The first hotel that I ever worked at was a relatively small 70 room property with 4 floors. Almost everything about the hotel was quite standard: a 2.5 Star property about 3 miles from a major NFL stadium and a bit closer to a Six-Flags amusement park. We were busy in the Summer, our weekends always fared better than our weekdays, and we struggled for corporate business on weekdays everywhere else in the year like many other hotels in the area.

The one thing that did stand out about that hotel was the amount of room types we somehow managed despite our relatively small footprint.  I still audibly gasp when I think of how many we had in that hotel: fourteen. Fourteen room types for Seventy rooms.

Junior suites, Junior vaulted ceiling suites, Accessible Kings, Accessible Double Queen Suites, Vaulted Ceiling Jacuzzi with Extra floor space which we called the Governors’ Suite (had Rick Perry or Anne Richards really ever dipped their toes, or worse into that Jacuzzi with the view overlooking the Jack-in-the-Box drive through?), Regular King, Double Queen, Jacuzzi King, Vaulted Ceiling Jacuzzi, Accessible King with Whirlpool Jacuzzi, Vaulted Ceiling King, Two Queen bed with Vaulted Ceiling, Family two Queen Suite, and Family two Queen Suite with Vaulted Ceiling. This was after some pruning also, as we very nearly included the two sets of connecting suites which would have added a King Connecting and Two Queen Connecting suite room type into the mix for a total of 16 room types, which would’ve rivaled H.H. Holmes’ number of room types in his thrill-kill-mansion.

The only real benefit to the assortment of room types was that it gave us a huge amount of creativity with which to experiment with various room type upcharges based on whimsical criteria (“sir, you are paying more for your room because it is a room Michelangelo would’ve been more apt to paint the ceiling in”). We really did charge a bit more for the vaulted ceilings, the Jacuzzi’s, the combination of the both, the floor space, and every other combination you could think of; it was quite a bit of fun in hindsight, although rate changes were absolutely tedious at times.

Most hotels that I interact with on a daily basis usually have 2-5 room types which is fine by me. If there are any more than 5, I usually start to hear a Theremin play in my mind and I begin to slowly lose my sanity (unless the hotel is justifiably boutique enough to warrant 6+ room types). There is usually a King room, Two Queen bed room, and some upgraded iteration of each of those (King Suite with or without a Sofa, and Two Queen Suite with extra floor space or a sofa thrown in for good measure). Most hotels as a knee-jerk reaction price their 2 queen suites a little bit higher, and that usually is enough of a start, but I still see a hesitancy to really try and upcharge the two bed rooms on the high compression leisure weekends, and I think there is big opportunity to drive ADR at many, many properties who are still using the old traditional $5 and $10 upcharges on their premium room types just because that upcharge has always been in place. It’s time to take our stodgy old room type charges off the mantle, dust them off and give them an update. By following the tips below you will be able to immediately make an impact at your property as long as you offer a 1 and two-bed room type.

Tip 1:

Day of week strategy – Typically, corporate travelers travel during the week and prefer a king room type. Leisure travelers travel on the weekend and prefer 2 beds. As a general rule of thumb (obviously considering the room type mix in the property), consider upcharging kings during the week for the less price sensitive corporate traveler and upcharging the 2 bed room types over the weekends.

Tip 2:

Identify your hotel’s seasonality trends; which seasons and months can you comfortably experiment with boosting your room type charges? For any of us, that time is the summer where leisure travelers expect to pay a premium for more beds. When we normally offer a $10 upcharge on a room with 2 queen beds above a standard king, we can most likely get away with a $15 or even $20 surcharge on those high demand summer or event weekends.

Seasonality Grid

Tip 3:

Shop your competitive set’s room type upcharges. Are similar hotels pushing their premium and two-bed room types higher than your premium and two-bed offerings? If so, that is often enough justification alone to give a higher upcharge a try. Shop your nearest 4-5 competitors and put the data in an organized spreadsheet. Shop weekday vs. weekend upcharge differentials to get the full picture.

Here’s an Example of room type charges in the market of the previous hotel we just used as an example:

OTA Insights Rate Shop

Tip 4:

As an added defense mechanism, you should be utilizing an upcharge by the total number of guests function in your PMS. Make sure that if someone were to shop your property online and actually be honest about the number of adults and children in the room that you would get the added upcharge. Not all prospective guests will be honest enough to let you know their occupancy, but for those that will, don’t turn away free room revenue!

Below is an example of as property that charges $10 + for every adult after 2 adults.

Property Management System upchargesTip 5:

Analyze room type occupancy and ADR premiums. From your PMS or reporting system, export a report that illustrates performance (ADR, Occupancy, etc) by room type. For example, the property below can likely squeeze a few extra dollars from their ONBR (one bedroom) suite, as the current ADR premium exceeds what their upcharge is on all seven days of the week!

Revenue Performance by Room Type gridTip 6:

In the negotiation process with RFP’s and local negotiated accounts, ensure that sales is upselling your premium room-types and not lumping them in with the lowest LRA rate associated with your most basic room types. All too often in the haste to negotiate new business there is no consideration given to room type upcharges when bidding for prospective corporate clients, and sales will often give the whole hotel away at a flat rate. This becomes problematic when corporate guests begin to expect premium room types at no additional charge.

Try to negotiate accounts with certain rate expectations regarding premium room types, such as the example below:

Sample LNR Rate strategy

Be sure to check out our previous blogs on advance purchase discounts, overbooking policies, and revenue hurdle points!

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