By Larry Mogelonsky, MBA, P. Eng. (www.hotelmogel.com)
Selling room upgrades is a vital tactic for generating incremental revenue and filling unused inventory. Most websites that I’ve visited attempt to outline the advantages of better rooms, be it through size, view, bed type, floor level, amenities or a combination of these elements.
But once the consumer purchases a specific room type, how do you entice them to spend a little extra to get something even better than what they’ve already confirmed? While there’s the age-old approach of prompting them either through a pre-arrival email or phone call, or once they are physically at the front desk, many hotels are trying something new.
Several chains now utilize programs that immediately offer all confirmed reservations a standby upgrade rate, typically at a discount versus the full upgraded cost. These programs can be quite effective in generating further revenue from participants. After all, ten bucks more for that better room (versus double that on the rate card) is better than nothing at all.
As a personal example, consider my most recent flight to Los Angeles for which I booked an economy return fare. The email here was received shortly thereafter, offering me not only an opportunity to make an upgrade, but to competitively bid for this upgrade with other passengers. Thus, the upgrade decision was not a binary yes-or-no at a fixed price, but one that had a sense of play involved.
Just like an online auction, I was notified each time my bid was beaten by another fellow passenger. Regretfully, I had a limited budget and ended up flying in the gulag. I do not know the exact value of the victorious bid, but my cut-off point was $250 each way and clearly this was not enough.
The key component of any simple gamification like this is participation. Unlike a simple ‘Do you want it at this standby price?’ situation, involvement, variability and sense of control add to consumer excitement and interest. As with most games, there is an element of chance, thus the ubiquitous signoff of ‘Good luck!’ at the end of the email.
Now imagine offering customers an opportunity to upgrade their superior rooms to deluxe, a suite or perhaps one of your signature rooms with a bidding system introduced? After the initial hurdle of setting this system up, your revenue management team can then easily control the situation, adding minimum bids and possibly a random success element as well as awarding one weekly participant with an upgrade at no incremental cost. Tangentially, imagine what this will do for your social media efforts when you post the weekly winner?
The airline industry has shown strong leadership in yield management. Here is another idea that we can ‘borrow’ from them to add to our success. Now is the time to use the principles of gamification to your advantage.
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