Free Room Upgrades – How Do They Affect Hotels?

free room upgrades“Can we get an upgrade?”

A common question asked of front desk agents.  What is it that makes guests think that they’re entitled to free room upgrades? A quick search online for how to get free room upgrades will result in many sites that reveal tips which increase a guests chances of getting an upgrade such as here or this site.  For some reason consumers in the hotel industry feel they have the right and in some cases are entitled to receive free products.  When someone buys lunch do they ask for a free coffee?  How about asking for a free belt when they buy a pair of jeans?  No, it doesn’t happen.  But hotel guests will ask for free room upgrades every day and it’s important to know when and when not to give them.

How Much Do Free Room Upgrades Cost a Hotel?

Provided the hotel is not forecast to sell out, free room upgrades cost nothing.  That’s right,

ZERO DOLLARS

This is because the cost of maintaining every room in a hotel is the same.  The typical cost to maintain a hotel room is roughly $40 per day including staff wages and consumables.  The only things that might cause the cost to vary is if the room is significantly larger than most other rooms in the hotel and would require extra time and/or staff for housekeeping or if more consumables are needed to replenish the room such as toiletries and/or cleaning products.  But generally, the cost to maintain every room in the hotel is the same.

Therefore, if the hotel is not forecast to sell out and a guest is upgraded from a standard to a deluxe room the hotel will not lose revenue.

When to Give Free Room Upgrades?

There are a number of reasons to give free room upgrades to guests.  These might include,

  • The guest is a loyalty member and loyalty members typically expect extra service and perks on top of the rewards points they receive.

  • Special occasion such as a birthday or anniversary.

  • The guest asks for an upgrade. If you’re not forecast to sell out then you can give an upgrade to any guest who asks.  You can even encourage them to sign up as a loyalty member in order to receive this upgrade the one time.

  • Just because the front desk agent feels like it. Maybe a guest is checking in and starts telling the front desk agent how they’ve had a long and weary drive to get there or they experienced problems with their airline such as delays or lost luggage.  The front desk agent could use their judgement and offer a free room upgrade to lift the guest’s mood.

  • Guest complaint. Because free room upgrades are better for revenue discounts.

Why are Free Room Upgrades Better for Revenue than Discounts?

If a standard room rate is $100 and a guest receives a free room upgrade the hotel still makes $100 in revenue.  However, if the guest stays in that standard room and instead receives a discount of 10% bringing the rate down to $90 then the hotel only makes $90 in revenue.

Hotels Win with Free Room Upgrades

A hotel that gives free room upgrades over discounts when it’s appropriate is winning at maximizing revenue.  But never underestimate the positive word of mouth that comes from free room upgrades.  When used correctly they are a powerful tool for securing repeat business and creating increased revenue through new guests.

Checking out,

Damien.

Thanks for reading

  • How important is it to have an understanding of free room upgrades?

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