Hotel Upgrade Company Market Size and Competitive Landscape

Part
01
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Part
01

Obtaining Hotel Upgrades

The most common ways in which hotel guests obtain a room upgrade are; just asking, loyalty programs, booking directly from the hotel and checking in late. Some reasons why hotel give upgrades are to celebrate guests, make up for their shortcomings and to compensate for overbooking.
Below is a deep dive into our findings.

JUST ASKING

  • Hotel guests often just ask the front desk if they can get a room upgrade.
  • Often times having a celebration like a birthday or anniversary plays in favor of the guests and they can get a free room upgrade from the hotel.
  • If the hotel room doesn't meet a guests' expectations or the guest is disappointed by the service and lets the hotel know, the hotel often offers an upgrade to redeem itself.

LOYALTY PROGRAMS

BOOK DIRECTLY FROM THE HOTEL

  • Calling to book directly from the hotel as opposed to booking online is also a common way to get a hotel room upgrade.
  • The personal connection formed may be formed as the guest gives details of his trip to the reservations' agent causing him to upgrade their room.
  • Apart from the personal connections formed, hotel booking sites often cut high fees that cut into the hotel’s profit. If the hotel isn’t paying a booking site, they have more allowance to throw you a free upgrade.

CHECKING IN LATE

  • Guests are more likely to get an upgrade during late afternoon hours towards evening as opposed to morning hours.
  • This is because in the evening, they have a better estimate of which rooms will be occupied for the night and are in a much better position to offer an upgrade with this knowledge.
  • They may also have some cancellations or no-shows in the evenings which frees up rooms.

REASONS WHY HOTELS GIVE UPGRADES

RESEARCH STRATEGY

While the research was straightforward for the most part, we were not able to find the average value of an upgraded hotel room. We were able to garner the rest of the information on reputable travel blogs and news sources giving tips and tricks on how guests can get room upgrades in hotels. To determine the most common ways in which hotel guests obtain a hotel room upgrade, we chose the four ways which were the most mentioned across our sources. Most of the ways mentioned were how guests get free upgrades, with the exception of using loyalty programs which often use membership points to get an upgrade.



Part
02
of ten
Part
02

Failed Hotel Upgrade Companies

HotelQuickly, a company that allowed travelers to book last-minute hotel stays at low prices, was forced to cancel customer reservations after defaulting on payments to one of its main suppliers. LateRooms and Super Break were forced to cease operations after their parent company, Malvern Group, ran out of cash before they could secure a sale.

HOTELQUICKLY

LATEROOMS AND SUPER BREAK

RESEARCH STRATEGY

While the research was straightforward for the most part, we were not able to find insights on what each company offered in terms of helping hotel guests get upgraded rooms. We started by looking through the company websites, but this strategy proved futile because the sites for each of these companies are not in operation anymore due to the fact that the companies themselves have ceased operations.

We then checked industry related websites such as Skift, Dream Travel on Points and Trip Advisor, for any relevant information concerning how these companies helped hotel guests get upgraded rooms. However, we were only able to find information concerning their business models in general as well as in-depth information on why they failed.

Lastly, we checked news sites such as The Mirror, The Sun, Independent and Standard for any information that would be relevant to our search. These sources, again, only provided information on the failure of these companies without mentioning how they helped hotel guests to get upgraded rooms.

We have concluded that the information on what each company offered in terms of helping hotel guests get upgraded rooms is not publicly available because their websites, which would have been the best source of this information, are not functioning anymore. We have summarized our findings on their failures above.






Part
03
of ten
Part
03

Hotel Upgrade Company Competitive Landscape - HotelTonight, One:Night

HotelTonight's app has an "Upgrades" feature which allows users to book an available suite for at least 50% off as well as make further personalizations. One Night provides guests with access to unsold high-end trendy/boutique hotels at lower rates similar to what they would have paid for standard rooms/facilities any time after 3 pm. Additional information can be found on rows 3-7 of columns C and D of the attached spreadsheet.

