The hotel industry employs many unique key performance indicators. ADR (average daily rate), RevPAR (revenue per available room) and Occ% (occupancy) naturally come to mind. These metrics reflect the unique nature of our business, but their existence also drives our attention and actions. Watching your hotel’s KPIs translates into optimizing key activities to influence those KPIs positively. As the old saying goes, “what is not measured cannot be improved.”
Hotel Upselling is Becoming More Important Than Ever
For example, pre-Internet, the concept of “conversion %” was far less important than today. Now, as consumers essentially employ reservations self-service, it is critical that the product marketing and booking interfaces are appealing and easy enough to ensure that the looker becomes a booker – on your site and no other. Thus, conversion is wildly essential to hotel website managers.
As more hotels recover from the pandemic, making up lost revenue is more critical than ever. It has been well established that upselling is key to this effort. Upselling adds revenue directly to the top line, especially if done through cost-saving automation. But just like managing rate or conversion, we need to measure to optimize.
9 Essential KPI’s to Measure Your Upsell Performance
To help hotels on their way, the following are key upsell KPI’s that all hoteliers should include in their reporting arsenal for maximum success.
1. Upsell Revenue Per Available Room (UpRevPar)
Formula: Hotel upsell revenue / Number of hotel rooms
Upsell Revenue Per Available Room per month is a key indicator of upselling performance, illustrating, on average, the total amount of upsell revenue hotel rooms generate.
2. Revenue Per Upsold Reservation $ (RLiftUpSold$)
Formula: Hotel upsell revenue/reservations upsell purchases
Revenue Per Upsold Reservation represents the average upsell revenue generated from a reservation that was upsold.
3. Exposure Rate
Formula: % of Upsell emails sent
Exposure Rate examines the percentage of emails sent to guests with upsell offers. While LOS and occupancy play a role, a high exposure rate of 80% or more with upsell offers provides greater opportunities to maximize conversions.
4. Revenue Per Exposed Reservation (RevPEX)
Formula: Hotel upsell revenue / no. of upselling emails sent
Revenue Per Exposed Reservation shows, on average, the amount of revenue generated from upselling email offers sent to guests who have a reservation. Similar to Revenue Per Offer Viewed (RevPI), the higher this figure reveals how effective the overall upsell program is from email, teaser, price to the offer, and time itself.
5. Revenue Per Offered Viewed (RevPI)
Formula: Total upsell revenue/number of offer views
The higher this number is the better the offer page is converting to purchases. It’s a good indication of an effective offer page and offers.
6. Average Room Upgrade (AveRu)
Formula: Total room upgrade revenue / no. of room upgrades
Average room upgrade illustrates, on average, the amount of room upgrade revenue generated. While room upgrades largely depend on the rate and occupancy and the type of hotel and ADR in the hotel, it can be a quick way to highlight money left on the table by not having an upsell program in place.
7. Average Early Arrival Upgrade (AveEU)
Formula: Total early arrival revenue/number of early arrivals sold
Average Early Arrival Upgrade shows the value, on average, of early arrival requests sold.
8. Average Late Departure Upgrade (AveLD)
Formula: Total late departure revenue/number of late departures sold
Average Late Departure Upgrade shows the value, on average, of late departure requests sold.
9. Return on Investment (ROI)
Formula: Total upsell revenue/cost per room per month
Return on investment measured usually doesn’t need much explanation. However, this figure highlights the total upsell revenue generated by utilizing a upsell software tool, such as ROOMDEX minus costs.
Free Masterclass: Upselling for Hotels
Without KPIs, it is unlikely that any upsell program will operate at optimal efficiency and maximum profit. With the new upsell KPIs, hoteliers can measure their performance more accurately and be confident in making intelligent adjustments to get the most out of their upsell program and increase profitability. Paired with the cost-savings and ROI of an upsell automation program, these KPIs will help your hotel make up the lost revenue of the last 15 months.