The revenue manager’s perspective: Upselling’s role in your overall commercial strategy
There may have been a time where revenue management was a sort of day-to-day, "let's just change rates and put minimum stay restrictions on" kind of activity. We are now operating in a new era. For competitive hotels, old school revenue management has given way to the stewardship of a holistic commercial strategy. In that light, we were interested in understanding the role of upselling in “new school” revenue management, so we reached out to some industry experts.
Total Customized Revenue Management (TCRM) is the one of the hospitality industry’s leading resources for Revenue Management services for both independent and branded hotels. In the last ten years, they have worked with over 500 hotels in over 250 markets, providing short-term task force to long-term outsourced revenue management including training and mentoring to system optimization audits; technology sourcing to new system builds and implementations.
We recently caught up with David Beaulieu, CHBA, CHIA, Executive Director of Strategic Accounts and Kathryn Baker, CRME, Chief Operating Officer for TCRM, to find out more about what they do, and where automated upselling fit into their view of commercial strategy.
What exactly does an outside revenue management services and consulting company do for hotels?
Kathryn: We have a lot to offer, but I think I'll start out by just saying we're really a full-service revenue management and commercial strategy company. We may be known for providing taskforce interim support in revenue management or long-term outsourced revenue management for our clients but we also can provide any number of consulting projects, whether that's a system configuration, transition properties, training in systems, or revenue management theory, mentoring - lot of different assessments as well. We do analyses on comp sets, channel cost, market feasibility - anything that touches revenue management commercial strategy is something we can do.
There are a lot of hotels that who don't do much revenue management, and there are a lot that have internal revenue management teams. What are the conditions in which a hotel is going to reach out to your organization?
David: Typically, for hotels that don't have a revenue management team in-house or maybe at the corporate level, and they are lacking in that resource, they will reach out to us. Primarily we find this in the independent hotel space, because it's sometimes difficult to attract the right type of talent with that systems' knowledge which we possess with our team. Then on the branded side, oftentimes we do, as Kathryn indicated, task force or interim revenue management support, and that's where they have the in-house talent, but maybe they are going through a transition, somebody has resigned and we're filling in internally for that position.
We hit the ground running pretty quickly, and we go through a multiple step process to ensure that we're not missing anything. We're sort of like looking under every rock, if you will.
Revenue management covers a huge array of different sort of revenue and distribution channels. Do you think upselling is something that has only recently been introduced into overall revenue management strategy as a serious source of revenue? And is that because of technology?
Kathryn: I think the larger brands have had access to technology for longer than independent hotels that support upselling and upgrading ahead of time, before arrival, right? And before the last few years, upselling was largely a manual process at a hotel or resort. And we don't like that. Nobody likes that, right? I've seen it be successful, just a handful of times when it's a manual process but there's got to be somebody really leading the charge on that, on property. And then when that person leaves, so there goes that process.
David: We've always believed that certain room types go unsold at hotels - And typically what happens is people at the front desk will upgrade their customers to those better room types at no extra charge. What we really like about a product like ROOMDEX is that it has the forecasting capability to determine which room-types, or "up-sellable" inventory would be available in the dynamic pricing. That, to us, was a key differentiator among other services or products that are out there.
Kathryn: Automated upselling is just a game changer. And, as David said, the idea that it is "yieldable" makes it so much more comfortable, not just for revenue managers, but for general managers and front office managers, because you're not having to just say that you can upgrade from a standard king to a suite for $40. You can have that be dependent upon the demand at the time, and that's so meaningful. Even in the past, when I've seen a little more basic technology address upselling, it wasn't "yieldable" and so therefore was seldom utilized. It was something that would maybe just be put into place in times of very low demand because a hotel was being optimistic that they'd be able to sell all their room types at the full rate. Doesn't happen that way most of the time. So now with something like ROOMDEX, we can feel comfortable upselling even in times of high demand.
When it comes to hotels that are not using an upselling platform, is it because there is it an operational resistance? Is it a resistance based on new technology? Or is it that they haven't considered it before?
David: I think there's multiple factors that could explain why sometimes there's a resistance. Sometimes it could be perhaps the hotel doesn't feel like they have the right inventory. Maybe most of their rooms are standard inventory room types, and they don't have enough of the upgradeable room types, so they just decide, "You know what, there's not a product out there for us." But oftentimes there's other things that you can upsell besides an upgradeable room type, you can do early check-in or late checkout or some other merchandisable things. Sometimes it can be that the people at the hotel that don't believe in the technology or perhaps they feel like they're better at doing it themselves at check-in. It's not just one thing; we've encountered several different reasons in the past.
