A 4-star hotel in Thailand was charging $100 per room. Wanting to increase bookings they knew they needed a solution to make their customers more loyal. They raised their suite room price to $125.
What? Is that a typo you’re thinking…No. They raised their prices.
Why? Because they provided a lot of added value for those extra $25. Every day, in each suite room, they put a bottle of fresh squeezed tropical juice, fruit, a bouquet of assorted flowers, tickets for a free drink in the hotel bar, a pass for a free 30 min massage, and free nightly movie. Wow, all that for $25 (and it only cost the hotel $10). Definitely worth the value, right? That’s what the guests were also thinking – bookings went up. So did profits.
Think about that…that’s $15 in new profit from each booking. At 25 bookings a day, that’s $375 a day in extra profits…$136,875 extra into the owners pocket each year. Imagine this same strategy being used at a resort with 250 bookings a day. That would be about $1.3 Million in additional profit for the owner. Not too shabby!
The key here is that when customers perceive additional value, it doesn’t necessarily have to cost you more and take away from your profits. Done properly, like the above example, it will raise your profits on each transaction.