As the industry begins to recover from a global travel lockdown, hoteliers are accelerating their efforts to provide better guest experiences. Over the past few years, many have pointed to attribute-based selling – offering the guest a la carte options at booking to build their own package – as a way to better serve guests while driving incremental revenue.
Proponents of attribute-based selling say it would better align the hotels selling options with the customer’s unique needs during the booking process. But a major challenge remains: Implementing the technology systems needed to properly execute the fulfillment on the operations side.
With the reality of our new world, could attribute-based selling give hotels a competitive edge when travel returns?
Dragonfly Strategists VP of Revenue Strategy & Analytics Alise Deeb recently caught up with one of our technology partners, George Roukas with Hudson Crossing, to discuss the opportunities and challenges.
The way hotels are sold today, by using an antiquated model evolved from how we sell airlines in the GDS, with fixed room types and variable rate plans, are not keeping up with evolving consumer demand. Customization and personalization have long been creeping into every aspect of consumer sales. Customizations are already a naturally integrated part of other industries like automotive, electronics and new home sales. Today, the guest’s point of view is extremely important. Allowing guests to shop by selecting the attributes that are helpful and meaningful to them and pricing accordingly is a natural evolution in the hotel’s sales process.
Roukas breaks down this complicated process by using a burger bar restaurant as an example of attribute-based shopping that consumers have been implementing for years:
“When purchasing a build-your-own-burger we have the following attribute choices to make: three types of buns, four kinds of burgers, five choices of cheese, condiments, sides, etc. If you add up all the combinations of attributes you would have 61,440 options to individually list. This would be overwhelming for a consumer on a menu so of course, the restaurant doesn’t list all 60,000 options — it creates pre-set combinations. Yet people intuitively understand what it is to order by specifying each individual burger attribute. The restaurant also offers a few signature burgers and meals that are pre-bundled attributes, but the consumer can also make substitutions, adding here and removing there to get exactly what they want,” he says.
“Hotels just don’t work like that.”
One way to start to think about this for hotels is to start listing all of your room attributes (room size, view, bedding type, high/low floor, quiet room, roll-away, breakfast, cancellation options, ancillary activities like spa and golf, and many more). It is a shift for hotels to begin thinking differently about centering the selling process around individual customer satisfaction and desires verses options limited by our technology.
Hotels will need to adjust their approach to pricing. Instead of pricing based upon market price, on the books, and pace, pricing must shift to what the customer values and what the customer is worth. If a guest greatly values a good night’s sleep, that guest will be willing to pay for a quiet room away from the elevator as long as it is guaranteed for them and not just upon request.
While any hotel can begin the attribute-based selling process by databasing all of their attributes, actually implementing this in the hotel technology systems continues to present challenges. For example, the hotel’s CRS might be ready but the PMS and RMS might need to evolve to properly price and execute the customizations. The technology integrations and customizations can take significant time to implement. A good place to start would be to install an attribute-aware CRS or PMS system. But you don’t have to have the entire organization ready to make the ABS switch to implement it. Some systems are already beginning to test new models to see what is important for the consumer.
One of the biggest challenges and hardest to design components is dynamic room assignments. To properly implement ABS you must turn over the room assignment to the system so it can do the shuffling because it is impossible to do it manually. One of the biggest selling points for future hotel technology systems is the performance of dynamic room assignments. This also has a very significant potential impact on revenue.
Training for the front desk and reservation team on the attributes and guarantee is essential. They will need to develop a new way of telling guests that their specific attributes are guaranteed for their arrival. Fortunately, we don’t have to train customers as they are already attuned to ABS through other industries.
With room demand at an all-time low, now might be the easiest time to begin to move towards ABS. Hotels that offer different cancellation policies for different rates, early arrival or late checkout options, add-on amenities or attractions are already positioned to move towards ABS. Now is a good time to transition to ABS because when you get very busy, the stakes are higher to test the systems.
Hotels now have a unique opportunity to look at their inventory and see what things you can do for guests to meet their needs (like guaranteeing rooms away from the elevator or on a higher or lower floor). Reviewing your call center document data from customer voice can help lead you to understand what attributes guests are already requesting at your property.
Future Revenue Streams
With today’s massive drop in the demand for travel, many hotels are chasing after fewer customers. ABS is a way to compete on products and should be on every hotelier’s radar. In the recovery, the traditional ways we handle pricing and selling might not be as competitive in the future. ABS testing during low occupancy will allow you to see exactly what travelers are valuing and how much they are willing to pay for it.
ABS will probably never be a model for selling on OTA and wholesale channels, though we may be able to accommodate it via the GDS as it directly shops the CRS. This could be a big advantage for hotels’ direct channels as travelers are willing to pay for guaranteed attributes that some of the other channels can’t offer.
The last economic downturn was when airlines unbundled their fees. By 2008, baggage fees alone were a $2.7 billion revenue stream. This shows that potential new revenue is there for hotels through attribute-based selling.
Who would look at a burger and think that there are 61,000 different combinations available?
For more on how your hotel can begin implementing attribute-based selling, see the full discussion between Deeb and Roukas as part of the Dragonfly Insights Interview Series.
About the Author
Caryl Helsel left a long and successful career in the hotel industry to launch Dragonfly Strategists, providing leadership and strategic direction to hotels. Dragonfly creates actionable strategies and transforms them into higher revenues and improved performance for a range of clients throughout the world.