Upselling and cross-selling: the difference and why it matters for hotels

August 11, 2015

Upselling and cross-selling are both great ways for hotels to boost incremental revenue on bookings, though the difference between these two strategies isn’t always clear.

Put simply, upselling involves getting a customer to spend more on an existing purchase, such as upgrading their choice of room, while cross-selling involves selling ancillary products or services, such as a massage treatment or city tour, on top of the original purchase.

Point of difference established, how can hotels maximize the opportunity to boost revenue through these two sales tactics?

The art of upselling

Asking customers to spend more on an existing booking naturally requires giving them a compelling reason to do so. Properties like Duane Street, Refinery, and Park Central do a great job of this by featuring side by side comparisons of their rooms, so guests can see exactly what they’ll be getting if they decide to upgrade. The use of incremental pricing can also be used to enhance the attractiveness of an offer. Saying a room is just “$54 more” sounds a whole lot more appealing than “$485 per night.” 

Going one step further, letting customers know when there’s a limited number of rooms left can create a sense of urgency and also build desire by promoting scarcity — both of which can be powerful tools to help boost conversions.

Photography also plays an important role. Having quality photos that show off the room’s best features is one of the most effective ways to demonstrate added value to a customer. Make a point to emphasize differences, such as additional beds or increased size. For example, this noticeably bigger Deluxe Queen room at Duane Street can be had for only $61 more per night.

The art of cross-selling

When it comes to cross-selling, timing is crucial. It might be tempting to try and promote ancillary products and services during the booking process, but this can actually be detrimental to the sale.

Our research has found that only 3% of travelers book add-ons during the booking process. In fact, presenting too many options at once can overwhelm customers and actually lead them to abandon their booking, which is why we recommend minimizing add-ons at the initial point of sale.

Confirmed guests are often most receptive to cross-selling during the “pre-trip buzz” phase leading up to their stay. This is when a well-timed email can encourage impulse purchases.

This is also another perfect opportunity to get to know the preferences of a guest and tailor suggestions accordingly. For instance, if a hotel knows a couple is on their honeymoon or celebrating a special anniversary, offering to arrange a romantic tour or private dinner reservation is likely to be favored.

However, properties like the Townhouse Hotel in the Netherlands are taking the guesswork out of this approach with their pre-arrival email, which actively asks customers if there’s anything they specifically need during their stay.

Other examples of this proactive strategy include Airbnb’s promotion of local activities and experiences to guests staying in San Francisco and Paris. Meanwhile, Hilton Worldwide are now providing a digital check-in service that lets members select upgrades and request additional amenities prior to arrival. Of course, using data gathered from previous bookings is still one of the best resources to target past guests with future offers and incentives.

The key to success

The difference between upselling and cross-selling is more than just definition; it’s about strategy. When it comes to the upsell, communicating value is most important, while success in cross-selling comes from appealing to the impulse buy.

Ultimately, it’s about knowing your customer. Upgrades and ancillary products should ideally be personalized to each customer, sales messages should be well-timed, and customers should be able to clearly see the value of what they’re paying extra for.

If hotels take the time to understand what their guests want and carefully promote their products and services accordingly, the boost to incremental revenue can be significant.