In the hospitality industry, having a well-optimized website has become an essential piece of driving bookings, especially in today’s digital world. Striving to remain competitive, many companies focus on generating traffic and converting their visitors into customers. While these are critical steps to drive sales, the next important component is maximizing revenue to increase the average order value. So, how can your hospitality business achieve this?
In this post, we will explore three practical tactics that can help your hospitality business increase the value of each conversion.
What Makes a Successful Website
Typically, you will notice that successful websites meet three key objectives: generating traffic, converting visitors into paying customers, and maximizing revenue for every transaction. Essentially, traffic brings potential customers, but it’s conversions that will turn those visitors into paying guests. Achieving both is already a success, but maximizing revenue allows a hospitality business to further increase the monetary success of their website.
When we talk about maximizing revenue, we focus on strategies that encourage customers to spend more in each transaction. For example, service-based businesses often use add-ons and bundling to increase the average order value. This is a tactic used by Online Travel Agencies (OTAs) like Expedia.com, which are known for bundling hotel bookings with car rentals and other services. While not every hospitality business can replicate this exact model, there are other ways to meet the same objective.
3 Tactics to Maximize Revenue
Tactics are often learned more effectively by seeing them in action, so let’s take a look at a company I had the opportunity to work with, named Selina. This global hospitality brand targets millennials and digital nomads, offering accommodations, co-working spaces, food options, and wellness services across the world. When we assess their website through the objectives mentioned earlier, we can see how they drive traffic effectively through organic search and word-of-mouth, while also offering a user-friendly booking process that converts visitors into paying guests. When it comes to maximizing revenue, we can see that Selina uses tactics that not only increase the average order value, but also impacts positively on the guest experience. Let’s explore what they do.
1. Price Anchoring
When potential or repeat customers visit Selina’s booking page, they are first shown premium rooms with the higher prices showing. This creates a psychological effect known as price anchoring, where the more affordable rooms seem like a better deal by comparison. Also, given that Selina’s target audience are millennials and digital nomads, this approach encourages spending while still making the guests feel they are getting great value out of their purchase.
2. Upselling and Add-Ons
Selina offers a variety of add-ons like co-working spaces, meals, local tours, and even surfing lessons. The idea is that guests can personalize their stay according to their personal preferences, and this flexibility will also help to increase the total transaction value. In return, upselling does not only enhance the guest experience but it also drives guests to engage more with the brand, making the overall stay more valuable for both the guest and the business.
3. Extended Stays
Selina offers a program called Co-Live which provides discounted rates for longer stays, and it’s particularly attractive to digital nomads and remote workers. While the daily rates are lower than short-term bookings, the longer stays serve to keep guests connected to the Selina brand for an extended period, which will increase the overall revenue and provide the company with more predictable cash flow.
Start Here
Maximizing revenue is an ongoing process that requires continuous assessment and periodic improvement. While a full analysis might be needed, use these simple questions to help you quickly evaluate how to boost revenue on your website:
- Are you using price anchoring to guide customers toward higher-value options?
- Are you offering relevant upsell opportunities, such as add-ons and extra services?
- Are you encouraging longer stays through discounts or flexible options?
- How effective are your bundling efforts in increasing the average order value?
- Are you using data to personalize offers based on guest preferences?
Final Thoughts
Whether you manage a boutique hotel or a global hospitality brand, it is crucial to encourage customers to spend more as this can significantly increase revenue. In that sense, maximizing revenue shouldn’t be seen as a nice-to-have but should be used as an essential tool to grow the business’s top line. In addition, by learning from Selina’s tactics (price anchoring, upselling, and offering flexible stay options), you could see a real impact on the monetary success of your website.
