Upselling: There’s Money to be Made at the Front Desk

The importance of upselling at the front desk has increased over recent years due in large part to the changing methods of booking rooms.

The popularity of reserving rooms online from a third-party travel site, the property’s website or packaged with a flight and/or rental car means that the front desk agent’s reception is often the first person-to-person interaction that guests experience. This trend gives the front desk agent the opportunity to become a member of the sales department by selling upgrades (upselling) to guests upon arrival.

Upselling allows a property to maximise revenue from its occupancy and increase the average daily rate.
The act of selling upgrades can benefit the property, the front desk agent and the guest if there is a quality system in place. The benefits for the property include higher guest satisfaction and higher revenue/ADR.

Proactively upselling can make a big impression on the bottom line, no matter the size of the property. For example, not too long ago, a smaller, high-end, boutique property with less than 150 rooms implemented a new upselling program in 2007 and its upsell revenue jumped from $20,000 in 2006 to $120,000 in 2007. The following years’ upselling revenue increased significantly as well: to $145,000 in 2008, $190,000 in 2009, and more than $200,000 in 2010.

The hotel paid for training and provided agents with upselling incentives; and even with such expenditures accounted for, the property increased profits by $168,000 over the previous year.

The front desk agent has the opportunity to profit from an upselling program through a commission-based incentive program. For example, an effective incentive program that has been implemented at a number of properties (ranging from full-service luxury resorts to boutique and urban corporate properties) offers 5% of the upgrade amount; and thus the difference between the rate booked and the new (upsold) amount is added as a bonus to the agent’s paycheck after the guest has checked out. For example, if a guest makes a three-night reservation at $115/night and the front desk agent sells an upgrade to the guest increasing the rate to $145/night, the front desk agent’s commission would be $4.50 (5% of $90) and the hotel would gain $85.50 from the increase in rate.

Team and individual selling goals are also opportunities for a property to motivate front desk agents to upsell proactively. If the team, for example, achieves its monthly goal for upsells, the incentive percentage can be increased to 10% and paid retroactively. In 2010, at the small hotel referenced above, an agent had an annual upsell total just short of $45,000 because her team made the monthly goals each quarter and so achieved the 10% bonus bracket, the agent earned an additional $4500 for the year. This kind of financial reward can be extremely motivating for staff. In this instance, the hotel realised an additional $40,000. It should also be noted that guest satisfaction surveys were higher that year than in previous years – an all-around win!

Recognition-based rewards are also great tools to incorporate into an upselling program.
Honouring staff for the most upsells, highest dollar average of upsells and highest monetary amount of upsells can be recognised with cash bonuses, plaques, prime parking spaces, gift cards or even lunch with the general manager.

An incentive for converting a “walk-in” reservation is also an opportunity to consider. This type of selling may warrant a slightly larger commission percentage because there is a different level of skill and effort needed from the front desk agent. In these situations, an 8% to 10% “commission” may very well be appropriate.

As you can see, upselling is a win/win/win scenario for the property, front desk agent, and guest - if done correctly.
How can your hotel upsell properly?

One of the most common mistakes the front office staff can make when implementing an upsell program is to establish “higher revenues” as the ultimate goal. That’s when a guest’s experience is almost always diminished. Instead, the focus must be placed on the guest and his/her comfort. When the agent is trained and incentivised to enhance the guest’s experience, the upsell progresses naturally.

Again, as the front desk staff is quite often the guest’s first contact with the hotel, it’s critical that the front desk agent “consult” the guest about the hotel – topics such as comfortable accommodations, appropriate packages, or guest room types, etc. Most frequent travelers report that front desk agents rarely make an effort to recommend any accommodation other than the one booked. On the rare occasion that an agent does make a recommendation, quite often the effort is a transparent attempt to “get more money” from the guest.

There is no connection to the recommendation and the guest’s needs. This approach can be very off-putting. The first step to successful upselling is a shift in focus and presentation; a keen awareness of the guest and sincerity regarding what that guest may require for comfort and satisfaction need to be the primary concern.

Agents must learn to recognise and anticipate the needs of the guests as well as have the proper product knowledge to make an educated suggestion of a more comfortable room option. For example, if someone is travelling with children and has booked a standard room, the agent could point out that the guest may be more comfortable being in a room type with a separate area, so that the parents aren’t required to have an 8:30 bed time. Or perhaps someone staying for an extended amount of time would find value in a room that has more space. Oftentimes, guests don’t fully understand the full range of room-type options that are available, and the situation should be approached in an informative and helpful manner, and never with a disparaging tone or remark about the currently reserved room. Again, the goal is to maximize the guest’s experience.

Once an upselling program is implemented, it is critical to also commit to a tracking system that measures the results and impact and provides an accurate incentive payout. The tracking systems will vary among properties due to the different PMS in place but there are aspects that should be universal. The system should be smooth and easy to process by the front desk agent. Incentives should be paid out after the guest has checked out and his/her payment has been received. The number of upsells, the average amount of upsells and the total amount of upsells should be tracked on an individual and team basis.

A full-service resort on the west coast of Florida tracks its upsells in this manner:
A well-managed upselling program can benefit all parties involved if done correctly. To stay competitive, it is necessary that a property be able to adapt to the changes in the hospitality industry. There is a delicate balance between good customer service and quality sales that, if done properly, could amount to great success for an upselling program.
Proper training and an energised front desk team will create the right atmosphere for a productive upselling program with a great return on investment.