How to Boost Ancillary Revenue through a Better Pre-Arrival Guest Engagement Plan
Guest acquisition is hard. In good times, guest acquisition could be described as a marketing battle for eyeballs, while revenue managers play a game of chicken to see how high they can push rates. In the good times, if your asset manager thinks that you are “winning” it’s because you have great market share, great occupancy, and high ADR – all of which are KPIs of guest acquisition. But we are not in Kansas anymore. Occupancy is at an all-time low and success now is being measured in much simpler terms i.e. “How much revenue can we generate?” With the pandemic enduring, every dollar really does count and ancillary revenue sources now demand our full attention.
And it seems some hoteliers have already begun turning to ancillary sources to mitigate the impact of the severe declines in revenue with great success. A recent CBRE report revealed that ancillary revenue grew by 26% over a one-month period last year. With ancillary income at the forefront of hotelier’s concerns, we focused on the topic in our latest ROOMDEX Webinar Series. Bringing together 5 leading hotel technology experts from Cendyn, SiteMinder, Maestro PMS, Bookboost, we discussed ways hotels can maximize ancillary revenue opportunities via pre-arrival guest engagement.
If you missed the webinar, don’t worry! You can watch it here. Plus, we have put together some of the main highlights from the discussion in this article on how to put a pre-arrival engagement plan in place that will service both you and your guest.
Ancillary revenue growth starts with engagement.
Guest engagement is all about encouraging guests to enrich their experience. You would think it is a simple task. Guests already like your brand enough to book a room so, now all you need to do is market some ancillaries and the rest will just take care of itself, right? Not quite. “We see a disconnect between the hotel and the guest when it comes to engagement. The guest often feels overlooked and almost feel like a number rather than a valued guest. 80% of hotels feel that they provide a great hotel experience, whereas only 8% of guests usually agree. But this can be fixed with better engagement,” said Daan de Bruijn, Head of Sales and Co-Founder at Bookboost.
Hotels need to understand that the booking is the only the beginning of the customer relationship. Pre-arrival represents one area of the customer journey where hoteliers can make significant inroads inexpensively towards genuine guest engagement. Sending pre-arrival upsell campaigns is a great way to foster engagement, boost the guest experience and promote more revenue opportunities.
Personalize, Personalize, Personalize
Engagement alone is not enough. To be successful, engagement relies on both sending the right message (i.e., relevant and personal) at the right time. “Personalization is buzz word. It’s something that we have talked about for a long time, but still have not adapted it effectively. But in order to create an affect pre-arrival experience, personalization is key,” said Michael Bennett, CMO at Cendyn.
So, despite the many pre-arrival emails that hoteliers send, too often they are a generic offering with little or no value to the guest – and ultimately do not convert. Ideally, a hotel should already know what its guests like before check-in to send customized pre-arrival emails.
Many hotels believe personalized experiences such as these are very difficult to put in place, but between the CRM system and the PMS, the data is there. And it is the critical piece that hoteliers need to leverage. While it might have been a daunting or complex process in the past, there are now new technologies in the marketplace that help make engagement easier, and in some cases, automated. Michael Bennett continued, “[It] doesn’t matter the size of the hotel or number of ancillary services, when you leverage the data and increase engagement with your guest, you see an increase in the open rate and click throughs and ultimately, ancillary revenue.”
Timing is everything.
Timing of the pre-arrival communication is just as important as personalization. Whether it’s 30 days, 2 weeks, 7 days out, 2 days, or day of arrival, the cadence of your pre-arrival upsell communications will be dependent on and determined by your property size and amenities you have to offer.
Similarly, it was often thought that too many communications could overwhelm or even irritate guests. But if you use your data effectively to send relevant emails, there is no such thing of over-communicating. In fact, guests want the communication. And while email is often touted as the main method of communication, if your guest prefers text, the engagement becomes 2-way and even deeper. Ultimately, the goal of engagement should be to reach the point where communications don’t feel like marketing anymore but instead where each interaction provides value to the recipient.
You should be focusing on ancillary revenue now.
While pre-arrival guest engagement is about encouraging guests to enrich their experience, right now, with low occupancy, your short-term goal is to generate additional revenue. As such, focusing on higher margin items that require little or no effort to fulfil such as room upgrades, early check-in and late departure are key for hotels to work on. “We are seeing that guests are purchasing upgrades a lot more as the price for particular rooms, like suites, are much lower than normal. Guests also like to stay in a room a little longer, so the purchasing of early arrival and late check-departure is very easy to achieve, and people are willing to pay for that. Right now, with social distancing, and all these rules staying in a room is a safe place and still a nice way of spending time outside of their normal home,” said Jos Schaap CEO and Co-Founder at ROOMDEX.
Jos went onto say, “I would definitely begin the process of communication with the guest more about making the stay itself more attractive upsell offers and early arrival. As you get closer to the arrival date, you can include some stay enhancements, but to bear in mind that they are low margin revenue. I would definitely focus right now on room product enhancements as they will give the highest margin.”
The Final Word
Pre-arrival upsell emails are a great way to engage with your guests and boost revenue. As Michael Bennet put it, “It’s not rocket science. You just need to take the time to do it. Ensure that you are collecting data and you will yield results.”
WATCH THE FULL WEBINAR HERE.