A new way of perceiving room distribution. Is traditional room type selection close to its end as we know it? Perhaps not just yet, but industry experts expect a major shift in the guest booking process to take place in the next 5 – 10 years. That is due to the emerging concept of attribute-based selling (ABS).
How it works
As its name suggests, ABS means separately selling individual room attributes and experiences, such as sea view, hot tub, kitchen amenities etc, rather than bundling them in specific room types. This practically enables guests to book a basic room and then add just the features which are meaningful to them. The final rate eventually comes up as the sum of the base room price and these attributes.
Of course, the ABS concept is nothing new to the travel industry. The entry of low-cost carriers has already led to the standardization of this booking process in the airline sector, whereby the traveller initially just books a random plane seat and can then add a variety of extra features such as seat selection, meals, speedy boarding or additional luggage.
In contrast, the process of a hotel room reservation remains far less personalized. This is mainly due to the dominant presence of OTA’s in the hotel industry. A shift to ABS represents a major opportunity for hotels to regain a big part of their reservations as direct ones.
Why to proceed this way?
The advent of attribute-based selling will be a win-win evolution for both guests and hotels. On the one hand, guests will be able to easily personalize their experience by selecting the features that interest them most from the start of the booking process. Moreover, even after they complete their booking, they will have more flexibility in adding or removing items later.
On the other hand, hotels will have the chance to increase their revenue by attracting more direct bookings and by up-selling attributes which they may have not considered in the past; the data they will be collecting as to what customers value and are willing to pay extra for will be quite insightful.
It is also worth mentioning that due to the differences in the quality of the same room categories (e.g. Standard, Deluxe, Executive, Junior Suite) among hotels and brands, today many guests prefer to book the most basic room type out of uncertainty as to what attributes they may eventually get by a higher type. Attribute-based selling will resolve this as they will be able to focus on the exact attributes they value and are willing to pay extra for. Thus, hotels will gain additional revenue by directly selling rooms of higher standards, instead of often using them in unnecessary free upgrades.
In addition, extra revenue may come from the more effective selling of off-site experiences and activities, provided by local partners.
Finally, hotels will be able to better understand what their different guest segments focus on and target them with the most appropriate offers.
Two are the biggest challenges that hotels may encounter as to this shift. The first one will be to determine a concise list of features which add real value to the guest experience and price them properly. Providing too many options may tire the user and become detrimental to the booking process. For example, does it make sense to offer a fridge and a stove separately? Or instead together, in a bundle of kitchen amenities? And then, what is the perceived value of each of these items for the average guest of the specific hotel? For example, what should be the price for sea view and what for an outdoor hot tub? The use of advanced data analytics models will be indispensable in determining these values.
The second challenge will be to ensure smooth execution among all hotel departments, so that the guest can indeed enjoy all the features they have booked. What if the guest has booked a specific meal plan which is not available at the hotel restaurant during their stay? Or swimming pool access during dates when the pool has to remain out of service?
As with all major advances, a change of mindset to embrace this new booking process will be crucial, both from the guest and the hotel side. However, given the fast pace at which the travel industry has evolved in the last 20 years, as well as the ongoing trend of highly personalized consumer services, this change may be closer than it seems now.