Why Is Upselling Important? How Can Hotels Improve Revenue Directly from the Front Desk?
By Leora Halpern Lanz, Program Chair, Boston University School of Hospitality Administration and President of LHL Communications
The importance of upselling at the front desk has increased over recent years due in large part to the changing methods of booking rooms. A well-managed upselling program can benefit all parties involved if done correctly.
The act of selling upgrades can benefit the property, the front desk agent, and the guest if there is a quality system in place. The benefits for the property include higher guest satisfaction and higher revenue/ADR. Proactively upselling can make a big impression on the bottom line, no matter the size of the property. For example, not too long ago, a smaller, high-end, boutique property in the mid-Atlantic region, with less than 150 rooms implemented a new upselling program in 2007, and its upsell revenue jumped from $20,000 in 2006 to $120,000 in 2007. The following years’ upselling revenue increased significantly as well: to $145,000 in 2008, $190,000 in 2009, and more than $200,000 in 2010. The hotel paid for training and provided agents with upselling incentives; and even with such expenditures accounted for, the property increased profits by $168,000 over the previous year.
The front desk agent has the opportunity to profit from an upselling program through a commission-based incentive program. For example, an effective incentive program that has been implemented at a number of properties (ranging from full-service luxury resorts to boutique and urban corporate properties) offers 5% of the upgrade amount; and thus the difference between the rate booked and the new (upsold) amount is added as a bonus to the agent’s paycheck after the guest has checked out. For example, if a guest makes a three-night reservation at $115/night, and the front desk agent sells an upgrade to the guest increasing the rate to $145/night, the front desk agent’s commission would be $4.50 (5% of $90) and the hotel would gain $85.50 from the increase in rate.
Team and individual selling goals are also opportunities for a property to motivate front desk agents to upsell proactively. If the team, for example, achieves its monthly goal for upsells, the incentive percentage can be increased to 10% and paid retroactively. In 2010, at the small mid-Atlantic hotel referenced above, an agent had an annual upsell total just short of $45,000; because her team made the monthly goals each quarter and so achieved the 10% bonus bracket, the agent earned an additional $4,500 for the year. This kind of financial reward can be extremely motivating for staff. In this instance, the hotel realized an additional $40,000. It should also be noted that guest satisfaction surveys were higher that year than in previous years – an all-around win!
Recognition-based rewards are also great tools to incorporate into an upselling program. Honoring staff for the most upsells, highest dollar average of upsells, and highest monetary amount of upsells can be recognized with cash bonuses, plaques, prime parking spaces, gift cards, or even lunch with the General Manager.
An incentive for converting a “walk-in” reservation is also an opportunity to consider. This type of selling may warrant a slightly larger commission percentage because there is a different level of skill and effort needed from the front desk agent. In these situations, an 8% to 10% “commission” may very well be appropriate.As you can see, upselling is a win/win/win scenario for the property, front desk agent, and guest – if done correctly.
How Can Our Hotel Upsell Properly?
Best Practices for Implementing an Upselling Philosophy
One of the most common mistakes the front office staff can make when implementing an upsell program is to establish “higher revenues” as the ultimate goal. That’s when a guest’s experience is almost always diminished. Instead, the focus must be placed on the guest and his/her comfort. When the agent is trained and incentivized to enhance the guest’s experience, the upsell progresses naturally.
Again, as the front desk staff is quite often the guest’s first contact with the hotel, it’s critical that the front desk agent “consult” the guest about the hotel – topics such as comfortable accommodations, appropriate packages, or guest room types, etc. Most frequent travelers report that front desk agents rarely make an effort to recommend any accommodation other than the one booked. On the rare occasion that an agent does make a recommendation, quite often the effort is a transparent attempt to “get more money” from the guest. There is no connection to the recommendation and the guest’s needs. This approach can be very off-putting. The first step to successful upselling is a shift in focus and presentation; a keen awareness of the guest and sincerity regarding what that guest may require for comfort and satisfaction need to be the primary concern.
Agents must learn to recognize and anticipate the needs of the guests as well as have the proper product knowledge to make an educated suggestion of a more comfortable room option. For example, if someone is traveling with children and has booked a standard room, the agent could point out that the guest may be more comfortable being in a room type with a separate area, so that the parents aren’t required to have an 8:30 bed time. Or perhaps someone staying for an extended amount of time would find value in a room that has more space. Oftentimes, guests don’t fully understand the full range of room-type options that are available, and the situation should be approached in an informative and helpful manner, and never with a disparaging tone or remark about the currently reserved room. Again, the goal is to maximize the guest’s experience.
How Do We Measure Our Front Desk Upselling Success?