HotelTonight

  • HotelTonight takes advantage of the 65% average hotel occupancy rate to offer empty hotel rooms at discounted prices if they are not booked at the last minute.
  • The HotelTonight app has an "Upgrades" feature which allows users to book an available suite for at least 50% off.
  • After booking, travelers can further personalize their suites by chatting live with a customer care representative.

One Night

  • One Night provides unsold high-end trendy/boutique hotels at their lowest rates anytime after 3 pm.
  • Essentially, the app helps hotel guests to upgrade by giving them access to extraordinary hotels at lower rates similar to what they would have paid for standard rooms/facilities.

RESEARCH STRATEGY

Our search through the public domain determined that both HotelTonight and One Night are private companies and, therefore, not obligated to provide their financial statements. Therefore, we have provided estimated revenues sourced from company/business profiling sites i.e. Crunchbase and Zoom Info.
Part
04
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Part
04

Hotel Upgrade Company Competitive Landscape - Upgrading.cc, Priceline

FINDINGS

Priceline and Upgrading.cc are an e-commerce platform that offers travel packages. Each company has a unique selling proposition as shown in the spreadsheet.

PRICELINE

UPGRADING.CC

  • Upgrading.cc is helping innovate the hospitality industry with its unique 4-in-1 upselling concept platform for revenue optimization.
  • They offer reduced operating costs together with the opportunity to upgrade RevPAR and maximize upselling revenue by over a 100% at zero investment cost.
  • Users can choose to create & manage their personalized price alert by using the "My Price Alerts", and get notified of any price changes matching their budget.

RESEARCH STRATEGY

Initially we started the research by looking at the companies annual report. The annual report gave information on the percentage increase on the total investment in hospitality industry but not the total revenue of the company. We found data on funding.

We proceeded to search for information in the Statista that contains the travel and hotel statistics. The data contained the comparison among various companies but not the actual revenue for Upgrading.cc.

Finally, we looked through the national travel and hotels records and reports like stocks security and exchange to see whether we could get some data.
The data found looked promising but it did not give us the revenue for Upgrading.cc. it contained gross revenues for the other companies. We therefore concluded that the information was not available.

Part
05
of ten
Part
05

Hotel Upgrade Company Competitive Landscape - Expedia, Orbitz

Expedia has estimated revenue of $11.2 billion while Orbitz has an estimated revenue of $764 million. Further details have been provided in the attached spreadsheet.

EXPEDIA

  • The company offers 1 point for every $5 that is used on flights and 2 points for every $1 spend on bundled booking of flights and hotels.
  • They offer three tiers: blue, silver, and gold. Seven bookings or $5000 spent on bookings annually gets users the silver status and $10,000 spent or 15 nights get the gold status.
  • They have 60 million visitors globally and 41.3 million are from the United States. Women make up 60% of its users, while men make up 40%.
  • Expedia posted revenue of $11.2 billion in 2018.

ORBITZ

  • Orbitz offers three types of membership tiers: silver, gold, and platinum.
  • Women make up 59% of Orbitz customers while men make up 41%. On the other hand, 59% of its customers are between 25 and 54 years.
  • Orbitz has an estimated revenue of $764 million.
Part
06
of ten
Part
06

Hotel Upgrade Company Competitive Landscape - Booking.com, Hotels.com

Booking.com offers the world's largest selection of beautiful places to stay, offering 40 languages with 28,983,491 reported listings to 153,474 destinations in 227 countries. Hotels.com, on the other hand, makes it easy to make travel bookings, offering hundreds of thousands of palaces with 90 local websites in 41 languages, providing complete information. Details on these two companies have been entered in columns I and J of the attached spreadsheet.

BOOKING.COM

  • Booking.com, through its partner site, BookingSuite can offer guests a chance to upgrade for a discounted price. For example, if a guest booked a standard room for EUR 60, a Booking.com partner or property owner can offer the guest a chance to upgrade with an extra EUR 20.

