Industry Update
Opinion Article17 December 2020

High Performance Hotel Upselling Requires a Holistic Approach to Hotel Technology

By Pierre Boettner, Head of Product & Co-Founder of ROOMDEX Inc

By Pierre Boettner, Head of Product & Co-Founder

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We were well into the COVID-19 lockdowns when we decided to launch ROOMDEX. It was a surprisingly easy decision - we knew each other well and when discussing how we could best help hoteliers through and beyond the pandemic, the answer was just so evident. Upselling clearly offers the best opportunity to create ADR and RevPAR lift while increasing guest satisfaction. The benefits of upselling as a WIN/WIN proposition have been demonstrated a number of times and I am certainly not here to repeat what is well understood, nor to try dispelling previous findings.

Hoteliers need every penny of extra revenue while having fewer staff. Plus, since guests would be acutely more interested in isolating themselves for the foreseeable future, focusing on the room product seemed a great place to start.

What upselling tool are out there right now?
Upselling software is already out in the marketplace, but most fail hoteliers in both efficiency and effectiveness. For example, if your upsell process needs to be driven by human agents, then it was underpowered before the pandemic and most surely is now.

So, how do we make it better? How do we improve conversion in upselling so we can actually enjoy the benefits of this important revenue stream? You may be thinking…personalization! I wouldn't blame you for saying so. Our entire industry has been chasing personalization for a decade or more. A recent survey of marketers showed that 94% say that personalization is important to meeting their current marketing objectives. Unfortunately, the same survey shows that personalization remains more of a promise than a reality.

Let's look at the component parts of upselling
Upsell systems (ideally) consider three core data components when generating offers: product availability, pricing and guest profiling (the basis for personalization). The secret to improved conversion and efficient automation is to understand the relative effectiveness of the component parts.

In even the most sophisticated cases, availability and pricing have been handled via connections to the PMS and RMS respectively. It has always been considered that this data was what it was. The problem is that the data received was inconsistent enough to necessitate human intervention:

  • The availability as presented to a CRS is not based on individual rooms and their state. Instead, it is based on the overall availability in a category. It is also driven by what the distribution team has decided will yield the most optimal business mix to the hotel. Base rooms are overbooked, sometimes significantly. Many of these reservations will have to be upgraded - a practice called 'balancing the house'. When the hotel takes ownership of the inventory it is all about fulfillment. Here the summary view of capacity is no longer sufficient. One must know if a category upgrade can ACTUALLY be fulfilled or not. There are other concerns such as whether an early arrival will be possible or whether it might collide with a late departure the night before. Or will the hotel have enough wiggle room to accommodate for unpredictable operational requirements and last-minute guest requests. It is quite simply a very different view of what availability truly means.
  • Especially when set automatically by your RMS, pricing is the very capstone of hotel distribution. Yet RMS pricing too is geared towards distribution alone and will rarely if ever take into account the needs for balancing. The Junior Suites and the Executive rooms may well be available for sale. Which ones will be occupied by guests upgraded out of Standard is an entirely different question.

Worse yet, systems out there will require you to regularly feed availability into it and define offer rules based on operational requirements. Some will even quite literally ask you to define what to offer to whom and at what price. And in most cases, any upsells "sold" can only be confirmed after an operational review. That might sound comforting, but it really should not. Not at a time when fewer agents need to be more productive to even deliver even on minimum expectations.

But hoteliers feel the limitations on pricing and availability data are impossible to address. So, they have traditionally felt the only lever they had to pull was guest profiling. Big Data analytics, hyper, super, and super-duper targeted offers. I am not here to make you that pitch- quite to the contrary. I acknowledge the importance of it all, but after many decades in operations, analytics, and in R&D, I also know better.

Traditional views on guest profiling may not be the answer in this case
What I am proposing is to stop looking for even better profiling of the guest in order to personalize the offers even more. We should all know by now that the amount of data needed to do that well is just difficult to come by. What certain persona did or didn't do in a different destination or context is just not that predictive. By limiting oneself to only a single or very few sources of information, the context may become more focused, but the age of the data may well make it stale. This false premise about the promise of Big Data has clouded our views on where the real hurdles are to improving conversion.

The answer: a holistic approach
For a system to deliver on a particular process it specializes in, it needs to take into account all of the critical components and bring them all together coherently.

Your upselling platform needs to address the traditional weaknesses of all three components. It should include:

  • An exact reflection of the availability down to individual rooms, room features, and categories;
  • The ability to enrich traditional PMS data for a quick, accurate, and self-adjusting configuration of the hotel and its offerings;
  • A pricing engine that yields in real-time and automatically, within the constraints set and controlled by the hotel;
  • A forecasting engine that ensures that an upsell is priced appropriately and can be truly sold and fulfilled without human review, and;
  • A persona engine accounts for external data, reservation data and faceted hotel information when matching guests to the right products the hotel has to offer to guests.

Make no mistake, hotel technology much more complicated than it might seem. It is easy to forget that a hotel operation is composed of a multitude of different services that all have to come together just right in order to form a seamless guest experience. Your selected hotel upsell tool must account for it all. If you are supplementing upselling with human intervention or are being told that Big Data is all you need to solve your sales problems, then I encourage you to look at your hotel holistically. If you continue to treat upselling as a trivial add-on, it will perform like one. But given the state of our industry right now, no hotel can really afford to do so.

About ROOMDEX

ROOMDEX automates, monetizes and ultimately simplifies the hotel room upgrade process by putting the power of choice in the hotel guest's hands. Founded early 2020 by Jos Schaap, Pierre Boettner and Denis Bajet, 3 industry veterans (Ex. MICROS, StayNTouch, Shiji and Nor1) who together bring over 90 years of hotel software experience around integrations, PMS, revenue management, BI, mobile, self-service and upgrade optimization software. The first product "Room Upgrade / Upsell Optimization", will deliver high margin revenue and ROI to hotels in LOW and in high occupancy periods. Find more about ROOMDEX on www.roomdex.io

Contact ROOMDEX at [email protected]

Pierre Boettner

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    About ROOMDEX, INC

    ROOMDEX automates, monetizes and ultimately simplifies the hotel room upgrade process by putting the power of choice in the hotel guest's hands. Founded early 2020 by Jos Schaap, Pierre Boettner and Denis Bajet, 3 industry veterans (Ex. MICROS, StayNTouch, Shiji and Nor1) who together bring over 90 years of hotel software experience around integrations, PMS, revenue management, BI, mobile, self-service and upgrade optimization software. 

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