Debunking Hospitality’s
“Price Ceiling” Myth
Through Effective
Upselling Techniques
Disproving common misconceptions that shrink property revenues, this
white paper explores how hoteliers can achieve not only higher revenue
but increased guest satisfaction and enhanced reputation through the
implementation of effective upselling solutions.
While complimentary upgrades for loyal guests
are a fundamental part of the hotel business,
the ability to upsell higher room tiers provides a
tremendous opportunity to generate additional
revenues at a significant profit margin.
Despite a continued rise in occupancy rates last
year, industry experts are still at odds on 2014
projections for RevPAR and ADR1.1 One factor
When booking online, most travelers seek out
in this apparent ambiguity is that some hotel
revenue managers believe that commoditization
in the market has created a “pricing ceiling” that is
preventing them from pushing the true ADR that
their properties should command. In reality, the
pricing ceiling is a myth. Research has proven that
most guests are willing to pay for enhanced value,
but only when the value proposition is made clear
and often only if they are encouraged.
hotels in convenient locations and end up reserving
base room levels. It’s predictable, except for only
the most special of occasions – but this is not always
out of lack of interest, means, or need. Instead,
consumers simply have a hard time seeing the value
of paying more at the point of booking. Needs at the
point of booking are very different than at arrival
and most want the reservation process to be as
brisk and painless as possible, and comparing the
relative merits of different room types is seen as an
unnecessary extra step in the process.
Too many hotels continue to give away premium
room tiers discounted or for free, undermining their
ability to differentiate their product and achieve
optimized rates. While complimentary upgrades
for loyal guests are a fundamental part of the
hotel business, the inability or lack of interest in
upselling higher room tiers is a tremendous missed
opportunity to generate additional revenues at a
significant profit margin. Just as importantly, failure
to upsell is creating a lesser stay experience for a
segment of guests who would clearly benefit from a
room product better matched to their needs and are
willing to pay for it.
More to the point, complimentary upgrades have
become so commonplace that even a guest who
would otherwise book the higher room type online
opts to hold out for the free or deeply discounted
upgrade at time of check-in—in much the same
way that a frequent flyer member on an airline
may wait for the free upgrade at the gate. In many
categories, the hotel industry follows the lead of the
airlines, but in this case, a bad precedent may have
been set. Rather than giving away premium rooms,
hoteliers need to make a more concerted effort to
sell the underutilized premium room types at the
point of check-in. The solution is not discounting –
1 http://www.hotelnewsnow.com/Article/13041/Data-firms-differ-on-hotels-outlook
With an optimized upselling program contributing on average
up to 3% in incremental RevPAR, it is too important to make it
dependent on one person alone, and a continuous engagement
process is needed to ensure the hotel remains focused on
driving optimal revenues from the upselling program.
it’s offering the right guests the right room product
at the right time while protecting a hotel’s rate
integrity. Imagine if 5% of guests spent 20% to 30%
more for every night – it would do wonders for
average rates and the hotel’s bottom line, which
both hotel managers and owners will appreciate.
Now imagine generating those extra revenues and
making the guests feel like they received a better
value than expected. That is the power of effective
upselling.
Upselling As A Win-Win
Foundationally speaking, upselling is not about
directly generating additional revenues for a hotel.
Done well, it certainly does that; hotels that have
opted to use a front desk upselling training solution
can post incremental RevPAR of sometimes up to
7% 2 after implementation.
That incremental revenue is absolutely significant in
immediate fiscal terms – especially when it is derived
entirely through higher ADR, but the real value of
effective upselling is seen in the bigger picture of
hospitality. When upselling is done correctly – when
higher room types and value-added amenities are
sold to those guests for whom such enhancements
2 http://www.hospitalitynet.org/news/4063497.html
will improve the overall hotel stay experience – it can
significantly improve the hotel’s entire image and
loyalty base. Guests whose needs are met inevitably
have a better opinion of the property, its employees,
and the service levels they have experienced, all of
which translates into happier guests who are likely
to return and who will offer positive reviews online
and to their personal social networks. Simply stated,
a professional and efficient upselling program
enhances guest satisfaction. In order to understand
the extent of this synergistic relationship, a major
global hotel company recently undertook a study to
determine how its upselling program affected guest
satisfaction at its properties. Correlating guests
who were upsold with guest satisfaction scores, the
company found a 3 point increase in overall guest
satisfaction.
As if simple hospitality were not reason enough to
strive to meet guests’ needs, research has proven
over and over again that even modest gains in a
hotel’s customer satisfaction scores can transform
a hotel’s bottom line in significant ways. Cornell
University’s Center for Hospitality Research
concludes that a mere 1% score improvement to
a hotel’s online guest reviews results in a 1.4%
RevPAR increase.
Better Experience Means Better Guest Reviews
can a property stand a chance of maintaining an
With the percentage of consumers consulting online
review sites before making a reservation steadily
increasing, now more than ever is it important
for hotels to ensure the total satisfaction of all
guests. Just a single negative review has the ability
to lower the rating of a property, something that
could impact the reservation decision of countless
potential guests.3 Although seemingly impossible
to accomplish, the ability to achieve an impeccable
online reputation is indeed feasible as long as staff
are adequately educated on how to discern and
provide for the unique needs of each individual
guest.
unscathed online reputation.
