Before we can talk about changes to revenue management in a post-COVID world, we have to talk about changes to demand. Traveler behavior has definitely changed, and will continue to change, and understanding guest demand during these ongoing changes is the key to revenue management success.
Guest demand historically meant demand by season. As technology costs have decreased, revenue management systems have become more sophisticated, and it has become easier to understand patterns in historical demand, leading to more granular forecasting. Dynamic pricing is the norm, and now pricing based on demand by room type is being implemented by many revenue management systems. We’re even seeing tentative steps toward pricing by attribute.
What’s missing? The guest request for an upgrade is as old as the hotel industry itself, but many hotels don’t include upsell revenue as a KPI on the rooms revenue report. Why not? Because if a hotel doesn’t approach upselling revenue management as methodically as rooms revenue management, the hotel can’t understand upsell demand. Without understanding demand, it’s almost impossible to create a forecast target. And if it can’t be forecasted, it can’t be a KPI.
Nor1 was the first company in the hospitality industry to offer automated upsell solutions. Because we were first mover, because we have the largest installation base of any upsell provider, and because we have multiple solutions covering booking to check-in, we have accumulated the largest set of guest/buyer behavior data in the hotel industry, including demand.
That data allows us to see trends and changes over time and helps us and our customers understand demand for upsell offers. Because of the COVID-19 disruption, we’re looking more closely at upsell demand, and how that demand has changed (so far). The data set includes thousands of properties in our portfolio in every region globally.
And this demand data reveals three reasons why upselling should be a part of every hotel’s revenue management strategy, right now.
First, let’s look at click-through rate (CTR). Calls-to-action (CTA) for paid upsell offers can be placed on the booking engine, on an email, in an app, or sent via text, whatever is appropriate for a hotel, hotel group, or brand. Comparing September 2019 to September 2020, we see a 7.4% increase in CTR on upsell CTA YOY. Remember these are not free upgrades, and guests know they aren’t free because of the text on the CTA. Even so, guests are clicking through at a higher rate than this time last year.
Guest Click-Through Rate
Now let’s look at guest requests. This is the count of guests who click the ‘request’ button on an upsell offer presented to them where the price is clearly presented. Again comparing September 2019 to September 2020, our data show a 17% increase in the number of upsell requests made by guests.
Finally, let’s look at the price of those upgrade requests. The average price per night of those requested upgrades increased 7.3% YOY. Compare that to STR’s report of a 57% global decrease in RevPAR August 2019 to August 2020. In this time when a hotel needs every dollar possible, why leave this demand unrealized?
Upsell Price Per Night
So what can a hotel do with these numbers? First, know that demand for paid upgrades exists, at a higher percent than at the same time last year, and for a higher price point. Second, capitalize on this demand, as you would on any other known demand, by implementing an upsell program. And now is a great time to do it!
- With lower occupancies, hotels have more inventory to upsell
- Guests have lower booked travel costs, so have additional funds available for upgrades
- Guests will pay for non-room inventory items like parking, early check-in, and late check-out
Guest demand exists for paid upgrades. Responsible hotel executives and revenue managers should fulfill this demand so guests can have the experience they want while providing the hotel additional revenue to get through this current disruption.
Many hoteliers believe they don’t have the resources to manage upselling, but Nor1’s machine learning-based automation takes care of that concern. No time is spent on pricing, selection, presentation, or management approvals. Managing guest requests takes less than one hour per week and can be completely eliminated with integration.
Let Nor1 help you realize your upsell demand.
About Nor1, Inc.
On November 18, 2020, Oracle announced that it has entered into an agreement to acquire Nor1. The acquisition extends Oracle Hospitality's OPERA Cloud Suite by adding Nor1's Merchandising platform that enables hotels to provide personalized offers throughout the guest journey using AI & machine learning, thereby improving guest engagement, and driving incremental revenue and improved loyalty for hotels.
Nor1 is the leader in hospitality upgrade, up-sell, and merchandising technology. Headquartered in Silicon Valley with offices across the world, Nor1 provides data-driven pricing and merchandising products that maximize incremental revenues for Hilton, IHG, Radisson Hotel Group, Accor, Wyndham, and other global hotels and resorts. Nor1′s real-time pricing and merchandising intelligence engine, PRiME®, powers eStandby Upgrade®, eXpress Upgrade™, and CheckIn Merchandising™,to recommend the most relevant upgrade to the right guest at the right time for the most optimal price. For more information, please visit www.nor1.com, or contact us at [email protected].