Supplement Charges are an easy and straightforward way to generate additional revenue. In this article we will look into Occupancy, Children and Single Supplements charges and how to use them to maximize revenue.
Occupancy or people supplements are generally utilized for family or premium rooms when a room is able to occupy more than two people with either a sofa bed or an extra bed.
Usually, the base price for a room is determined by double occupancy. This way, if the room has the possibility to accommodate more people, an additional third person supplement can be charged.
However, people supplements are not that common as they can be replaced by
room type supplements. For example, hotels often charge more for the family room, which already includes the people supplement.
Yet, there are some specific ways to utilize people supplement. If the base price is set for one person, it can be changed to charge for the second person, depending on what makes sense for the property.
For example, a business travel-oriented hotel might charge for the second person as the base price would be set for business travellers who often travel solo.
Some hotels also have a single supplement, which charges an extra amount if the guest is staying alone in a double room.
Single supplements are charged as a privilege for guests not wanting to share the room with anyone else.
Traditionally, this supplement was used by cruise ships, as for them, it was a privilege if someone stayed alone in the cabin. Nowadays, most hotels have removed the single supplement as they don’t want to penalize solo or business travellers.
What is Children Supplement?
With some hotels, children under a specific age can stay for free. However, they might be charged extra due to breakfast and cleaning cost.
Most hotels don't charge a full amount for children. It is only a way of recovering some additional cost that could arise by having a child or two stay in the same room as the parents.
After this, assess the target audience. You should have a clear idea about the kind of guests that book a stay at your property. These may be families, business travellers, leisure travellers, backpackers, etc. It will help you make an informed choice.
How to Benchmark and Calculate Single Supplement?
When it comes to Single supplements, not many hotels use it anymore. The base price in general is considered to be for double occupancy. However, second-person supplement is a possibility when the base price has been set for single occupancy, such as in the case of business travellers.
Yet, in terms of benchmarking this supplement, the most important factor is the competitors in the area. If they aren't using this supplement, it would be a mistake to go ahead with it for your property.
How to Benchmark and Calculate Children Supplement?
Benchmarking and calculating Children supplements is one of the trickiest points. Usually, children under a specific age (depending on the property) can stay for free.
Benchmarking when it makes sense to charge a child is not easy, but definitely doable, if done by age.
For instance, a simple and non-discriminatory way of charging for kids is setting up age brackets and deciding to charge children above 13 half the price of the room. Also, bear in mind that if a family books a breakfast-inclusive rate, there must be adequate supplement added.
Top Tips for Maximizing Hotel Revenue with Supplements
Supplements are the easiest and most useful way to maximize revenue. However, bear in mind that the modern revenue manager tends to use limited methods to maximize revenue with supplements, such as room type supplements. This approach is easier to manage, and the rates and supplements remain more organized and straightforward.
The best thing about supplements is that they can be changed and updated easily. It's better to use them during the high season and remove them from your revenue strategy in the low season.
You could even lower the supplement rate depending on different conditions, such as number of occupants, amenities included, etc.
Supplements are the easiest way to change rates without actually changing the price points. Plus, you can get as creative as you want. You can use them for specific room types or market segments. Eventually, they're meant to help you earn a higher revenue.
Overcomplicating and adding too many supplements can harm the business. That being said, if it makes sense for your property, do go ahead and utilize them for maximizing revenue!
Mia Kun, originally from Hungary, Budapest, has been living in London UK while pursuing her interests in travelling and experiencing other cultures. She graduated in 2017 from Rochester Institute of Technology (RIT Croatia) with a major in International Hospitality and Service Management.
Currently, Mia works for a leading Hospitality Company as a Revenue Manager. With years of expertise in Creative Writing at Writers Bureau, she is a published author, who has written two fiction novels, and is currently working on more titles.
Her enthusiasm to add value in multiple domains across various categories of hospitality management has allowed her to take up different projects for HotelMinder, focusing on revenue management, distribution strategies, and guest interactions for clients.