A family on vacation may not want to hear about
singles night or drink specials going on at the hotel
bar, for instance. If present with very young children,
they more likely would be interested in hearing
about a family-size room that provides space for a
crib.
What is critical here is the ability to supply each
employee with the necessary training that allows
them to discern the unique needs of each guest
through visual queues and conversation. Only then
Turning Front Desk Agents Into Star Salespeople
A professional upsell training program turns a front
office agent into an effective salesperson. Using
proven techniques, hotel employees can learn to
perceive and anticipate the needs of various guest
types and how optimally to explain advantages
and benefits of premium room categories. These
upselling strategies focus on engaging guests in a
way that actually enhances guest satisfaction scores
by engaging customers in establishing their needs.
Achieving staff member buy-in – convincing them of
the value and importance of upselling – is sometimes
its own challenge. The most important step in the
staff buy-in process is to help them understand how
upselling can be a benefit for everyone.
Some front desk agents are reluctant to engage in
upselling. Often it is due to a misplaced belief that
upselling equates to being a pushy salesperson,
and pushiness is not seen as a desirable trait of
a hospitality professional. An effective training
program is needed in order to show these hotel
3 http://www.sddt.com/Commentary/article.cfm?Commentary_ID=140&SourceCode=20140127tbc&_t=The+harmful+impact+of+a+negative+online+review#.
Uw0DYJV2NHg
Incentivizing employees
through healthy competition
and tangible rewards does
wonders for establishing
staff buy-in...
employees that upselling is in fact a valuable guest
service in its own right, and that the process can and
should be a pleasant experience for all involved.
It begins with having a friendly, natural conversation
with the guest and observing both visual and
verbal clues —then combining that information
with relevant pre-arrival information to determine
whether the room type booked will meet their needs.
If the upsell interaction is approached from the
standpoint of delivering an ideal stay experience to
the guest, rather than trying to sell a more expensive
room, that is the very definition of being hospitable.
Overcoming Cultural Challenges/Differences
Imperative in today’s globally connected world is
the ability to identify and accommodate the many
cultural subtleties that can influence the personality
and preferences of any given traveler. Something
that is as seemingly harmless as offering a
complimentary bottle of champagne could
potentially result in a cultural faux pas, and
ultimately an unsatisfied guest. It is up to hotel staff
to know when a cultural difference could potentially
impact the quality of a guest’s experience. The
alternative is an irate guest who at the least may
simply choose not to book future stays, but at the
most could spread word of a property’s cultural
insensitivity. Needless to say, that sort of attention
may bring untold damage to a hotel brand’s
reputation.
Organizations often provide cross-cultural training
to middle and upper-level management. Curiously
however, frontline employees who predominantly
make contact with guests are frequently unprepared when meeting individuals from various
cultures.4 By familiarizing service staff with
potential cross-cultural scenarios on a regular basis
and ensuring they are equipped to deal with any
given situation, hotels stand to only gain given the
post-recession resurgence of international travel. 5
Similarly, hotel brands with holdings in numerous
global markets must also take into account the
existence of distinct staff cultural sensitivities when
implementing an upselling program on a corporate
level. For example, a program technique that relies
on inciting participant interaction may work well
in some Western cultures where open individual
4 http://www.eckerd.edu/academics/internationalbusiness/files/shapero_summer_06.pdf
5 http://en.wikipedia.org/wiki/Tourism#Growth
+
“TSA has always
delivered a
great ROI.”
Richard Riley, Former Chief
Executive Officer, Abu Dhabi
National Hotels
expression is common. By comparison, using the
same tactic in many Asian countries where cultural
interaction tends to be more reserved may have a
very limited effect.
Thus, while the majority of upselling methods
have been proven to be universally effective, it is
imperative that hotels with a global presence look to
educate staff members in a manner that translates
culturally. By consulting and utilizing an upselling
program’s regional representatives, a hotel brand
can provide its global employees with the same
effective upselling lessons, but in a way that makes
sense and stands little chance of misinterpretation.
In summary, hospitality is a people-centric industry
that can only deliver on its promises if all individuals
and organizations involved are able to understand
one another. With the proper tools and services in
place, hotels can deliver satisfaction to guests no
matter what their cultural preferences are.
into the program, such as having front desk teams
or sibling properties competing against each
other, helps drive employee engagement. With
any incentive scheme being hard to adjust once
implemented, it is critical for a hotel to receive the
right expert guidance on the most effective level of
incentives to help drive optimal engagement.
Effective training programs should additionally
be able to provide hotel clients with a robust
reporting platform that clearly and simply
illustrates upsell performance on a comparative
basis. The reports let management and staff see
which employees are converting the most upsell
opportunities, tracking performance for the hotel
against monthly and quarterly goals. If provided
as an option by an upsell solutions provider, hotels
should also able to track upsell performance
against all other hotels in given markets. This
added benefit can provide baseline metrics and a
simple way for management to evaluate the hotel’s
performance and opportunities for improvement.
