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  • Home
  • MANAGEMENT
    • Why Every Hotel Needs a Channel Manager…

      Program Konsorsium Hotel: Bagaimana, Mengapa & Berapa…

      โปรแกรม Hotel Consortia: อย่างไร ทําไม และค่าใช้จ่ายเท่าไหร่?

      ตัวจัดการช่องทาง Channel Manager คืออะไร และทำไมผู้ให้บริการที่พักจึงจำเป็นต้องมี?

      The Top Traits of Exceptional Hospitality Professionals

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    • Smart Hotel Distribution: What Every Hotelier Needs…

      The Ultimate Guide to Turning Negative Reviews…

      6 Social Media Trends Hoteliers Must Leverage…

      ไอเดียโพสต์โซเชียลมีเดียที่กําลังมาแรงสําหรับโรงแรมในปี 2025

      Xu Hướng Nội Dung Mạng Xã Hội…

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      Maximizing Hotel Revenue: Advanced Channel Manager Strategies…

      The OTA Balancing Act: How a Channel…

      Tapping into Wellness Tourism: A Hotelier’s Guide

      Overcoming common challenges in channel management for…

  • News
    • Cloudbeds and STAAH partner to enhance channel…

      STAAH Achieves Prestigious Seamless Product Badge from…

      STAAH Product Updates You Can’t Miss –…

      Thoughtful Thursday – Reporting for Properties: Converting…

      Thoughtful Thursday – Matrix – Revenue Control…

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      Online Revenue Jumps 50% for Mangkuluhur Residences…

      23% more online bookings for Vivatel Kuala…

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      Nova Express Pattaya expands online visibility with…

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The Difference Between Rate Maximisation and Upselling

29 June 2018
Upselling

If you’ve been in hospitality long enough, you’d know that upselling is like the icing on the cake. Good to have, but the cake can be happily eaten even without it. Rate maximisation is the sugar – if it’s not sweet, the cake won’t taste good.
Hospitality expert and Hotel News Now contributor Doug Kennedy goes beyond this food analogy to explain these differences further, and also tips to improve both conversions and upselling.


Revenue managers should know the difference between maximising rate and upselling, and be able to better explain it to owners.

Being in the business of hotel sales training, most months I spend at least six to eight days training hotel sales managers and also reservations sales agents on how to convert more business and along with how to maximise average daily rate.

In our pre-training consultations, I always encourage the revenue leader to share their vision of the hotel’s rate optimisation strategy, and therefore get to hear today’s leaders articulate their visions. While some do a much better job than others, too many have a hard time truly explaining the concepts of rate maximisation versus upselling.

Depending on your hotel’s classification (resort vs. hotel), branding and segmentation (upscale, luxury, midscale, economy, boutique), the terminology might vary, yet every hotel has one or the other revenue opportunities and most have both. I find the best way to explain these concepts is by using definitions such as these:

  • Upselling refers to selling guests higher-rated accommodation types. At hotels, this might be categories such as traditional, superior, deluxe or premium, or rooms and suites. At resorts this might include garden view, partial view and full (ocean, mountain, lake) view.
  • Rate maximisation is best explained as referring to the strategy of selling the highest open rate tier first, before offering discounts. Open in this context is the rate tier the revenue manager has set to show up in the reservations system. Generically speaking, this would be high demand rate tier, moderate demand rate tier and low demand rate tier. Discount in this context refers to rates such as AAA/AARP, advance purchase / non-refundable, or match rate / book direct rate.
  • Rate options. For some hotels, there is a third rate type term to throw into the mix, which is rates that include options such as breakfast, parking or hotel services (recreational experiences, F&B credit special amenities).

rate max upsell staah 2

The points of differentiation between these three blanket terms might seem simple to revenue managers who spend most of their day immersed in numbers and data. However, I find that a lot of front desk, reservations and even hotel sales managers are themselves a bit confused. As a result, they have a hard time explaining all these options to today’s value-driven, deal-seeking transient guests and meeting planners. Here are some suggestions for revenue managers:

  1. If you have in-house reservations, take some time to listen to real calls being fielded by real agents. (Chances are they have an adaptor for doing this that is used to train new staff.) Sit side-by-side with them as they navigate your reservations system and take note of how they are tactically deploying the rates you have loaded. Is it easy for them to quickly identify which rate tier they should be quoting first? Are they able to answer the question “What’s the difference between those two?” when asked about room categories or views? Does the difference between room types and rate options seem to represent tangible value-adds?Hold focus-group sessions, or at least meet with them individually to find out what difficult questions they are having to field.
  • Likewise, spend a bit of time observing the front desk team in action during periods of heavy check-ins. If you are familiar enough with the property management system, put on a name badge for a few hours during a couple of shifts and try to use your hotel’s stated tactics for upselling at registration. Do guests understand the differences? Does it work for you when perfectly executed?
  • Attend hotel sales team meetings. In advance, ask sales colleagues to bring in email exchanges with planners in which they try to explain the differences in accommodation types and rate options. Read through some of the actual written guest commentary regarding pricing, as well as the replies sent back from the team to gain insights into the challenging questions they are dealing with.

rate max upsell staah 1

During all of the above engagements, make sure to use clearly-defined terms such as the examples here to articulate your hotel’s preferred rate strategies. Discuss how each strategy should be adjusted to fit the guest’s situation and opening remarks. For example, when guests say “What is your lowest rate?” a bottom-up strategy works best, but we should still use incremental selling to mention the next option up. When guests say, “I want to make a reservation right now, and this is a very important occasion…” a top-down strategy works best. Otherwise, if no hints are provided, perhaps a star- in-the-middle option works best.

By using terms such as these examples, you can help your front desk, reservations and hotel sales staff understand your hotel’s rate strategy and therefore better execute it when selling and upselling, and also better defend it when they are faced with otherwise difficult questions from today’s savvy guests.


This article was originally published on Hotel News Now – an online news resource with up-to-the-minute information for hotel decision makers throughout the world.


About Doug Kennedy

Doug Kennedy

Doug Kennedy is President of the Kennedy Training Network, Inc. a leading provider of customized training programs and telephone mystery shopping services for the lodging and hospitality industry. Doug continues to be a fixture on the industry’s conference circuit for hotel companies, brands and associations, as he been for over two decades. Since 1996,Doug’s monthly hotel industry training articles have been published worldwide, making him one of the most widely read hotel industry training authors in the world. He is the author of Still On The Road to Sales and Guest Service Excellence. Visit KTN at: www.kennedytrainingnetwork.com or email him directly:  doug@kennedytrainingnetwork.com

The Difference Between Rate Maximisation and Upselling was last modified: September 8th, 2021 by staah

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