Former Shangri-La Hotels & Resorts’ executive vice president South-east Asia Cetin Sekercioglu has laid down his corporate suit and is developing an online platform that sells hotel ancillaries – room upgrades, lounge access, club room and suite promotions – a huge income stream for hotels, he says, but one they are neglecting.
Launching in the third quarter, Upgrading.cc will enable travellers to check for availability of upgrades and buy them online, whether it’s three months or a day before their arrival, by adding their hotel’s confirmed booking details into its app or website.
According to Sekercioglu, founder & CEO of Upgrading.cc, people do want upgrades, among them families that want to bond by staying together in a suite rather than two smaller separate rooms, honeymoon couples who want the VIP treatment that a club room or suite affords, or resort-goers or corporate travellers who see value in lounge access.
“Based on my experience, I’ve seen hotels generate incremental revenue from upgrades of US$1 million to US$1.5 million a year. From customers’ point-of-view, they get a better experience,” said Sekercioglu. “There is definitely demand for upgrades. Unfortunately, there’s not much focus by hotels on this area, so we are coming in to make up for the shortfall.”
Instead, hotels are focused on Best Available Rates and on OTAs, which sell the lowest room type, said Sekercioglu in an interview. Improvements in the check-in process, meanwhile, have unwittingly reduced the time or the chance for a front office staff to upsell.
“I don’t want to undermine the impact of upselling at front desk so far, which can be very big for some hotels. But given the advancements in technology, and that millennials, who will comprise 60-70 per cent of the market in three years’ time, want all their interactions on mobile, it will mean a further reduction of interaction with the guests at front desk in the future. Already, you can pick up your key from a kiosk at the lobby, open your door with an app – there is less opportunity for hotels to upsell at the front desk,” he pointed out.
The front desk is the main area of upselling when a guest arrives. It can also be during reservations, but a guest might not get the best picture or deal, he said. “When you book online through Upgrading.cc, you can have a clear description of the upgrade, the benefits, the features, and you can book prior to arrival. Why go through the hassle of going through all that when you’ve just arrived at the front desk?,” Sekercioglu said.
The company is now in discussions with hotels to get them to come onboard, beginning with properties in South-east Asia and China, then Europe and the US. There is no joining or annual subscription fees, or training costs, which are typical of technology providers. Customers pay a 10 per cent fee to Upgrading.cc when the upgrade is confirmed and the balance 90 per cent is payable at the hotel upon arrival.
Upgrading.cc promises to unlock potential upselling revenue gains of 40 per cent to 90 per cent depending on three tiers of partnership, Tall (entry-level), Grande and Venti (Sekercioglu obviously loves coffee).
“We are not OTAs, we are partners. We do not sell room at lowest available rates. Our shared goal with our partners is to increase RevPAR via upgrading online. Ninety per cent of the upsold revenue is retained by partners,” said a statement on the website.
When asked if Shangri-La, which he had served for many years, would be a launch partner, he said: “We are exploring who should be the anchors…we have just started on July 1 and are focusing on hotels (and serviced apartments) to sign up first. We could handle 100,000 hotels if we want to, but we have to be selective. The inventory must comprise hotels that are well-maintained and can offer a great guest experience.”
He expects majority of the revenue will come from upgrades to a higher room category. As for club lounges, for most hotels, not more than 50 per cent are paid for; they are automatically given to the guest as part of the deal in booking a club room. “The occupancy of the club lounge may be 70 per cent but in reality, 50 per cent is stay, 20 per cent is paid,” he said, pointing out the potential to increase this ancillary revenue.
Sekercioglu introduced the first in-room delivery robotic technology in Asia-Pacific, created a Best Practices online platform for idea-sharing and digitised F&B loyalty programmes, among initiatives that generated incremental revenues of more than US$1 billion, according to a press release issued by the company.
Meanwhile, its senior executives include co-founder & chief technology officer Johnny Lee, managing director Ting Huong Tak, and director of business development Barry Chew.
Hotels generally have been slower than airlines in tapping the a la carte revenue. In the airline sector, carriers were expected to generate ancillary revenues of US$82.2 billion worldwide last year, a breathtaking 264 per cent increase from US$22.6 billion in 2010, according to IdeaWorksCompany, which create a la carte strategies for airlines and help them boost ancillary revenues.
Airlines have gone beyond selling Coca-Cola and more legroom onboard to, for example, packaging airline-airport-resort deals. Hotels?
May be there is something in Upgrading.cc