Rallying The Team
Incentivizing
employees
through
healthy
competition and tangible rewards does wonders
for establishing staff buy-in and motivating them to
push ahead with the upsell process on a long-term
basis. Similarly, bringing a competitive component
Cultivating a successful upsell program has direct
bottom-line benefits, and the long-term indirect
revenue growth via improved customer satisfaction
is also rather evident. But there’s yet another
financial advantage that is less obvious: reduced
Case Study: TSA Solutions Helps Hotel Missoni Kuwait Grow RevPAR By 7.2% in First Month
To maximize guest satisfaction, luxury Middle East Hotel Missoni
Kuwait implements TSA’s industry-leading hotel front-desk
upselling training and technology solutions. Each of the new
TSA hotel partners in the Middle East properties have reported
significant ROI in the weeks following implementation, while
enjoying measurable improvements to guest satisfaction scores.
The front desk team at the 169-room Hotel Missoni in Kuwait
City was able to upsell on one of every ten transactions in its
first month after implementing TSA Solutions methodology,
accounting for an additional 7.2% of RevPAR. In November
alone, upselling added more than $25,000 to total revenue
numbers as a result of the TSA Solutions implementation,
according to General Manager Alfio Bernardini.
staff turnover. Service industries struggle with
high turnover rates, and hospitality is no exception,
with front-line positions often turning over in less
than a year.
There are many reasons for the high turnover rate,
but one of the most common is low employee morale.
This can be due to frustration in not having the skills
needed to perform their jobs with confidence and
efficiency, so that lack of morale can, at least in part,
be remedied through an effective training program.
The resulting reduction in turnover will end up
saving the hotel thousands that it would have
lost in diminished productivity, searching for a
replacement, and retraining. Instead, the hotel
enhances the bottom line by retaining a talented
employee with a higher level of confidence and a
knack for generating higher room revenue.
In It To Win It – For Long Term Results
Launching a successful upsell program requires
not only experienced hospitality professionals
conducting a proven training program, but also complementary technology and long-term consultation.
Simply throwing technology at a hotel only does not
work. Neither does a training effort which is not
continuous and sustained throughout a long period
of time because performance recedes rapidly if it
improves at all. Only an upselling program with a
continuous focus on engagement can be successful
and maximize potential over the long term.
When hotels attempt to implement an upsell
program internally, it is entirely dependent on one
person driving it. What happens when the person
leaves, or if his or her personal style does not align
perfectly with the talents of the given employees?
In either case, the program will not achieve optimal
“TSA has a strong training plan for upselling, with innovative
techniques to convince customers of the benefits and
advantages of enhanced room types. We also benefit from
the strong upsell reporting system and tools that show
the ongoing performance of our staff.”
Alfio Bernardini, General Manager, Hotel Missoni Kuwait
revenues or will inevitably fail. With an optimized
upselling program contributing on average up to
3% in incremental RevPAR, it is too important
to make it dependent on one person alone, and
a continuous engagement process is needed to
ensure the hotel remains focused on driving optimal
revenues from the upselling program.
Thus, the ability to provide program continuality
and ongoing performance measurement is precisely
what properties should look for when seeking out
an upselling solution that can ensure long-term
growth and profitability.
Think Global And Act Local
Hospitality is both a local and a global business.
An individual property needs to take immediate
competition and local customs into account, yet
may be part of a global brand that has set performance
standards around the world, regardless of locale.
Therefore, properties should look for a company
that can provide the local support the property
needs, while also being able to address the needs
of the group at large. At TSA Solutions, we are
committed to providing experienced hotel industry
professionals who remain in contact with each
property over the long term, returning on a regular
basis to address any gaps in performance and offering
support to ensure ongoing positive outcomes. In
addition, TSA employs the right technology to
support this team of professionals, such as reporting
tools that show performance impact on the hotel’s
bottom line and expose unrealized opportunities for
continuous performance growth.
When all these pieces of the puzzle are in place,
hotels can certainly find a happy balance between
guest satisfaction and profits, maximizing both
while increasing RevPAR and enhancing the bottom
line. And that is certainly a win-win for the guest
and hotelier.
About TSA Solutions | TSA Solutions is a leading global provider of measurable and sustainable revenue performance enhancing solutions for the
hospitality industry. Since 1987, TSA has helped to identify and maximize revenue opportunities for thousands of the world’s most recognizable
hotels in more than 78 countries, and has become the partner of choice for independent hotels, as well as national, regional and international
hotel groups. TSA’s proven solutions include a unique combination of skills education, technology and ongoing performance management tools
for front desk upselling, reservations, sales, restaurant/bar, and meetings/events. Headquartered in Singapore, TSA maintains operations in over
45 countries throughout Asia-Pacific, the Middle East, Europe and North America. For more information, please visit www.tsa-solutions.com.