketing tactics are employed but: 

  1. upselling during the check-in process is very difficult as there is a time constraint and 
  2. bombarding guests with upselling offers does lead to a very negative experience which is often reflected in public reviews guests leave after their stay.

Cross-selling: A missed revenue opportunity

Hotel staff are usually the first and only point of contact when guests travel to a new destination for leisure. They do not have any local contacts and want to experience the best that a destination has to offer. 

On the other hand, the reception desk has to deal with a number of issues apart from upselling and cross-selling. Primarily finalizing payment and billing paperwork, sorting out luggage and arranging a smooth experience for the guest, particularly if the room is not ready by the cleaning team. They have a few minutes to let the guest know where all hotel facilities included in the room price are located, like the breakfast buffet, the bar and the spa.

While upselling is important, they do not have many opportunities to bring more revenue. They have to answer guest questions and concerns while ensuring their utmost to accommodate special requests while guests rely on hotel staff for their local experience, asking for advice from the reception, the restaurant waiter and the bar staff.

These are typically the best opportunities for cross-selling which involves products and services in demand by hotel guests. Airport or port transfers, sightseeing tours, mobile phone chargers/adapters, local sim cards, local restaurant vouchers, car & bike rentals and more exclusive services.

Coming back to the check-in process, it is almost impossible to cross-sell. Many hotels have not yet embraced the opportunities that are available to improve revenues.

Some leaflets in the room and in facility areas are typically ignored by the guests while these sale challenges are unique revenue opportunities!

Remember that negative experiences lead to negative reviews

Underpaid hotel staff are traditionally making deals with local business owners to get a commission for referrals. Some hoteliers are allowing this to happen since employees need the extra money to supplement their low salaries.

While this may seem like a fair “unwritten” deal, guest reviews on OTAs and on Google business listings paint a different picture…

Take ownership of the entire guest experience

Sometimes, hotel staff make deals with businesses offering low-quality services. But:

  • These deals are part of the overall guest experience during their stay at the hotel
  • Guests tend to blame the hotel and not the staff member that made the reference
  • Future guests who read the review either hesitate to book or become suspicious prior to their arrival

It does not always happen but things can get out of control primarily for one very solid reason: Hoteliers fail to take ownership of the entire guest experience.

These situations are sometimes due to poor staff training, other times due to poor hire management. Overall, hoteliers can’t see the bigger picture either because they are busy micro-managing operations or they deal with other important business issues.

Although, every effort should concentrate on creating memorable experiences and not solely on making profit or increasing TrevPAR, Cross-selling requires a careful approach focused on helping substantially the guests to experience the destination in the best possible way.

The ideal approach during the pandemic

After trying several methods to improve revenue for each and every reservation, you can’t overlook the fact that each guest is unique and has different aspirations when visiting a destination.

Imagine: People with very unique backgrounds, from very different cultures and with varying definitions of the ideal travel experience. There is no “one size fits all” recipe in upselling and cross-selling. The most successful sales strategy involves personalization as the main “ingredient”. 

What you will quickly realize is that not only guests are more than willing to pay a premium to you as hosts but they will also be thankful for your efforts to make their experience a truly memorable one. And we know, that after all your experience in hospitality, you are in the position to quickly evaluate your guests’ needs from the first 30 seconds of your initial conversation with them.

The bottom line is that you can minimize your losses from the pandemic, retain more of your precious staff members and make you feel more positive for the future.

You can set up your “Guest Like Local” shop and introduce all the local products, experiences and services your guests can enjoy!

Visit Guestlikelocal.com and let us know your thoughts!