We’re in a climate where every dollar counts. For hotels, this means working out how to maximize total revenue per room (TRevPAR) by encouraging guests to spend more during their stay. Increasingly, hotels are turning to activities and experiences to earn more, whilst also improving guest satisfaction and loyalty. But how much extra revenue can hotels expect to earn through recommending, or even organizing their own “things to do”?

The answer depends on what is known as the hotel’s cross-sell rate.

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What is cross-selling?

Cross-selling involves marketing additional products to existing customers. In this instance, the cross-sell rate refers to the percentage of guests that book an experience or activity with the hotel. If the cross-sell rate is low, you can expect TRevPAR to approximately equal the average daily room rate (ADR). But at the other end of the spectrum, a high cross-sell rate drastically increases TRevPAR… without impacting price competitiveness.

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What drives a high cross-sell rate?

As you might expect, cross-sell rates can vary dramatically between hotels. In fact, one of the biggest reasons why hotels often underestimate how much they could earn from activities and experiences is because they assume the cross-sell rate is fixed.

In fact, a hotel’s cross-sell rate is determined by 3 key factors, all of which are highly variable: 

1. How enticing is your experiences offer i.e. how many guests want to book? Research shows that guests actively look to their hotels for recommendations on what to do - so the opportunity is there for hotels that leverage their local knowledge and unique attributes.
2. How many guests know about your experiences offer? It’s no good offering the most exciting things to do, if no one knows about them… or they only find out once it’s too late. Waiting for guests to turn up and talk to the concierge is now an outdated model, which will miss the majority of guests.‍
3. How easy is it for your guests to book? It’s no surprise that you’ll get more bookings if guests can checkout in a matter of clicks, rather than being asked to fill out lengthy forms, call up, or wait days for a reply. E-commerce is now the norm, and guests expect a similar service in their travel.

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What cross-sell rate can you expect?

One of the greatest fears of any hotel is investing a time and effort into improving their cross-sell rate, only to find the results aren’t what they expect. 

At Turneo, our hotel partners see cross-sell rates of up to 50%. 

That’s one in every two guests staying at the hotel also purchasing some form of activity or experience…And the best news is that reaching these sorts of numbers doesn’t need complex integrations, big digital overhauls or expensive online ads. The Turneo platform benefits from specialized sector expertise to deliver best-in-class cross-sell rates at a fraction of the cost of traditional methods.

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What does this mean for my earnings?

With an average ticket value of around €50, the overall impact to hotel annual revenue could be as much as €25,000 for every 1,000 guests. 

…And in some cases it could be much, much higher! With the rise of luxury experiential travel, ticket values can reflect once-in-a-lifetime opportunities like your own VIP Hot Air Balloon Flight or Exclusive Mediterranean Yacht Tour.

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Conclusion

Most hotels deprioritize - or dismiss - activities and experiences because they believe they won’t earn enough to pay off the necessary investment. However, hotels systematically underestimate how much they could earn because they don’t appreciate how much their cross-sell rate could increase by moving away from the status quo. 

At Turneo, we love empowering hotels to promote, sell and manage in-house experiences. That’s why we offer simple, intuitive software that's easy to set up, and eliminates any upfront risk. From a centralized hub hotels can see and manage bookings in real-time, so you’ll have full insight into your earnings as they start to come in! 

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Get in touch for a no obligation call to find out more:

https://www.turneo.com/book-demo

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