Whether you’re a vacation rental or a hotel or host or anything in between, you don’t want to miss the opportunity to increase revenue and delight your guests.
We have brought together three hospitality industry experts to discuss all aspects of hospitality upsells and cross-sells success.
Webinar speakers:
Marcus Rader, Founder and CEO of Hostaway, the leading all-in-one property management software for professional vacation rental operators.
Annie Sloan, Co-founder and CEO of The Host Co, a retail solution for vacation rental hosts to automate and upsell services, rentals and in-home products.
Francois Gouelo, Co-founder and CEO of Enso Connect, an all-in-one guest experience platform
Topics covered at the live event:
- What to expect for the Holiday Season: Hostaway’s state of the industry preview
- Vacation rental guests’ need cycle and upsell timing
- Dos and don’ts of vacation rental upsells at the booking stage
- Making an upsell purchasing experience easy
- What sells: vacation rental upsells best practices
- How to actually make money with upsells
What to expect for the Holiday Season
Marcus touched on concerns and lack of confidence in the industry due to increasing interest rates and an upcoming recession. He also covered a misalignment between the real state of the economy and people’s opinion about the future of the economy.
For vacation rentals, according to Hostaway’s data, this year’s Holiday Season has better numbers than last year. And it’s worth mentioning that 2021 was a record year for vacation rentals.
“We are seeing a slightly higher occupancy and slightly higher average daily rates. So overall the market is looking really strong.
Of course, nobody knows what's gonna happen next year, but so far the American consumer still has savings that they are spending.”
Marcus RaderFounder and CEO of Hostaway
Top 5 characteristics of the vacation rental market this Holiday Season
- Rates went up 40 to 60% in certain places around Thanksgiving, Christmas and New Year. Bookings overall go up and people are willing to pay more.
- The average lead time this holiday season is about 49 days. Meaning it takes about 49 days before guests start booking their holiday vacation. This means that most of the travelers have booked their Christmas and New Year stays.
- Consumer behavior has changed substantially in the last 10 years, accelerated in the last couple of years. When travel patterns changed due to Covid, then surged with the revenge travel and now grew a little more, setting out to a new normal.
- Now the new normal is not the same as it was before, and it’s not a direct continuation, so you will see a lot more interesting combinations. You will see people working remotely, but then they meet up with their family, who is not necessarily living in the same space. So they might actually go to a third location.
- There’s a lot more local bookings going on this year than there was last year. Last year people wanted to get out, but now they actually wanna rent a place.
Source article: Hostaway’s preview of the upcoming holiday season and World Cup for the vacation rental industry.
So it is crucial to really make sure that you are adding that value throughout the lifecycle of the stay. And of course property managers don’t have to do this manually. Having an automated system to manage and communicate upsells increases productivity and eliminates human error.
Vacation rental guests’ need cycle and upsell timing
Annie Sloan shared that The Host Co have mapped out the need cycle throughout the guests’ stay.
In terms of upsells, there are specific points along the journey that are the best time to offer specific upsells. When offered at the right time, add-on services are perceived by the guests as a value add. This is how these offers have to be positioned.
Top 5 upsell times throughout the life cycle of the stay
The booking stage
The questions to ask are: What else can we do for you? What can we add to your experience? How do we make this more valuable? And where would it fit best: start right at the booking stage. Why? Because of that booking adrenaline.
Several days before arrival
This is when people are seeing in their mind what that vacation experience is going to be like. They envision themselves on a sleigh ride with the family, having a delicious meal in a local restaurant, etc.
An hour after check-in
After they’ve unpacked and figured out what they forgot. Usually it’s a phone charger, sunblock, swim goggles,
App day 4 into the stay
This is when logistic things are becoming a pain point. Such things like a mid-stay cleaning, same day laundry service, and extra recycling pickup offers come handy.
The night before the checkout
It’s important to not miss this window and offer late check-outs or extra nights at a discount
Because the morning of the checkout would be too late for this. In the morning people are already packing up and their minds are already out the door.