HOTELS.COM

  • Hotels.com give upgrades to gold members at check-in at VIP Access properties, subject to availability, which depends on rewards tier at the time of booking. Room upgrades may include complimentary upgrades to a room category with better quality or greater value. Room upgrades cannot be reserved.
  • 61% of Hotels.com's customers are women, while 39% are men. 63% are between the ages of 25 and 54, and 60% earn over $75,000. Out of 32.8 million unique visitors worldwide, 27.8 million are from the United States.
Part
07
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Part
07

Hotel Upgrade Company Competitive Landscape - KAYAK, Trivago

Kayak is a part of Booking Holdings and has an annual revenue of $14.5 billion. Trivago's annual revenue amounts to about 914,816,000 Euros. The requested details on Kayak and Trivago have been entered into columns K through L, rows three through seven of the attached spreadsheet.

KAYAK

  • Currently, Kayak does not have any options for hotel upgrades directly through its official website. Kayak operates as a metasearch resource for different hotels, and it merely exhibits a comparison of prices. Any visitors seeking bookings are redirected to the source site where they are typically performed.
  • The company's target market primarily consists of businesses operating in the travel industry (e.g., Hertz Global Holdings Inc., Delta Airlines). As of today, Kayak has a digital presence in more than 60 countries.
  • One of Kayak's competitive advantages is that it manages about seven distinct international trademarks, while offering 20 different language options to assist visitors in several areas of the world utilize its services.

TRIVAGO

  • Since Trivago acts as a metasearch resource, visitors are not permitted to book hotels through the website and upgrade options, along with cancellations, are not present on the site. Through its Hotel Manager PRO program, hotels present various offerings to visitors exploring the Trivago hotel webpage.
  • Its chief target audience/market is price-sensitive travelers, while its leading markets are nations in Europe.
  • One of Trivago's competitive advantages is the fact that it operates around 55 different localized sites in 33 nations, as reported by Market Realist.

Research Strategy:

Our research began by examining the company websites to determine their competitive advantage and the target markets. For some missing information, we searched for a SWOT analysis of the business and explored market research sites. As for the revenue, we analyzed the companies' annual reports.

For Kayak, market share data was not available in the annual report of its parent company, Booking Holdings, but it mentioned that the advertising revenue is from the Kayak. To find the exact revenue Kayak, we had to rely on the third-party site ZoomInfo. We also discovered information on its 2012 revenue when it was a stand-alone company.

Regarding upgrade services offered, as both Kayak and Trivago are metasearch sites and do not permit customers to book, cancel, or modify the bookings on its site, they redirect them to direct booking sites. Therefore, customers are not able to upgrade hotels through Trivago or Kayak websites. However, we observed customer reviews from Kayak stating they acquired room upgrades without asking, and clients utilized sites like Booking (parent company of Kayak) and Expedia (major shareholder of Trivago) sites. We can conclude that the upgrade services offered by the redirected websites are also applicable for the customers of Kayak and Trivago.
Part
08
of ten
Part
08

Hotel Upgrade Company Competitive Landscape - Travelocity, Jetsetter

Travelocity provides hotel room upgrades through coupons and deals on their website, while Jetsetter offers upgrades via a loyalty club. Details of their target markets and other findings are captured in the attached spreadsheet.

TRAVEOLCITY

Overview of Upgrade Services

Target Market

Competitive Advantage

Annual Revenue

JETSETTER

Overview of Upgrade Services

Target Market

Competitive Advantage

Annual Revenue

RESEARCH STRATEGY

In conducting this study, we analyzed data provided from the official websites of Travelocity and Jetsetter. To receive hotel upgrades on Travelocity, we acquired this information by visiting the official website. We performed the same task for the Jetsetter website and got data on how customers can get free hotel upgrades through an article on the website. To acquire the competitive edge for both companies we looked at the about us pages for both and formulated our response from this information.

Regarding the demographic information for Travelocity, we studied the website and found that they provided four key demographics to whom they cater. Jetsetter has been acquired by Trip Advisor, and as such there was no specific demographic information provided for them. However, we sought out marketing websites and obtained information on Trip Advisors key demographics and provided information on this. The competitive advantage of both was found on their Official websites.

