What is a Value-Add Package? It’s is an amenity, product and/or service bundled together with an overnight stay. The price point should reside over BAR and the amount over BAR can be flexed based on individual hotel revenue goals. The value-add amount should be given careful consideration and the cost of the elements closely reviewed before the amount is determined.
A well-designed package may not require any discounting at all. A package in peak season built to drive revenue likely does not need to be discounted either. On the other hand, if the goal is to drive occupancy in a down time and steer more guests to the brand.com then pricing the package slightly below what the elements of the package cost might be the best approach.
For example, if the elements of the package cost $25 and the hotel is in dire need of occupancy then maybe the upcharge should be $15 instead of the full $25 to make the offer more appealing to the consumer. The goal is that the customer needs to be able to see a real value in it. When the package elements are discounted ultimately the difference comes out of the room rate.
Even when discounting the elements, Value Add Packages drive profitability because the upcharge is being added to our highest rate with one of the lowest cost margins thus generating more profit and it is also potentially creating a new loyal guest. Once a busier season is reached or if the package is very successful the amount of the premium can be increased to full value or even more!
To drive even more profit consider only paying commission on the room portion of a commissionable package. Another profit driving measure within a package that includes breakfast is to limit the breakfast items served or change out the breakfast items for more cost-effective items. An example of this is to serve bulk cereal with pitchers of milk instead of individual boxed cereal and small cartons of milk. For packages that include local services or attractions such as a Spa or Golf package let the local attractions take over on their end once the package is booked. They can finalize their part of the reservations, scheduling, guest questions or other details removing the front desk from the equation and limiting that labor expense on the hotel.
One additional strategy is to negotiate with attractions for better ticket pricing or other perks. Many mall offices give out coupon bags or coupon books and these make a great amenity within a shopping package. There is no cost to the hotel, but it has a huge perceived value to the customer. Along that same line, many amusement parks offer discounts for bulk ticket purchases. The hotel can pass the savings onto the guest to make the package more attractive or if the goal is to drive revenue the hotel can increase the package price and take the savings to their bottom line. The pricing strategy is going to vary greatly based on the hotel and what the overall revenue goal is.
As seen on HotelExecutive.com in October 2019.