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Upselling solutions for the Hotel Industry

Advantages of using upselling and cross-selling techniques

The advantages of using upselling and cross-selling techniques go far beyond increasing the profits of a travel company, regardless of whether it is a hotel, a travel agency, an airline, etc. That is one of the objectives, but experts agree that it should not be the most important. Increasing the level of customer satisfaction by constantly adapting the product or service to their needs should be the main objective.

At least that is the opinion of Alejandro Francino, CEO of HBD Consulting, a consulting firm that carried out integrated upselling and cross-selling projects in hotels. Francino explains that that is the customer wins, thanks to the fact they get something better suited to their needs, the employee wins, thanks to the benefits of an incentive plan and greater professional esteem, and also the company wins thanks to an increase in customer loyalty, higher revenues and a stronger brand-image.

The same idea comes out of the international "Cross-sell your way to profit " report by Forrester Consulting for Amadeus, which surveyed 19 hotel industry executives who said that the main objective of cross-selling was improving the travel experience. In the study, hoteliers estimated that additional services would increase by 41% between 2010 to 2015.

It is estimated that eight out of ten hotels sell some type of service in the destination, offer media services, and put greater emphasis on third-party ancillary services rather than travel services. For example, by 2015 more hotels will be selling golf tee times, car rentals, travel insurance or airline tickets.

And by 2020, the Forrester report predicts that hotels will use complementary third-party services to offer digital concierge services through mobile phones to avoid interaction with the front desk, offering packages of organic food and sustainable energy sources, or renting portable entertainment devices to use on the trip.

Outsourcing

The outsourcing of ancillary services is seen by some professionals as an endless source of new experiences for potential customers, as stated by Aurelio Martinez in his post "Outsourcing complementary services: a way to increase revenue" published in the Hosteltur community. However, there is still some way to go in implementing upselling and cross-selling techniques in hotels. In fact, the absence of a correct upselling policy to increase unit sales for each customer was one of the main weaknesses that the consulting firm Abserve detected in luxury hotels in Madrid after an audit of twenty-two 5-star hotels in the city which revealed insufficient personalized service, with zero concern for addressing the customer by name and little interest in knowing their level of satisfaction.

According to Chema Herrero, Zenit Revenue & CRS Manager, "most hoteliers find it difficult to make front desk and call centre understand the need for upselling and cross-selling as one of the foundations for the optimisation of results." With regard to upselling, many executives simply apply executive packages with superior rooms and similar, but we have to "train salespeople that are constantly aware of the chances to improve a sale" in the words of Herrero.

According to Francino, the majority just use room categorization. But we have to go further than that. In addition, it’s not enough to just implement training courses and an incentive plan. Develop these techniques requires monitoring of the whole process, analysis and accounting, and a person who is working on it full time. They are techniques that can be applied to any type of hotel, although the type of hotel has to be taken into account in each case to determine which techniques are most advisable. In addition, depending on the conditions, it may also be more or less desirable to develop use upselling techniques, for example when there is low occupancy, or cross-selling techniques, for example when there is high occupancy.

Don’t hassle the customer

A proactive attitude from the hotel receptionist is essential, without making the customer feel that they are under attack, according to Francino. These receptionist skills must also be accompanied by marketing materials, such as screens that allow the customer to see visual content designed to promote superior rooms when checking in, or digital frames and signs in public areas and lifts promoting complementary services.

Herrero affirms that hoteliers are increasingly aware of the need to complement their products with added values that provide uniqueness to the product. For him, services such as a spa, massage, tapas, gym, classes, or transfer services are essential in offering cross-selling and we have to look for originality if we want to make a difference.

Some companies say they are already using these techniques. Abel Matutes, CEO of Fiesta Hotel Group, says: "We have been working on our upselling and cross-selling programme for years. Cross-selling between city and resort hotels, which is working very well. And upselling within our resorts, where what we clearly intend to do is to get people to buy a better room and better services. We are now putting a number of screens in some of our resorts which show exactly where you can go with upselling and what kind of room you would get." In addition, Matutes added that, although it is not yet finished, they are thinking about a virtual hotel in which you can check in to the room and then allow upselling to a better room.