Lastly, the annual revenue for Travelosiy was obtained through an annual report provided by Expedite and we were able to provide information on that. On the other hand, Jetetter’s annual revenue was acquired through Crunchbase and additional information was given through a Trip Advisor annual report.

Part
09
of ten
Part
09

Hotel Upgrade Company Competitive Landscape - Hipmunk, Dayuse

Neither Hipmunk nor Dayuse offers any assistance with getting travelers free or discounted room upgrades. But demographics for both are Americans going directly to their websites. Out of the two, Dayuse has the most competitive advantage due to them being the first to offer daytime hotel room rentals at 1000 hotels worldwide. More information on these companies can be found on the attached spreadsheet.

HIPMUNK

  • Hotel upgrades — Hipmunk doesn't mention offering or helping travelers find hotel upgrades on their website. Their site has bots that scrape the internet to find the lowest prices available for hotels, flights, and Airbnb rentals. However, certain hotels do list information on how to earn room upgrades on their properties, but it's at the discretion of that hotel.
  • Target market — Hipmunk targets frequent business travelers and people who travel using major brand airline and hotels. The highest website traffic comes from direct searching from US travelers. The top two social sites that travelers click through from is YouTube and Reddit. Some interest of these travelers is travel & tourism, news & media, and technology.
  • Competitive advantage — Hipmunk has been featured among the top 10k in private western US companies. They raised $55 million in funding in seven rounds and were acquired by SAP Concur in 2016. They also offer efficient travel planning through their quick and easy website and apps.
  • Annual revenue — It's estimated their income is around $5 million, but they are a private that has chosen not to disclose their revenue.

DAYUSE

  • Hotel upgrades — Dayuse doesn't offer direct help with hotel room upgrades. They work with about 1000 hotels worldwide, and some do offer upgrades, but a traveler would need to contact the hotel directly find out about them. However, some hotels do list information about the upgrades they offer, but that is on a per property basis.
  • Target market — Dayuse is targeting people who are looking for a quick daytime romantic getaway, travelers that have layovers, and any other people that could make use of a short stay. The highest website traffic comes from direct searching from US travelers. The top two social sites that travelers click through from is Facebook and YouTube. Some interest of these travelers is travel & tourism, news & media, and social media.
  • Competitive advantage — Dayuse is the first site that offers daytime hotel bookings where travelers can purchase a few hours stay in any of the hotels on their website. Travelers can enjoy high-end amenities at these hotels for a fraction of the price.
  • Annual revenue — The last mention of their revenue was at $21 million in 2017. They are a privately held company that earned around $17.5 million in funding since 2010.
Part
10
of ten
Part
10

Hotel Upgrade Company Competitive Landscape - Last Minute Travel, Hotwire

Last Minute Travel offers discounted hotel prices to the last-minute traveler. Hotwire offers hugely discounted hotel bookings for the budget-conscious traveler. The information is furnished on the attached spreadsheet, rows 3 to 6 and columns Q and R. Below, we discuss the topic in more detail.

Last Minute Travel

Hotel Upgrades

  • The Last Minute Travel support section offers the ability to amend a booking which would likely include an upgrade if needed. Requested changes cannot occur within the 24 hours prior to the check-in date. The site specifies that all bookings have to be paid promptly to be valid.

Target Market

  • The target market for Last Minute Travel is the traveler who makes last-minute travel plans and needs a booking in any type of hotel, including 5 stars. You can obtain a booking up to two weeks in advance.

Competitive advantage

  • Besides finding hotels at competitive discounts, Last Minute Travel offers an option to reserve an Undercover hotel at a lower rate.
  • Last Minute Travel also offers a loyalty program that includes booking discounts of up to 65% of the price points that can be accumulated to book a free hotel stay and a savings plan.

Annual Revenue

Hotwire

Hotel Upgrades

  • According to Hotwire, a change is possible but is dependent on room type, cancellation, and hotel policy. The room would have to be canceled and rebooked for an upgrade.

Target Market

According to the Expedia Group 2017 financial report, Hotwire targets the budget-minded traveler.

