People love free things. Candy, coffee, compliments – we can’t get enough of ’em. That’s why there are so many articles about getting free upgrades. But as any hotelier knows, freebies come at a cost – especially when upgrading guests.
While a free upgrade may seem like a generous way to thank your loyal guests, it can cost you in the long run. Today, we’ll go over:
- The most popular free upgrades
- How upgrades end up costing you
- Upsell and cross-sell strategies to help minimize lost revenue
Now, let’s look at the most popular upgrades guests request…
The Most Popular Upgrades Among Guests
OK, first, we need to establish what we mean by free upgrades. A room upgrade is one thing, but there are other types of upgrades that guests commonly request – and receive – for free.
These include:
- Early check-in
- Spa treatments
- Dinner reservations
- Expedited check-out
While each of these upgrades has a different value, they all come at a cost to the hotel – in terms of both time and money.
What are the most sought-after free upgrades? According to a 2020 Hospitality Upselling Report, here’s a quick rundown:
- 21% of guests prefer wellness services
- 20% of guests choose room upgrades
- 18% of guests use taxi services
- 16% of guests prefer restaurant reservations
As you can see, guests love freebies that make their stay more comfortable. But as we mentioned before, all of these upgrades come at a cost to the hotel.
How Free Upgrades Can Cost Your Hotel
It’s quite obvious why upgrades are popular. First-time guests are often unaware of all the services your hotel offers. And returning guests like to try new things to keep their experience fresh.
But when do free upgrades come into play? Why so many hotels are now offering – and guests are requesting – freebies?
The answer is quite simple, really.
In recent years, the hospitality industry has become more competitive than ever. Online travel agencies have made it easy for guests to compare prices and find the best deals. And with the rise of home-sharing services like Airbnb, hotels feel pressure to offer more bang for their buck.
Hotels must find ways to stand out from the crowd to compete. One way they’re doing this is by offering free upgrades as a way to thank guests for their loyalty – and encourage them to come back.
While this may seem like a good way to keep guests happy, it can actually end up costing you in the long run.
Here’s why:
- Free upgrades cost you time and money
- They can lead to guests expecting – and demanding – more freebies
So it makes sense that hotels are looking for ways to minimize free upgrades. But how can you do this without alienating your guests?
4 Ways to Minimize Free Upgrades
To lessen the impact of free upgrades on your bottom line, you need to find a balance between offering them and upselling guests on paid services. Here are four upsell and cross-sell strategies to minimize lost revenue:
1. Understand Who Your Guests Are
No matter the business, understanding your target market is essential to success. In the hospitality industry, this means understanding who your guests are – and what they want.
It’s estimated that guests spend around 70% of their time exploring the hotel property. That means they’re more likely to take advantage of on-site amenities – like the spa, restaurant, or bar.
If you can identify which services your guests are most likely to use, you can upsell them on these services. You can do that by collecting data on their booking habits and using it to create targeted marketing campaigns.
2. Offer Experiences, and Not Just Upgrades
Your guests are there to relax and escape the everyday grind. So offer them experiences that will help them do just that. More than 85% of guests are willing to pay more if their experience feels unique and personalized.
While room upgrades are always a nice perk, they’re not necessarily going to create a lasting impression. Instead, focus on offering experiences that will make your guests’ stay memorable.
Collecting and analyzing feedback from previous guests gives you an idea of what they’re looking for. And you can use that information to create unique packages – like a romantic getaway or a family-friendly vacation.
3. Find the Best Pricing Strategy
It’s no secret that price is a major deciding factor when booking a hotel room. So it’s important to find the right balance between price and value.
You’ll lose money on each booking if your rooms are too low. But if they’re priced too high, you’ll deter guests from booking with you altogether.
Some well-known hotel pricing strategies include:
- Occupancy-based pricing: Involves raising and lowering prices based on how many rooms are booked.
- Cancelation policy-based pricing: Offers lower prices for guests willing to book non-refundable rooms.
- Upselling-based pricing: Add-ons and extras are offered at a discounted rate when guests book their room.
4. Encourage Direct Bookings With Rewards
In the age of online booking, encouraging guests to book directly with your hotel is more important than ever. After all, it’s one of the easiest ways to increase revenue for you.
The problem is that online travel agencies (OTAs) like Expedia and Booking.com have become the go-to booking method for many travelers. They offer convenience and often have lower prices.
So how can you encourage guests to book directly with you? By offering rewards, of course.
Some hotels offer loyalty programs that give guests points for every stay. These points can be redeemed for free nights, room upgrades, and other perks.
Using ChargeAutomation can also help you encourage direct bookings. Our online check-in tool allows guests to reserve rooms, ask questions, and even acquire upgrades without going through an OTA.
Maximize Upselling and Cross-Selling With ChargeAutomation
You need the right tools in place to capitalize on your upsell and cross-sell strategies fully. That’s where ChargeAutomation comes in.
Our platform offers a number of features that will help you increase revenue and guest satisfaction, including:
- Automated check-in and check-out
- Online reservations
- Guest profiles
With ChargeAutomation, you can collect all the data you need to create targeted campaigns and upsell your guests on the services they’re most likely to use. Make sure to sign up today, take advantage of our features, and start increasing your revenue!
