Hotels don’t have many opportunities to generate revenue streams outside of selling accommodation and items on the addon-list. The only way to step up their game is to personalize offers and invite guests to spend more than they initially planned. Two useful sales strategies can help hotels do it – cross-selling and upselling.
Today we are going to take a closer look at both these strategies. Let’s see what cross-selling and upselling have to offer to the hotel industry, what makes them different, and when is the right time to use them to generate additional revenue.
What Is cross-selling
Cross-selling is a sales technique targeting existing customers. Hotels use cross-selling to persuade a guest to spend more by purchasing a service or product related to what they’ve already bought. For instance, when booking a room, you can offer your guests something that will enhance their experience.
What items can you successfully cross-sell? For instance, it can be a sightseeing tour, access to a pool or a gym, and massage. Wellness offers are the most popular among hotel guests, and they amount to about a fifth of all services sold.
If we take a look at the customer journey, the cross-selling naturally follows the booking phase. Once a guest has booked a room in your hotel, it’s a perfect opportunity to offer them add-on items and services.
Your front desk staff can carry out this task and enhance the guest experience for those coming to the reception desk. For customers using online booking sites, you should consider using software that automates cross-selling.
What Is Upselling
Upselling is a sales technique popularly used across verticals. It revolves around persuading customers to buy the more expensive room and service upgrades. For instance, you can convince your guests to buy additional ancillaries or buy a room upgrade before they arrive at your hotel.
There are several ways to implement upselling into your sales process. One of the methods is to enable your front desk staff to upsell. It works for guests who’ve just arrived at your hotel and are looking for a room to book. What about the guests using booking engines or online travel agents, such as booking.com and Expedia, to book a room?
If you want to upsell these guests efficiently, you should consider using specialized hotel upselling software. These tools perfectly integrate with PMSs, booking engines or channel managers and help you benefit from upselling on auto-pilot. Given that more and more guests use online booking websites to book a room, this method may be the most efficient in terms of consistently increasing hotel revenue.
Difference Between cross-selling and Upselling
Many people use cross-selling and upselling interchangeably. However, there’s a subtle difference between them. Each one of the sale techniques is indicative of a specific phase in the buyer journey.
Upselling can help you persuade customers to spend more while or after they are choosing a “product.”
Cross-selling is focused on getting customers to spend more on ancillaries after they’ve booked a room. The cross-selling offer has to relate to or complement the room or services that are already booked.
Advantages and Disadvantages of Each
Although targeting customers at different stages of their journey, both cross-selling and upselling share the same advantages.
Increase in revenue. Hotels can use cross-selling and upselling to increase revenue. It enables hotels to take advantage of their entire inventory and monetize some services that are rarely chosen by default.
Personalized guest experience. In the customer-centric era, hotels need to play the personalization card. It can help hotels engage more customers and appear as companies that care about their customers.
Increase the value of every sale. Valuable cross-sale and upsell opportunities can help you better optimize your sales. After all, it’s easier to sell something to an existing customer than a new one.
Unparalleled guest experience. Cross-selling and upselling add-on items to your customers can help you appear as an on-stop-shop. You’ll build an image of a hotel that goes out on a limb to help guests enjoy their stay.
Disadvantages of cross-selling
- Cross-selling when overdone can disrupt the customer experience and make it harder to build a long-lasting relationship with a customer.
- Additional offers, especially if they are not personalized, can frustrate the customer, minimizing the chances of repeat business.
Disadvantages of Upselling
- You can appear as if you are compelling a customer to buy a more expensive service or room.
- Some hotels find it daunting to convince the customers that a bigger room is more valuable than the cheaper option.
Both disadvantages can turn into advantages for hotels using innovative approaches and solutions to simplify the process for the guest and communicate that their offer carries a great value. Many hotels follow the success of airlines to offer their guests upgrade opportunities based on dynamic pricing and real time inventory status
Examples of Each
Here are a couple of examples of upselling and cross-selling to help you paint the picture.
Cross-selling example – During check-in, you can offer a couple with a honeymoon suite reservation a package of chocolate or champagne.
Upselling example – During or after the booking process, you can inform the customers there is a larger room with a better view available for an additional $30 or even give them the opportunity to place a bid to upgrade to this room.
Cross-selling Is Good When
Cross-selling is good post-booking. You can cross-sale add-on items:
- When guests are at the hotel reception during check-in.
- Before arrival, via an email to inform them about the additional services.
- When a guest shows interest in a service, you can tell them about other relevant options.
Upselling Is Good When
Upselling is good during booking, but is much more effective when done pre-arrival, a week or two before a guest arrives at the hotel.
You can upsell room upgrades and add-on items:
- While a customer is browsing through your offer;
- During the booking process;
- Before arrival, you can inform your customers that you have a better room available at an affordable price; That’s the most effective way to go, with the highest conversion rates, when the guest is anticipating her vacation, but not too soon after the booking is made.
- During check-in, you can provide more information to your guests in terms of making their stay more enjoyable if they spend a little bit of extra money;
How To Combine Both
While you can pursue upsell and cross-sell opportunities at the reception desk, the most efficient way to combine both is via software. Specialized software, such as Upstay, enables you to automate room upgrades and additional ancillaries promotion completely.
Customers have the convenience and freedom to choose and bid on upgrades they find attractive before their arrival. With advanced customer journey analytics, you’ll be able to deliver personalized product offers, capture more sales, and increase your hotel revenue.
It’s hard to declare the winner of the cross-selling vs. upselling match, at least in the hotel industry. Both are viable and powerful sale techniques that can help you increase the value of every sale. Now that you know all their benefits and when to use them, we will leave it up to you to decide the best course of action for your hotel.
Graduated from Standford University, Arielle has over 5 years of experience in the Hospitality industry. She holds an MBA in business administration from the IDC Herzliya, Israel. She currently works as Account Manager at UpStay, building and maintaining strong, long-lasting customer relationships. She is deeply passionate about helping hoteliers unlock significant new revenue streams from unsold premium inventory.