Competitive advantage

  • According to The Expedia Group financial report, Hotwire provides hugely discounted deals as its competitive advantage.

Annual Revenue

  • The 2018 Expedia Group fourth-quarter financial report lists Hotwire under Core Online Travel Agencies (Core OTA). The Expedia Group does not provide Hotwire revenue independently. However, Dun & Bradstreet (Hoovers) lists its estimated revenue at $30.32 million.
Sources
Sources

From Part 06
Quotes
  • "Offer a room upgrade If a guest has booked a standard room for EUR 60, you could offer them the chance to upgrade to a superior room for an extra EUR 20. As long as the selling points are clearly stated and shown in your hotel photos, the extra cost will seem small compared to what they’re getting overall – making the upgrade very appealing."
Quotes
  • "Established in 1996 in Amsterdam, Booking.com has grown from a small Dutch startup to one of the largest travel e-commerce companies in the world. Part of Booking Holdings Inc. (NASDAQ: BKNG), Booking.com now employs more than 17,000 employees in 198 offices, in 70 countries worldwide."
Quotes
  • "“We’ve noticed that guests, especially millennials, are looking for more immersive, experiential environments,” says Halperin. “Guests are no longer satisfied with just a convenient place to meet, they want meeting spaces to offer more personality, introduce attendees to something new or provide an unexpected experience.”"
Quotes
  • "Gold members may qualify to receive upgrades at check-in at participating VIP Access properties, subject to availability. Eligibility for the room upgrade is based on Hotels.com Rewards tier at time of booking. VIP Access property upgrades are intended for the primary account holder and will only be extended to additional rooms booked via the Gold member's account at the property’s discretion and subject to availability. "
Quotes
  • "In the summer of 2017, social media was dominated by one thing—funky inflatables. From pizza slices and donuts to unicorns, flamingos and more, these floating friends were everywhere and Millennials were leading the charge. So when Hotels.com decided to go after the audience, we knew exactly what would make a splash."
Quotes
  • "About Hotels.com® (or Hotels.com™) Hotels.com is the most rewarding way to book a place to stay. We really love travel and we know you do too. That’s why we make it really easy to book with us. With hundreds of thousands of places to stay around the world and 90 local websites in 41 languages, Hotels.com has it all."
From Part 07
Quotes
  • "The hotel surprised us with a free upgrade to a very nice and spatious suite. Reception team was really kind and professional."
Quotes
  • "Free room upgrade and early check in Pool and area was very good Staff were friendly and helpful Food was a bit too Asian oriented which I would accept but The western options were not quite to the standard and variety I would have liked"
  • " Hotel is on perfect location and mrt is under hotel.hotel staff was great and they upgrade the room for free.mini bar was complementary and the pool is nice.they give us child crib for our baby.thanks for all."
From Part 10
Quotes
  • "To request a hotel reservation change, please open a support ticket or call +1-800-442-0568."
Quotes
  • "As its name suggests, LastMinuteTravel.com is dedicated solely to last-minute travel deals. This wide-ranging site offers bargains on hotels, flights, car rentals, cruises, packages, vacation rentals, and activities. In a sample search, I found top-rated hotels in Paris from just $45 per night for a trip about two weeks out."
Quotes
  • "You may be able to change your hotel reservation by cancelling and rebooking it. Cancellation policies vary by type of Hotwire booking, hotel policy, and room type. You can find your cancellation policy in your confirmation email and on your My Account page. "
Quotes
  • " For example, Hotwire finds deep discount deals for the budget-minded travel shopper while our Classic Vacations brand targets high-end, luxury travelers."
Quotes
  • "The Core Online Travel Agencies ("Core OTA") segment provides a full range of travel and advertising services to our worldwide customers through a variety of brands including: Brand Expedia, Hotels.com, Expedia Partner Solutions, Orbitz, Travelocity, Wotif, lastminute.com.au, ebookers, CheapTickets, Hotwire, Classic Vacations, Expedia Group Media Solutions, CarRentals.com, Expedia Local Expert, Expedia CruiseShipCenters, SilverRail and ALICE. "