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

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.

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.

When booking online, most travelers seek out

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.

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

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-WinFoundationally 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

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.

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.

2 http://www.hospitalitynet.org/news/4063497.html

Better Experience Means Better Guest ReviewsWith 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.

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

can a property stand a chance of maintaining an

unscathed online reputation.

Turning Front Desk Agents Into Star SalespeopleA 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

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/DifferencesImperative 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 un-

prepared 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

Incentivizing employees

through healthy competition

and tangible rewards does

wonders for establishing

staff buy-in...

4 http://www.eckerd.edu/academics/internationalbusiness/files/shapero_summer_06.pdf 5 http://en.wikipedia.org/wiki/Tourism#Growth

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.

Rallying The TeamIncentivizing 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

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.

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

+

“TSA has always

delivered a

great ROI.” Richard Riley, Former Chief Executive Officer, Abu Dhabi

National Hotels

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 ResultsLaunching a successful upsell program requires

not only experienced hospitality professionals

conducting a proven training program, but also com-

plementary 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

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.

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 LocalHospitality 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.

“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

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.