Have you ever booked a hotel room online only to find out that you can upgrade to a suite for just $50 extra? Upselling is a wonderful business opportunity to increase the average revenue a hotel makes from a customer.
Room upgrades are by far the most effective strategies to upsell in a hotel business. However, this is becoming less common in recent times as competition has forced a lot of hotels to offer free upgrades as part of their customer experience management. Hotels are thus left to grapple with innovative new strategies to upsell and maximize their revenues.
Here are a few strategies to help hotels upsell to customers while ensuring high customer experience.
Airport pickup and drop
Apart from room upgrades, hotels do a lot of business offering airport pickup and drop services to their guests. This service could be extended to other chauffeuring services that include transporting guests to tourist attractions in your town. If you are an upstart hotel, it may not be cost-effective to own a fleet of cabs. In such cases, it is common to strike a deal with a taxi service and handle all your guest travel through them. Hotels may earn a commission for every referral made to the taxi company this way.
In some instances, it may be necessary for a hotel to have a dedicated fleet. If you do not want to invest in your own cars, you may work with rideshare services. From a tax perspective, these drivers are not employees, but independent contractors and so you do not have to withhold taxes or pay for their social security (in the US) like you would with a regular employee. At the same time, you may enjoy a commission for every trip referred to the rideshare service.
Add-on services
A lot of hotels have an in-house salons or spas that visiting guests can pay a visit to. For the salon-owner, the facility gives them access to a captive audience who may be interested in their services. The hotel too gets a chance to make money from an additional service that their guests will be interested in.
You may offer many such add-on services if you have the necessary real estate space within your premises. If your hotel has a heavy footfall, you may offer the space on rent to a third party vendor. This does not work out if you have a small hotel with limited guests. In such cases, it may be a good idea to own the salon and award the project to independent contractors. This improves your margins from the service while giving the contractor a risk-free assignment. Margins are also higher because in-house salon services are typically priced higher than market prices because of the presence of a captive market.
Referral marketing
A common challenge with the above strategy is that hotels do not always have real estate lying around that they can use for such upsell projects. In such cases, there are other ways to make a commission on upsells. You may, for instance, tie up with salons and spas in your neighborhood and offer to refer your customers to them in exchange for a commission.
You may also tweak this strategy depending on your guest profile. For instance, if a lot of your guests in a month are due to a local business conference, you may offer coupons relevant to their industry and make a commission from the sales made. Studies show that a growing number of businesses are bringing down their spend on traditional marketing strategies. Promoting niche businesses to your guests and earning referral commissions is a win-win since the advertisers too enjoy better ROI from their marketing spend.
Do you upsell in your hotel business? Share other strategies and tips you have in the comments.