In the past, with legacy systems, that were sort of a one stop shop for everything, the IT guy would oversee procuring the technology and everyone would just use whatever the platform was. Now we live in an era of the cloud PMS, with free trials available you can plug and play. With that in mind, what is the current role for revenue managers in terms of technology acquisition?
Kathryn: I absolutely feel this falls under the umbrella of revenue management commercial strategy, right? We're now in an era that is really elevated, commercial strategy and revenue management, to the executive level - and with that comes a greater reliance on the person that's in that role to not just get us through the day, but to look to the future and proactively finding ways to maximize not just room revenue, but all revenue. That's really what we're here to do. I absolutely feel like this is a revenue manager's job or a director of revenue management or a director of commercial strategy, to constantly be on the lookout for the new technology that supports the strategies that they want to implement at their property.
David: I agree with that, and I think that with the directors of revenue or the revenue leaders at the hotels being involved, you'll see a higher adoption rate as well. Because oftentimes, to your point earlier, where you said, in the past it was directors of IT or some commercial or chief information officer who was sort of pushing down the technology to the user level, there's not always going to be an adoption rate there. But, if it's coming from the field and it's the field that's going to use it, I think you'll see a higher adoption rate.
Do you feel that because we had two years of very low occupancy that there is more of a push by ownership to find additional revenue sources or to increase efficiency? Or has everyone just kind of written off the last couple years and is back to business as normal?
Kathryn: The smart hotels are definitely looking towards the future and open to doing things in a different way, which is going to mean adopting new technologies and automating processes that in the past have been manual. That's the way we're headed. I think there are certainly some that are going to kind of dismiss the past couple years. Our ideal client and, luckily a lot that we do work with currently, want us to bring them the next great technology that's going to make them more money.
In revenue management we're used to our role being that we must sell all the time - we have to sell our strategies, we have to sell our ideas and our recommendations to the executive team at the properties, and our clients. This is no different. And I think a lot of directors of revenue management, revenue leaders, they know how to do that.
What would you say to other revenue managers who are out there, when they're considering upselling platforms? What are the key considerations?
David: I would say, first they should assess their own hotel product and what is capable of being upsold and merchandised. And then look at the products that are out there that have the features to be able to promote those attributes that they have at their hotel - the ability to send a confirmation email and an upsell request in advance of arrival, the ability to allow for "yield-able" inventory so that you don't have a fixed rate because you may be leaving money on the table if you're not asking enough for that particular upsell, or perhaps you're overcharging and you're not upselling enough because of it.
If you were speaking to an audience of hotel managers or hotel management companies, what would you say about your company's approach to strategy in revenue management?
Kathryn: Yes, very good question. So, at TCRM, we know that commercial strategy is not just one or two big things that are going to change the revenue picture of a hotel or resort. It's often a lot of smaller strategies. So, an upsell software, or any other single revenue innovation, is not going to be the one thing that's going to jump your revenues 50% year over year. But it is a piece of an overall strategy that we should always be looking at. There's so many individual programs and strategies and channels and tools, and we have to constantly be making sure that we're looking at all the available ones and picking the right ones for our properties. I think it's a matter of not dismissing something because you don't think that it's important enough, because it is a piece of the puzzle.
About ROOMDEX, INC
ROOMDEX is the technology leader in the hotel upselling software space. Its hotel upsell software automates, monetizes and ultimately simplifies the hotel room upgrade process by putting the power of choice in the hotel guest's hands.
ROOMDEX Upsell Automation uses hotel reservation, guest data and its proprietary True AvailabilityTM and Dynamic Pricing algorithms to deliver personalized digital offers, greatly enhancing the guest experience. The hotel upsell tool relieves hoteliers of the labor time required by other upselling solutions while delivering high margin revenue and a substantial ROI.
ROOMDEX is now the exclusive provider of ABS Upselling. Attribute-based selling re-imagines hotel inventory merchandising, delivering a unique and improved guest satisfaction and increased hotel revenue.
ROOMDEX leverages hotel operational and software experience gained by our team members while in leadership roles at companies such as MICROS (now Oracle Hospitality), Nor1, Duetto, StayNTouch and Shiji to develop our innovations in hotel automation, dynamic pricing, operational availability and attribute-based selling. Since founding in spring of 2020, ROOMDEX has signed hundreds of hotels across North America, Europe and Asia Pacific.
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