To upsell or not to upsell a COVID amenity
 
To upsell or not to upsell a COVID amenity
09 SEPTEMBER 2020 7:22 AM

Hoteliers might be able to upsell pandemic-related services as add-ons to position hotels in an attractive light and at lower prices while maintaining healthy margins above costs.

We all know that the COVID-19 pandemic will require the continued implementation of enhanced cleaning protocols and capital expenditures, all of which will be factored into the new room rates hotels offer to guests. We don’t want to charge our guests more, but maybe we should to break even.

Therein emerges the prolonged problem of sticker shock whereby, except for the upscale or luxury customer, price sensitivity becomes a foremost thought. And we can’t lower rate because this creates a milieu of other problems including brand dilution, understaffing due to an occupancy surge and running a deficit on each room sold. Given how important price already is in the purchasing decision, though, I ask if there are certain COVID-19-related services that can’t be offered as an add-on moving forward to help present your hotel in as attractive a light as possible—that is, as low a price as possible—while still keeping healthy margins above costs.

A strong caveat must be stated before debating what’s obligatory versus optional for your customers. All hotels must ensure the safety of their guests and stay in compliance with any new cleaning and sanitizing standards that emerge from this pandemic. However, through what we are describing as post-COVID stress disorder (PCSD), some travelers will be more anxious than others in the post-pandemic world, meaning that this cohort will continue to demand high levels of physical distancing and sanitization while others will simply want to move on with their lives.

So, once you have the “basics” covered to safeguard everyone according to the local and state guidelines, what’s needed to appease the PCSD guest might in fact make the nightly rate unappealing to everyone else, especially if a lengthy global recession emerges which will make the average guest even more sensitive to whatever BAR you offer. This presents the opportunity to split off the more excessive measures as additional fees that the PCSD customer can purchase a la carte in order to keep the sticker price as low as possible to stay competitive on the online travel agencies, in meta-search and against alternate accommodation platforms.

Because let’s face it, the very essence of our humanity is not compatible with all the draconian procedures stipulated for operating during a pandemic of this sort. We endure it to flatten the curve, but we don’t want these measures in place for any longer than they have to be.

Some poignant examples of our current economic model demonstrate the increasingly urgent need to return to a normal state of affairs. For instance, how is physical distancing possible for a little restaurant that must pack its front-of-house full of tables and complete multiple turns per night just to keep the lights on? A small enterprise like this can hold out with shrewd finances and a loan, but long-term the business structure is unfeasible. Next, how do we create a vivacious and emotionally engaging space in our hotel lobbies without lots of people to give it that energy? Building on this, how do bars, nightclubs and event halls ever open again with some semblance of worthwhile capacity?

While I am indeed suggesting an eventual return to normalcy, albeit with permanently upgraded sanitization standards, the key word is “eventual.” But within this next normal, the divergence in expectations for PCSD and non-PCSD guests will present us with the opportunity to provide a safe environment for all while still preventing drastic cost overruns.

Here are some thoughts for items that can implemented as add-ons or bundled in a resort fee model to drum up ancillary safety revenues:

  • Being assigned to a “COVID-safe” section or floor at the hotel where more extreme cleaning and sanitization protocols are provided.
  • Verified 48- or 72-hour booking buffers (over, say, a more reasonable 24 hours in the new standard) whereby the PCSD guest pays for the extra prearrival nights from when their room is off-limits prior to check-in.
  • Housekeeping and turndown services that are “COVID-safe” for stayover guests whereby the new standard may become no cleaning or staff entry whatsoever while a room is occupied.
  • Superior, branded personal protective equipment and customized hand sanitizer units made available in the guestroom, with enough for however many nights booked and guests registered.
  • Upgraded food-and-beverage service delivered in a safe, overly sanitized method to the room instead of delivered at the restaurant or for pickup, and for all meal occasions.
  • Guaranteed safe airport transfers in a sanitized car and other transportation services.
  • With the trend towards décor minimalism to limit guestroom cleaning requirements, perhaps hotels can even charge for the presence of extra furnishings in the guestroom and soft goods that are not single-use.

As previously mentioned, the upselling model for many of these additive amenities will depend on a property’s star level and target demographic. For luxury guests, they may expect most of these already included into the nightly rate and not bat an eyelash at the elevated price. Others may not be so blasé.

If you do decide to offer these debatably superfluous add-ons, know that selling them is just as important as the features themselves. In a “do you want fries with that?” model, your first step will be to properly train your intake team to prompt customers about these options at the appropriate times during the reservation process. Concurrently, you must communicate to your loyalty base what you are including as standard and what will be available for a surplus cost.

After that, investigate how your existing technology suppliers can add in these upsell opportunities into the prearrival experience. At the very least, PCSD guests should be able to select these amenities from within the booking engine and via third-party websites. And then, what one customer selects versus another must be put through to the CRM so that you can better tailor the on-site experience to meet one’s anticipated level of anxiety.

What I would emphasize here is that like all things emerging from the pandemic, it is an opportunity to reinvent your business. But that model must be profitable or else it will fail, and so upselling certain COVID sanitization procedures as paid-for amenities may be the way to keep your margins.

Larry Mogelonsky is the principal of Hotel Mogel Consulting Limited, a Toronto-based consulting practice. Contact him at larry@hotelmogel.com

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