Industry Update
Opinion Article15 May 2019

Upselling The Frugal Guest

By Larry Mogelonsky, Managing Director Hotel Mogel Consulting Limited

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When applied to hospitality, the word 'frugal' can have a rather opaque meaning. It doesn't mean that guests are cheap, but instead they are discerning and hesitant to splurge without full justification.


Every hotelier knows that guests are becoming increasingly tech-savvy with each passing week, but what this also means is that they are becoming exceedingly aware of channel price differences and marketing tricks used to cajole them into spending more than is absolutely necessary for a given service. And this is true for not just hospitality but practically every industry where the internet has served to maximize price transparency.

Oftentimes frugal is interpreted as cheap, but by understanding the difference you can modify your sales and marketing materials to convince this seemingly parsimonious audience to spend more with your hotel. The best place to demonstrate how you should proceed is in how you upsell your top tier rooms product to guests.

The first customer behavior to understand here is the predisposition to book the cheapest room available. Besides having the lowest rate, the key issue with these bookings is that this product line will likely result in the least rewarding guest experience because such guestrooms cannot properly express the full merits of the hotel (or they may have a few egregious flaws such as proximity to noisy public areas or awkward configurations).

Thus, not only do you have a monetary rationale in trying to upsell, but a defensive one in that your reputation is at stake.

Indeed, there are many hotels that have a policy of giving out complimentary upgrades when occupancy will allow so as to avoid bottom-seeking guests who reserve the cheapest room then complain online that the experience didn't live up to what was advertised. Given the democratizing format of online travel websites, a negative review from someone who stays in the cheapest room is just as damaging as one from an individual who stays in your presidential suite.

Your first job thus is to control the narrative of how your rooms are presented to avoid any disconnect between expectations and reality. This means modifying all pre-booking channels - that is, your website, OTAs, third-party channel operators - so that guests are immediately aware of all of the advantages of your higher tier products. Given your frugal guests a clear and concise reason to select a larger room or suite where you know they'll have a better experience.

Even then this may not be enough for the spendthrift. So, they review your full range of offerings and still go with the low-priced lodging. How are you going to continue the post-reservation conversation to try and upsell them? By the time guests arrive onsite, it's too late to upsell them because such frugal guests don't like being put on the spot.

Luckily, there are now a few platforms that can help to automate this part of the process by offering guests a portal through which to explore all your rooms then let them select individual rooms for an incremental fee (similar to airlines) or upgrade to one in a better class.

Convincing frugal guests to opt for one or the other means you have to convey to them a strong emotional driver so they explicitly understand how they will benefit. As seeing is believing, you need a visual platform so guests can peruse your product range with their eyes - think fully stocked photo galleries, floorplans with specific features earmarked, 360-degree images, virtual tours, panoramic shots of the views or links to positive videos from past guests and allowing guests to select their own room and upgrade if the detail provided moves.

When we talk about how increasingly tech-savvy guests are becoming - and how this is influencing purchasing behavior - one critical aspect to all this is the budding dominance of millennial and the soon-to-be centennial generations as modern travelers. For these two cohorts, it is important to recognize how significant a role social media plays towards hotel purchases.

Not only are they more discerning and facile when it comes to channel comparisons, but they also want experiences that they can brag about online. Upselling post-booking means playing into this 'badge seeking behavior' by expressing how various aspects of your top tier guestrooms will contribute to this everything-must-be-posted-online mentality. What specific features make your rooms unique? Do you have any cool furniture or colorful artwork? Are the views from the balcony Instagram-worthy?

These are the sorts of questions you must ask yourself and all other senior managers you work with moving forward. The modern sense of traveler frugality isn't going away, nor are any of the billion-user social networks. You must adapt by finding ways to connect with and convince this emergent customer type to try your more expensive rooms, first and foremost by prompting them with a platform that allows them to better see how stunning your best rooms are.

Larry Mogelonsky

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