Hotels in Real Resorts in Cancun have a new Guest Management System (GMS) through which hotel employees with an iPad can input valuable guest information and create upselling and cross-selling strategies designed to exceed their expectations and adapted to their needs and preferences. They also carry out the check-in online employing upselling techniques.

Assign value to each product

Developing upselling and cross-selling is one of the eleven key factors that Jaime Lopez-Chicheri considers essential components of a revenue management strategy (from his post "Eleven ideas for training our sales staff to support the Revenue Management strategy"), among which he also includes the need to make "staff learn to assign a value to each product in the most attractive way possible and not simply just making a list of its features."

Francino notes that this must not be seen as a cost, but rather as an investment, which will generate revenues, among other things. Some companies which have begun to implement this type of strategies have managed to increase their gross profit by 20% in a year, and also gives as an example a company which has earned one million euros after a year of working on upselling and cross-selling techniques.

Budget is one of the main constraints, together with the mindset at some hotels, especially those that are already well-established in the industry and wonder "why should I pay the receptionist for work that they should already be doing?". He also points out technical issues such as the categorization of the rooms in a hotel with a more homogeneous service, which makes it difficult to differentiate between rooms.

Price factor

It also has to be kept in mind that, in an economic climate such as the present, "the consumer first chooses price, then destination, and then identifies the best option over a range of prices," as noted by Jordi Schoenenberger, a partner at Deloitte for Tourism and Leisure. This expert recommends that hotel companies follow two steps. First, offer a price "never far above competing hotels in the same destination as you, those that consumers perceive as a similar product". And then "once you have customer in house, you have to make them see that the product is worth much more than what they have paid in their basic price, showing them that you have a lot more choice. This is not easy, because it requires segmenting well your entire product: views, height, mini-bar, Wi-Fi, sensory aspects ... Hotels have to carefully deconstruct their facilities and services into smaller pieces and identify for which of them the customer may be willing to pay more."

Retail travel agencies

For retail travel agencies, this type of strategies is almost a must, to the extent that they have access to them. "They are very important for our network, because offering them to our customers allows us to explicitly highlight the added value of buying a trip through an agency," explains the director of the Vacation Area of Viajes Iberia, Juan Miguel Morales. Whenever possible, because upselling is a very attractive sales pitch, but it’s not always available to the travel agent: airlines or railway companies, for example, manage these upgrades on their own". However, as for cross-selling "I would dare to say that it is not so much as an attractive technique for our network, but rather a genuine obligation," he adds, "offering our customers insurance, car rentals or excursions at the destination allows us to provide them with a key added value and provide them with great service and earn their loyalty."

Regarding upselling, Morales says that even though the crisis "might seem a natural enemy", and in spite of the current importance of the price in the purchasing decision, "when a customer is offered a trip enhancement at a competitive price, we notice that they are very receptive".

Viajes Barceló state that they "strongly believe that travel advice is the main added value that the customer recognizes and appreciates." This type of products are designed to "avoid complications on a trip, suggest visits, be sure that they will be covered if anything goes wrong, identify their needs even if the initial approach is wrong ..."

As for improvements, they are frequent in Barceló Viajes with respect to accommodation, "with welcome amenities or upgrades subject to availability at Barcelo Hotels".

Wholesale travel agencies

Wholesalers frequently use cross-selling. For example, the International CEO of the Low Cost Travel Group, Alex Gisbert, says the company often uses cross-selling in marketing throughout Europe through its Lowcostbeds bed bank. "Our cross-selling is mostly based on Resorthoppa transfers". This occurs in 30% of transactions, he says. In addition, "to incentivize agents we offer more commission if they book Lowcostbeds and Resorthoppa products in the same transaction".

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