After the summer break, we are back with live webinars, for which occasion we chose to reopen with the much desired and controversial topic of ancillary services: how to promote and sell them with upselling and cross-selling actions to maximize revenues.
Together with Marzia, two guests who daily clash with this reality both in terms of revenue and marketing and communication: Luisa Torboli, revenue manager at INUP Tourism and, Vito D’Amico, founder, and revenue manager at MyForecast Revenue Software.
Let’s start immediately from the basic concepts and definitions, excluding the “beloved” technicalities, acronyms, and the use of English words. Thus, giving practical advice and suggestions to make a guest’s stay in the hotel fruitful, in an economic sense, by offering the services that revolve around it. How to try to inform first and then promote all those services that are complementary to the overnight stay.
Marzia: Very first question, simple and straightforward. What are ancillary services and what are they for?
Luisa: The term ancillary services defines the income of those goods and services that go beyond the main product. In the hotel world the main sale is linked to the room. The ancillary service is therefore the product or service that completes our guests’ stay. As with hotels, ancillary services are also found in campsites and residences. The revenue derived from the rooms remains the main source of income, but ancillary services can play an important and fundamental role
When we think of services, we immediately think of the catering sector or the SPA. Actually, the services we can offer are many, it would be enough to look at other sectors with creativity and imagination. These, as a matter of fact, can help us to propose and invent new services that can differentiate us from the competitors.
For years revenue has been seen as lowering prices, but today managers need to broaden their perspectives and look beyond just the rooms, as well as considering other departments. In planning the changes made to offer these services, it is essential that there is a collaboration with marketing, with sales and with all the other departments of the facility.
Marzia: As you know Qualitando, as a customer relationship software, has launched a web app to inform, promote and sell all the services that could be purchased and therefore could make the customer’s stay in the hotel more special. The most classic objection of hoteliers, during negotiations for the web app, is not having services such as a restaurant or spa. Exactly what Luisa anticipated, this idea was created that ancillary services are limited to meals or spa treatment.
In reality, if each of us made a list of what could be sold – pre-check-in, late check-out, etc. … – the list would be really long and by associating a figure we could even triple the average revenue of a room. Vito what do you think?
Vito: the concept of ancillary service is as broad as it is concise, I would not define ancillary services as all products and services such as the restaurant / bar sector or the SPA or as other services inside the facility. Actually, ancillary are those products external to our business on which we then marginalize a share, whether it is a percentage or a fixed one. Among the most classic ancillary services we find transfers, excursions or beach rentals (towel and sunbed).
For example, in the latter case the hotelier objects by claiming that he has got to buy this service externally, but this is exactly the ancillary service. Make an agreement with an external party – such as, for example, the lido in front of you and in target with you – such that you will have a discount from it and you only charge a small margin on what you go to sell and on which you then go to earn.
The hotelier normally does not agree on all the work that comes with it, but does not realize that, even just one or two euros more per cot multiplied by all the beds purchased during the season, increases the average room rate. Actually, increasing the revenue and lowering the commission cost, thus obtaining enormous benefits.
One of the reasons that drives tourism in Italy is the food and wine aspect. We are a country that offers an overwhelming number of opportunities from North to South. We are appealing, the leisure customer knows this and spends here for this. An advantage that should be exploited, it would be appropriate to give the opportunity to make agreements with local wineries or other gastronomic solutions
Marzia: Sometimes when we talk about ancillary services, we use two technicalities: upselling and cross-selling. What’s the difference between the two? Distinguishing between the two sales techniques becomes essential to understand how to propose one or the other to be effective in achieving the goal.
Luisa: in a very simple and practical way, we sold a standard mountain view to the customer, and we immediately propose the junior suite or the superior lake view, we are doing upselling. We had already sold a product and are looking to sell a better product to let the guest enjoy a higher quality stay. Another case, our client is doing a manicure and the spa manager starts talking about our restaurant and the care of the chef’s choices, if at the end of the service the client books a table at the restaurant, we are doing cross-selling. So, we talk about cross-selling when we sell an extra service other than the one used.
Marzia: To summarize, in upselling we are talking about the extension of quality or quantity of the same product, if they offer me a collateral service other than the one purchased, we are talking about cross-selling.
Marzia: How much could ancillary services weigh on the turnover of a hotel? Where should we go to make calculations and understanding whether to commit ourselves and create a strategy to be able to sell them
Vito: There is no limit, if we consider all the departments present in the structure and the people who are in contact with customers, we have an unlimited number of opportunities inside and outside our hotel. We could get to invoice at levels close to those of the rooms. There is no habit of thinking that the hotel is no longer just selling rooms, but in fact it is much more.
In the United States before the pandemic a study that changes the rules and the perspectives was launched. We are talking about ABS (attribute-based selling) sales techniques, which is a sales technique based on the attributes of the hotel world. The traveller enters an OTA, chooses the city, and then chooses what he would like to find inside or outside the room (carpet or parquet, the view from the tenth floor or the garden on the ground floor).
At this time, this type of service is chosen after deciding on the hotel or room, with this new approach the attributes are first chosen. Each of these has a cost, which will form your price, click on search and a list of hotels and rooms that have the highlighted characteristics will appear.
It is a paradigm shift, where the concept of ancillary service and sales changes, I choose what I want from my hotel and / or around my hotel and I am directed to a cart of options.
This study stems from the need to respond to data from reports on the hotel and air world that demonstrate how important it is to sell services, because we are moving towards a flattening of the room price; therefore, what can make the difference is to be able to associate all the other services in a package or not. The pandemic has changed the methods of choice, today we all have more precise needs, and we all want to satisfy them. We will travel less for many reasons, this means that I, the client, want to find what I want. I am willing to spend more as long as the services I want are presented to me the way I want. Basically, today more than before, the room alone no longer makes a difference.
