What is Automated Upselling?
Picture this. You are sitting in an airport bar waiting for your flight. Your bartender comes by, and you ask for a Gin & Tonic. Without skipping a beat, the bartender, says, “Want to make it a double for just $4 more?”
Boom. You’ve just been upsold. Wikipedia define upselling as, “… a sales technique where a seller invites the customer to purchase more expensive items, upgrades, or other add-ons to generate more revenue.” We’ve all have experienced it and many of us have practiced it.
Hoteliers have been upselling for as long as there have been hotels. Yet, despite all this experience, hotels are not really very good at the upsell game. Upsell revenue is not considered a reliable revenue source because of a myriad of operational challenges.
But technology has come to the rescue. The industry is now talking about Automated Upselling as a way to resolve these issues, and finally profit from upselling.
To best understand Automated Upselling, it is best to review the evolution of the practice of upselling in hotels:
Traditional Upselling
This is essentially front desk upselling. You are checking in, and the front desk person promotes a bike rental or breakfast or some other amenity which has a flat fee. You agree and they then look down at the PMS to record the transaction. They may also suggest an improved room type, based on availability. This room upgrade may have a flat fee, or the price may have been set that morning based on availability.
Traditional Upselling is the most common practice, and it is the least efficient. The reasons for this are many and may have to do with the fact that:
- The product that is sold in advance (the room reservation) but is operationally difficult to upsell in advance (more on this later).
- Typically, the customer is in no mood to be upsold when waiting to get into their room after a long flight.
- It’s a challenge to get staff to upsell in the first place.
1st Generation Upselling Software
About 10 years ago, hotel software companies recognized the opportunity being missed in Traditional Upselling and rolled out products that would upsell the customer to a better room in advance of check in. For example, right after you booked your reservation online, you might be greeted with an offer to purchase an upgrade for a better-than-rack price in the event it was available when you checked in.
Early upsell software makers were smart in that they knew that after you searched for and reserved the lowest price room, you might be open to a small purchase of only a few dollars more for a chance to improve the room.
So why couldn’t you actually reserve the upgrade in advance? The answer has to do with the way room inventory is typically managed and the way the ‘house’ is balanced on the day of arrival. Without being able to forecast the inventory usage in advance, most hoteliers don’t want to commit to any room upgrade before they could see if they could sell those upgrade rooms at standard pricing. So, 1st Generation Upselling Software was really just Upgrade Request Software. You were upselling… but not really. And you were making disappointed guests along the way.
Automated Upselling
In the last year, a new technique has been created to address the challenges that keep hotels from optimizing their upselling. Like the trend in new automations we are seeing across other verticals, hotel upsell automation uses algorithms to parse data from multiple sources in order to intelligently execute a process previously dependent on human (or, in this case, hotelier) labor. Or more specifically, Automated Upselling is the use of automation tools to determine availability, dynamically set pricing, present the offer, and consummate the transaction of an upsell.
Automated Upselling accomplishes what 1st Generation Upsell Software couldn’t: Your guests can purchase an upgrade in advance with a guarantee it will be available. But that’s not all. Automated Upselling is way more efficient. It sends the right offer to the right person at the right price. How does it accomplish all this? The automation features three key components:
- Inventory Usage Forecasting: In many ways, this is the secret sauce. To ensure that a room will be available, the automation system forecasts how the house will be balanced (i.e., how the inventory will be used across all the reservations) to determine availability. With this type of forecasting, not only can hoteliers sell upgrades in advance, they can guarantee and monetize early arrivals and late departures, knowing there won’t be any operational overlaps.
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Yielded Pricing: Revenue managers regularly yield pricing on their rooms to acquire the biggest share of the market demand as possible. However, that technique often stops when it comes to pricing room upgrades. As noted, often upsell pricing is either flat or based on day-of-arrival rates. To maximize conversion, Automated Upselling varies upsell offer prices based on, among other things:
- The rate the guest initially paid and price sensitivity, and current rate
- The occupancy constrains (the higher occupancy, the higher the offer)
- Guest/persona price sensitivity
- 2-way PMS Integration: Automated Upselling has a symbiotic relationship with the PMS, pulling key data points and writing consummated transaction back into guest records. PMS integration may not sound sexy, but it is what makes life better for hoteliers. With 2-way PMS integration, there is no more approving of upgrade requests or recording of upsell transactions by human hands. That means less admin work and more time to provide service to guests.
Automated Upselling is a revelation for revenue managers because it drives consistent, reliable incremental revenue month after month. It’s a new term but one you will definitely be hearing more of in the upcoming months.
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.
Website https://www.roomdex.io
Twitter: @ROOMDEX
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