Hotel Upgrade Company Market Size and Competitive Landscape
To determine the size of the market size for companies that offer hotel upgrading services (bidding, selling, etc.) and to obtain a competitive landscape of companies that are in direct and indirect competition with UpStay for investment purposes.
Preliminary research indicates that the number of upgrades done in hotels each year and how many of them are booked using points are not publicly available. The breakdown of free versus paid upgrades and the average value of an upgrade is likewise not available. There are some interesting statistics on upgrades, though, especially with regard to millennials.
- Room upgrade programs can increase a hotel's profits by as much as 35%.
- Room upgrade programs can fill "frequently unused premium rooms" and create an awareness of premium room features.
- Standby upgrades are "especially lucrative when the hotel has higher ratio of premium-to-standard rooms and guests are myopic (i.e., non-repeat guests who may not be able to predict the chances of being awarded a standby upgrade)."
- In addition, hotels with rooms that have special features (city vs. ocean view, for example) can "benefit more from standby upgrades than upscale hotels with mostly standard rooms when facing myopic guests."
- According to an Oracle study, 58.7% of hotel guests do not belong to a loyalty program. Therefore, less than half of hotel guests have used loyalty points to upgrade their hotel room.
- However, the same survey showed that 54% of hotel loyalty members were interested or very interested in using their points for a room upgrade.
- The survey also showed that location plays a role in how popular room upgrades are as a loyalty perk. For instance, in the UK, room upgrades are very popular, with 49% of respondents indicating they would choose that option.
- In 2016, a PwC survey found that of millennials who are hotel loyalty members, 36% use their points for upgrades compared to 16% of non-millennials.
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