Marzia: for reasons other than in the past, guests are looking for an experience, whether it is business or leisure, they want to enrich it. Living a holiday within the same holiday, concentrating multiple experiences in a few days.
Luisa: and this allows us to shift sales from OTAs to direct sales; therefore, we talk of an increase in turnover, but also of cost containment. The extra services offered can also become included services, such as the garage for business customers. This is a reason to differentiate ourselves, the OTA customer pays it, the direct one doesn’t. It is therefore necessary to perfectly know the costs of our services, to decide whether to leave them included. In any case, the reduction of internal costs is always one of the main objectives of revenue and marketing.
Marzia: We can therefore talk about two ways of selling: in the first case we are talking about the sale of a room on OTA, maybe just the stay or with breakfast, so that it acts as a mirror to divert the customer to your own website, where the guest will then go to look at the gallery the services and maybe he is struck by a captivating claim that proposes the purchase of the room with services included at the same rate, let’s talk about encouraging direct booking.
Another sales system: I deliberately put the basic product on OTA and after the customer’s purchase, through constant and continuous communication, I start trying to get him to add services to the stay, those he has not yet bought.
Which of the two can be more profitable? One is pure disintermediation, with the other I pay the commission, but I constantly try to sell complementary services to increase the revenue of the room. They must be mixed, or one strategy must be preferred to the other, also with a view to exploiting the long wave of visibility.
Luisa: only the data can tell us which strategy is to be preferred in different situations, but, apart from rare cases, the mix is always to be preferred. For example, we are talking about customers who are loyal and feel safer buying from OTA, because they know it despite the hotel where they have never stayed. The important thing is that the procedure is clear and shared between the departments, whoever receives an email from the marketing department must then find a correspondence in the telephone response of the reception.
Vito: We need to go ahead with data analysis. Before building any sales strategy – from the opaque product or not to the room – it is necessary to know who our customers are, what they bought and when, to have the data of all customers whether they are spa, restaurant, or room. Knowing all this, it would be possible to build products suitable for the individual customer, without having to adopt the all-inclusive. We could give them what they want when they want it. We’re talking about moving towards personalization with tracking and data processing.
Marzia: if we look at this situation from a customer-centric point of view, what we cannot do without is therefore a CRM, a place where you can keep all the key information concerning your customers in all departments. Often between the moment of sale and the moment of arrival there is no adequate registration of the customer’s wishes, while instead recording what was the result of a conversation prior to arrival or looking at the quotes sent, we discover important elements and decisive to offer the right service on site.
If I know that a customer has an early flight in the morning, I don’t have to waste time proposing a late check-out but preferring a transfer that can facilitate the customer at an appropriate time. For the sale of services, the knowledge of the customer is of fundamental importance, as well as codifying procedures for the collection and storage of information.
Marzia: Why do you think their sale represents a desire as much as a frustration for hoteliers? Where are the reasons why they are not selling or not selling enough?
Luisa: The hotelier is used to monitoring everything, from costs to times, everything is always very controlled. In the same way, you need to understand what works and what doesn’t, not all services are always easily salable. When a hotelier tells me that he does not want to propose a service / product because he has not been able to sell it, I wonder if we are talking about case studies or statistics. Did you try it once, and at the first no as a reply you gave for granted that no one wants that service, or do we know for sure that we have offered the offer X times and the conversion was Y? Are you offering the service to everyone or only to the potentially interested target?
When it comes to services, we need to talk about planning, organization and control, which are the 3 fundamental stages if we want any sale to become fully operational and convert. To ensure that a receptionist – already overburdened with procedures – is able to sell, it is necessary to identify a few services starting from data analysis and try to understand how to offer them, solutions must be found.
The most effective is customer profiling. Everything that is known about the customer, habitual or not, must be recorded for a subsequent suitable sale to that customer.
If used in the correct way, technology in this case comes to us. It is no longer possible to rely only on the human factor – memory and the habit of the front office for example – it is necessary to record everything precisely to avoid trying to sell a service in which that customer is not interested.
Often the hotelier is frightened by this, they start with the proposal of a possibly new service, then work begins, the procedures have not been defined correctly, and when the customer who requests that service arrives, this will not be available, and this leads to that frustration that blocks the mechanism.
Marzia: Let’s take stock and define the key concepts to start from:
– Make a list of ancillary services based on your target customers, whether they are internal services or not
– Staff training and well-written and defined procedures. Teach staff to ask questions and not just answer.
Marzia: Human relationship versus Technology (apps, bots, etc.). Is there a more correct choice for which to lean or should the two methods be integrated, one in support of the other? Where to start, and above all, how to harmoniously make human relationships and technology coexist to hit the target (to sell!)?
Vito: the two are closely connected, it is often thought that technology should replace the human factor, but the tracking of customer data starts from the front office. I must understand how to behave and how to relate directly to a customer who has just arrived, and who has certain needs, starting from the information entered correctly in the CRM.The data of our customers, the market and products by target are also the basis for offline communication activities. We always start from the data, knowing how to work them to obtain an excellent result. Because the front office approach can also change depending on the data already available. If I am aware that the incoming customer has certain needs, perhaps because it is a regular corporate, I will act accordingly. I’ll be on the safe side by proposing certain services or not.
Luisa: Communication must be coordinated and omni channel. Technology allows us to automate processes, which does not mean being adversaries but allies, profiling customers.
We thank our guests for their availability and experience. Together we tackled a central and much discussed issue in the travel sector, we defined the basic steps and looked a bit to the future.
We look forward to seeing you for the next appointment with the Live Webinars on Tuesday 26 October, always on our Facebook and Youtube channels