So it is crucial to really make sure that you are adding that value throughout the lifecycle of the stay. And of course property managers don’t have to do this manually. Having an automated system to manage and communicate upsells increases productivity and eliminates human error.
Dos and don’ts of upsells at the booking stage
Marcus has shared Hostaway “does and don’ts” for vacation rental upsells during the booking process.
There are extra charges and fees that are being offered at the time of booking. Many of them can be offered later, but there’s something a property manager absolutely needs to avoid. Especially with the negative conversations around cleaning fees, that’s been going around lately.
Don’t: Avoid trying to make money on something that should be included.
For example, parking: you can’t charge a parking fee at a cottage with a driveway that fits 12 cars. But you can definitely charge for parking downtown in case you have an arrangement that you can sell.
Do: Use well-presented upsells to stand out from competition
One of the main advantages with the upsells is that even before the booking, the guest is able to know what’s included and what’s not. And that’s a massive benefit to get the guest to book. We have seen increased conversions when you offer extras at the booking stage.
If all the other 19 places had something, and yours doesn’t, you will look worse. But if you show that you have these amenities, even as add-ons, it’s not going to come as a surprise.
At vacation destinations, firewood, pool heating or hot tub heating are great to include at the booking.
Do: Provide choice
“You don’t want to be penny-wise, dollar foolish, trying to make extra few bucks here and there. You gotta find things that add value.”
We have seen a lot of success with giving the choice to the guests to choose between different options. People like to be in control of their decisions. And this is exactly the feeling you provide by giving a choice with upsells/fees options.
Example: damage waivers VS security deposits
Damage waiver is like self-insurance. It means collecting a one-time non-refundable fee for the property manager to keep that cash on the side. In case the guest does cause damages under a certain level, the operator will use those funds to cover the damage.
What we’ve noticed around Airbnb versus other channels is that guests don’t like additional fees. They get frustrated seeing fees after they’ve made an Airbnb booking. Hostaway positioned it in a way where it’s a choice between the safety deposit or the one time damage waiver.
The result: a higher conversion rate. 85% of guests end up choosing the damage waiver. Most people prefer paying a one-time $50 fee rather than depositing $500, which will take time to get back. And obviously this is additional revenue for hospitality professionals at the booking stage of the guest journey.
Hostaway’s Webinar on increasing your visibility on Airbnb.
Do: gamify the upsell pricing
You can create the Black Friday feeling of getting a great deal by adding discounts or even giving something for free. For example, saying usually this is $50 for the early check-in, but for you, we will be waiving this charge.
Annie Sloan gives an example of hospitality operators offering a free or a discounted item in their The Host Co store. Or providing a discounted link to their store, adding value and increasing the guest experience.
Making upsells easy: for both operators and guests
Main reason preventing hospitality operators from doing upsells
Annie shared the takeaways from The Host Co’s past surveys. The main reason why property managers avoid offering upsells is not wanting another item on their to-do list. It is something else that they just had to do, and they don’t have the time for it. They’ve got cleaning to deal with, they’ve got all these guests to handle messages, etc. It is usually seen as almost another business to handle.
For operators: smart automation and synchronization of all systems
What can we do to streamline the operations related to upsells for businesses? And how can we improve the purchase experience for their guests?
Annie, coming from a tech background, states that this is a problem that can only be solved through automation.
Upsells are a pain and you’re already doing ten other things. Property managers need a solution to “set it and forget it”. Automating guest communication, vendors interactions, payments, restocking, etc.
Francois Gouelo adds on the importance of synchronization with the core systems that operators use. First hand – a two-way sync with a property management system. This allows operators to stay on top of all interactions without worrying about manually updating all existing software.
For example, when an early check-in is requested, your systems need to “connect”, making sure that the early check-in has actually been provided to the guest.
In some cases your PMS already has the guest data, including payment details, collected at the reservation. This allows you to streamline the purchasing process, providing that Amazon-like experience consumers love and expect, “spoiled” by digital retail.
For guests: one-click checkout
People are used to buying online and expect a certain experience when ordering upsells as well. They don’t like to read, fill out forms and wait. To increase your upsell conversion, provide clear visual instructions, pictures or videos, with a plus sign leading to one-click checkout.
