Hotels need to cross-sell and up-sell because rooms are left unsold on many nights (depending on location and season) and because they can. Even hotels at 100% occupancy risk losing out on incremental income.
Margins under pressure from increasing range of distribution channels, rising utility and staff costs, so cross and up-selling is a means of replacing lost profits. Driving occupancy via online channels increases direct marketing cost through pay per click (PPC) or search engine optimisation, and indirect costs through higher commission payments to OTAs.
Cross-selling is also a means to offset the cost of personalising a hotel product without raising rates. it’s a way of increasing RevPAR without risking occupancy or losing competitive advantage.
Up-selling is the technique by which hotels derive extra revenue from a fixed range of assets. This can range from room-upgrades to early or late check-out, car parking, rooms with a special view or location or conference services such as AV equipment hire.
Cross-selling involved generating incremental income from other assets such as leisure club membership, car rental or other amenity / local attraction usage.
So what are the essential tools to effective up-selling? The hospitality Sales & Marketing Association (HSMAI) defines these as process, data, technology and personnel. The key stages are as follows:-
- Identify all products and services available for up-selling.
- Determine the best time to offer these up-grades, and at what price.
- Keep track of which offers work, and with which customer segments.
- Use technology to capture guests’ preferences and needs and to track changes.
- Ensure that your front desk, revenue and sales team work together to provide the right guest experience.
Points to remember:
- People hate to be ‘sold’ but they love to buy.
- The point of sale is the best time to cross-sell or up-sell, followed by when first time guests stay or a corporate account is opened.
- Customers have to know about a product or service to be up-sold effectively.
- Don’t over-price the room up-grade.
- Trying to cross-sell products won’t put the customer off the original purchase.
- Changes in regular guests’ needs or tastes create cross-selling opportunities.
- What appeals to one guest, or category of guest, may not appeal to another.
- Offer guests guidance.