Crystals of ${\mathrm{BaLu}}_{2}{\mathrm{F}}_{8}$ doped with ${\mathrm{Er}}^{3+}$ 1.0 and 4.5 % were studied by high-resolution optical absorption, luminescence, and excitation spectroscopy in the temperature range 10--300 K with particular focus on the role of the two crystallographically different sites for the dopant ions in this host, referred to here as ${\mathrm{Er}}^{3+}$ ``A'' and ``B.'' Efficient green upconversion luminescence was observed at all temperatures between 10 and 300 K under both excitation into ${}^{4}{I}_{11/2}$ around 980 nm and into ${}^{4}{I}_{9/2}$ around 800 nm. For both excitation wavelengths excited state absorption (ESA) and energy transfer upconversion (ETU) were found to be active and could, in the case of ${}^{4}{I}_{11/2}$ excitation, be identified on the basis of time-resolved measurements. At 10 K, the ${}^{4}{I}_{11/2}$ and the ${}^{4}{I}_{9/2}$ excited states shows completely different behavior: whereas with ${}^{4}{I}_{9/2}$ excitation the ${\mathrm{Er}}^{3+}$ ``A'' and ``B'' sites act independently of each other, a directional ${\mathrm{Er}}^{3+}$ $``B\stackrel{\ensuremath{\rightarrow}}{''}``A''$ energy transfer is observed upon ${}^{4}{I}_{11/2}$ excitation, leading to predominantly ${\mathrm{Er}}^{3+}$ ``A'' ETU luminescence. In contrast, upconversion luminescence excited via the ${}^{4}{I}_{11/2}\ensuremath{-}\mathrm{ESA}$ mechanism mainly occurs from ${\mathrm{Er}}^{3+}$ site ``B.'' Measured oscillator strengths of the observed $f\ensuremath{-}f$ transitions are modeled using a Judd-Ofelt calculation, from which relevant ESA oscillator strengths are estimated.