A full-service resort on the west coast of Florida tracks its upsells in this manner:
- The agent leaves the original reservation room type on the reservation but adds an “upgrade” charge for the amount, let’s say $20;
- The agent makes a screen print of the reservation and highlights the upgrade amount, number of days, date, and initials (ID);
- The agent gives the printout to the Front Desk Manager, who verifies the information;
- The Front Desk Manager gives the reports to the payroll department, which applies it to the paycheck of the agent after the guest has departed and paid his/her bill;
- Accounting also creates the upselling statistics reports for individuals and teams.
How Can HVS Train Your Staff to Upsell?
While these traits still serve an agent well, the changing landscape of reservation-making has created the need for a new skill set for the front desk agent – the ability to sell effectively. Agents need to be trained properly on how to qualify the guest, use appropriate verbiage, assess availability, identify appropriate packages or promotions, and quote pricing. Upselling can seem daunting, but the rewards are indisputable – happier guests (translating to a higher repeat ratio), higher revenues, and better compensation for the agent.
A well-managed upselling program can benefit all parties involved if done correctly. To stay competitive, it is necessary that a property be able to adapt to the changes in the hospitality industry. There is a delicate balance between good customer service and quality sales that, if done properly, could amount to great success for an upselling program. Proper training and an energized front desk team will create the right atmosphere for a productive upselling program with a great return on investment. HVS’s expert staff can help you create a customized program for your property, provide sales and customer service training for the frontline staff, and help you implement a tracking and rewards systems for the program. HVS Sales & Marketing Services can also help you instill a philosophy of upselling through personal training, webinars, tutorials, and more. For more information, please contact Leora Lanz at [email protected]
HVS Sales & Marketing Services would also like to acknowledge Miss Lacey Hagen for her enthusiasm, attitude, and contributions to this article. Lacey is a Graduate Assistant at Temple University pursuing a Master's Degree in Tourism and Hospitality Management. She has a Bachelor's Degree in Sport Management from the University of Minnesota. Lacey has worked at the front desk of the Residence Inn Minneapolis City Center, as a Social Media Intern for the Minnesota Timberwolves, and as a Recreation and Front Desk Intern for the Tradewinds Island Resort on St. Pete Beach, Florida.
About Leora H Lanz | HVS is pleased to announce that in 2010 Leora Halpern Lanz was named Sales & Marketing Executive of the Year - Tourism, by the Greater New York chapter of the Hospitality Sales & Marketing Association International (HSMAI). Leora Halpern Lanz joined HVS in February 1999. She is responsible for coordinating the global marketing and external promotion of HVS’ worldwide office network and comprehensive hospitality services. Additionally, she coordinates the internal communications for the firm as well as contributes to the production of the firm's weekly e-newsletter, website and intranet. Her efforts have earned her Awards from the prestigious Hospitality Sales & Marketing Association International (HSMAI) as well as awards from within HVS itself. Leora also serves as Director of HVS Sales & Marketing Services – providing sales, marketing, revenue management and public relations expertise for the hospitality industry. Specialties include: operational reviews; marketing plan development; sales and marketing assessments; reviews of hotel marketing strategies, sales organizations and operations; public relations; sales and marketing coordination with the property’s flag; sales action planning; pre-opening marketing; sales direction and training; publicity; and promotions including web marketing and social media.
About Jennifer Coyle | A tenured hospitality professional, Jennifer Coyle specializes in the areas of sales training and staff development for various hotels and hospitality-related industries. In this capacity, Jennifer works closely with sales personnel to assess their strengths and opportunities for improvement, and then provides training and coaching designed to enhance performance, increase job satisfaction, and maximize revenues. Jennifer’s first- hand knowledge of the complexities of hotel sales, and her effective communication and teaching style allow her to truly partner with her clients to deliver results. Clients consistently report higher earnings, lower turnover and expanded market share as a result of this collaboration.
Prior to joining the HVS team, Jennifer served as Vice President of Training for a highly specialized hospitality-consulting firm. Additionally, Jennifer worked as Director of Corporate Sales for the InterContinental Hotel Miami and Director of Sales for both Doubletree and Doral Hotels. While on property Jennifer was frequently recognized for her performance, earning distinctions such as “Manager of the Year Worldwide” (InterContinental Hotels), “Sales and Marketing Executive of the Year,” and the “Rising Star Award (Doubletree Hotels). Jennifer holds a master’s degree from Florida International University in Training and Development, and a bachelor’s degree from Georgetown University. Jennifer is one of the founding faculty members of the Center for Service Excellence in Miami, Fl.
Leora Halpern LanzMore from Leora Halpern Lanz
HVS is the world's leading consulting and valuation services organization focused on the hotel, restaurant, shared ownership, gaming, and leisure industries. Established in 1980, the company performs more than 4,500 assignments per year for virtually every major industry participant. HVS principals are regarded as the leading professionals in their respective regions of the globe. Through a worldwide network of over 50 offices staffed by 300 experienced industry professionals, HVS provides an unparalleled range of complementary services for the hospitality industry. For further information regarding our expertise and specifics about our services, please visit www.hvs.com.