We spoke to Erik Tengen, Co-Founder of upselling platform Oaky, about the types of strategies that can help you increase key metrics at your hotel, such as loyalty memberships, F&B revenue, guest satisfaction and bringing about a reduction in housekeeping costs.
Oaky are the market leaders when it comes to upselling. Since 2013 they’ve sold over 8,000 variations of addons to hotel guests. And they’ve been capturing data the whole time to inform their decision-making.
“We’ve processed so many transactions so we know exactly when and how to upsell an offer to different segments. We can even help with pricing, using historical data to advise on similar types of traveller,” says Erik.
The company mission is to help hotels automatically send the right offer to the right guests at the right time.
They’re helping drive an evolution in hotel upselling, away from simply offering bottles of bubbly in the room or late check-out / early check-in, focussing on offering deals that really add value to the guest.
“We use email at several touchpoints in the pre-arrival journey, sending guests welcome emails that link to a webpage,” says Erik. “This landing page has a wide array of bespoke offers tailored to each guest, in their language and currency.”
Oaky emails have an open rate of 83%, which is significantly higher than the average generic email open rate of 16%, and lead to an upgrade conversion of 13%.
So, how exactly does the Oaky upsell platform work in practice?
Strategy One: Increase Loyalty Memberships
Loyalty programmes are hugely important for hotels, especially enterprise-level chains.
Data shows that loyalty programmes help hotels boost bookings at lower costs. Kalibri Labs found that 40-60% of hotel room bookings come from loyalty members, while the cost of these repeat direct bookings is 9% less than if they came through an Online Travel Agent. Triptease even found that 40% of hoteliers found regular direct bookers to be their biggest spenders.
Oaky found that one of the easiest ways to gain new loyalty members was to reach non-loyalty members before arrival and offer them a low-entry barrier incentive to become a member.
“We optimised a way for the hotel to automatically reach out to guests who weren’t members yet and offer a 5% discount on F&B during their stay,” says Erik. “All they had to say was ‘Yes, I’m interested in becoming a member.’”
“The front desk saw new loyalty memberships skyrocket as a result of this strategy.”
Strategy Two: Increase F&B Revenue
Traditionally, Food and Beverage (F&B) income has been hoteliers’ largest driver of non-room revenue, accounting for around 25% of total revenue.
And in recent years F&B revenue has grown by around 2-3%, outpacing room growth of around 1.5-2.0%, according to Avendra.
This growth has led hoteliers to invest millions of pounds into new F&B concepts.
However, the expected results have not always been as easy to achieve.
“If you have a great location, you actually start competing with thousands of other restaurants,” says Erik. “We needed to find a way to help these hoteliers create a lively atmosphere in their restaurants.”
And the solution? Oaky managed to turn ‘free’ into revenue.
“We started offering free snacks, booked pre-arrival on our platform,” says Erik. “And what we saw was that by getting people to sit down to enjoy a free snack in the restaurant, we were able to create that buzz and energy that guests were looking for.”
“The snacks were hot and salty, meaning guests were likely to order a beer and spend time in the restaurant. And once we got that initial four or five couples to sit down in the restaurant, we saw F&B revenues flourish.”
Strategy Three: Reduce Housekeeping Costs, Save the Environment
It will come as no surprise to hear that travellers prefer sustainable accommodation. Booking.com found that 70% would be more likely to book a room knowing it was eco-friendly.
With this in mind, Oaky looked into ways of helping to make hotels less impactful on the environment. The genius of their strategy is that it helps to save the environment, while at the same time saving money on housekeeping.
“We targeted those spending more than two nights at a hotel and offered them an incentive to turn down housekeeping,” says Erik.
“Save the planet with a free beer or slice of pizza!”
Oaky found this to be a win-win-win situation.
The guest feels good because they are helping to save the environment, the hotel can show that it is trying to make a difference and operating costs are reduced because the hotel is saving on housekeeping.
So, that’s three actionable upselling strategies that could help you improve the performance of your business across a number of different sectors.
If this sounds like something you’d like to trial across your hotel properties, get in touch. We’re happy to discuss your strategic goals.
The Future of Upselling
We also spoke to Erik about his plans for the company going forward.
“The connectivity landscape has become a lot less fragmented, with companies solving problems by developing marketplaces,” says Erik. Oaky is on every single marketplace there is, so we could have a bigger addressable market. We jumped on the opportunity to integrate with as many middleware platforms as possible.”
This is a trend that we’ve heard about from pretty much everyone we have spoken to in the hotel tech sphere. By opening up to partnerships and integrations, hotel tech providers and hoteliers will be able to unlock a whole new world of complementary opportunities moving forward.
“At Oaky we aim to go from being the best platform for pre-arrival upselling to doing it across the journey,” says Erik. “We want to sell the right deal to the right guest at the right time, on the guest’s preferred channel across the entire guest journey.”
Oaky is able to do this through its two-way API, which allows other applications to use Oaky as the upselling engine across different platforms.
“For example: through integration, we can allow a chatbot to present Oaky deals, such as parking, to guests at different points in the customer journey. We also use AI to let the chatbot provider offer other deals, which similar people who also bought parking were interested in.”
“This conversation could be on WhatsApp, FB Messenger, We Chat or other channels. This creates inbound opportunities, with guests asking for services creating the opportunity for upselling.”
We’re really excited about the opportunities that tech integrations and partnerships are creating for hoteliers in 2020.
If you see value in a partnership like this, please get in touch today to discuss how we can help you get started.