Otherwise, it doesn’t work on either side.
A streamlined process makes purchasing add-ons seamless for the guest and eliminates guest interactions for property managers. This is a win-win situation.
What sells: top 5 creative vacation rental upsells
We’ve asked our panelists what are the best and most creative upsells they have seen with their customers.
Francois named the top 3 upsells of Enso-connected customers: early check-in, late checkout and mid-stay cleaning.
Other exciting add-ons Enso Connect users offer are boat rentals, champagne on arrival and extra coffee pods.
Annie surprised with such cool upsells such as: beer burros, mobile tattoo artist, fridge stocked with local produce, etc.
She also shared that they have a customer selling North Carolina shaped Christmas ornaments, and she’s been selling them since she joined The Host Co in August. Almost every single guest buys one of those.
Another interesting example is a beautiful farm in Arizona, selling their handmade soaps. They also have them in the property for the guests to use. And they’re making about $700 a month with this offer.
Marcus added a practical insight on convenient automations Hostatway users benefit from.
The flow that automatically checks if the day after checkout is available. If yes, it sends a message asking the guest whether they’d like to stay one extra day. You can even set it up to include a discount to the daily rate if it is aligned with your business strategy.
Marcus also stressed the importance of having basics, such as wine openers and pillows, in place before offering paid add-ons.
Focus on your core competencies before you do anything else.
Full service hotels make 30% of their revenue on upsells. So it is definitely worth it if you are getting the right things. For short-term rentals it will be fair to say that we need to start with one or two items to fully control the process and expand slowly.
Annie added that the biggest parts on the hotel upsells pie chart are: food and beverage and wellness. Focus on wellness because almost everyone will ask for something from a massage to facials and even a glam squad.
It is also incredibly useful to work with local businesses and specialists like meditation, yoga and fitness specialists. Next useful thing would be rental amenities, transportation, children’s items like Baby Quip, etc.
How to actually make money with upsells
“Only 20% of Enso-connected operators are using the upsell functionality. But the ones who do - cover their subscription fee and grow their revenue per guest very quickly.”
“The Host Co are seeing top sellers on the platform make about $1,000 per month per listing.
There is no single pattern of making a thousand dollars. Some hospitality businesses do this by just offering fresh flowers, chocolates and pool heating. Others provide massages, their own soaps, etc. It is really dependent on that specific property.”
“Hostaway helps professional property managers to earn more money. They usually make a mistake of focusing only on the management part in their business model, with a 20% profit margin. 20%/80% is probably the most commonly used business model for vacation rental property managers.
If you just do that, you are not gonna make A lot of money. In fact, you're probably not gonna make enough money to keep the lights on. You need to have other ways of structuring it.
That's why I think upsells are so incredibly powerful because the bottom line of the property manager, you get your 20%.
And then the cleaning fee usually equals the amount you pay for the cleaners. So that's basically money that just flows through you, but you have your 20% out of that. You need to pay the salaries, you need to pay your cell phone bill. You need to pay for gas, you need to pay for pretty much everything you need to run your business.
But if you can set up an automation to generate upsell revenue that you don't share, it’ll make a massive impact.
And making a hundred or a thousand or 10,000 extra a month will make an even bigger impact on your rental business, and it's pretty achievable. Hostaway property managers doubled their gross margins after restructuring their business model.
And normally you would need to double the amount of properties or double the nightly rates or doubled revenues, to achieve that. Or double your prices to go from 20 to 40%. But if you can just do the same amount of profits by doing a couple of upsells, like even early check-ins, mid-stay cleans, then that's what you should be doing.”
Your rental owners don’t have a problem with that. They have a set amount that they expect every month for their rental properties. And that revenue is extra services that, if anything, they’re very happy that you’re offering these, because it further illustrates that you are a professional operator. You are able to differentiate yourself from the other property managers in the area because you can provide those additional services.
While it’s true for upsells, it also applies towards owner retention. Property owners want to have the best guests and managers taking care of their rentals in a best way, are providing an elevated guest experience.
