How hoteliers can drive revenue and improve CX with attribute-based selling
The hospitality industry is undergoing a retail transformation, driven by evolving guest expectations and new digital tools, integrations, and partnerships—all of which make selling more flexible. Attribute-based selling (ABS) is fundamental to this transformation.
With ABS, hotels can personalize guest experiences by enabling guests to pick, choose, and purchase varied attributes with their stay. ABS enables a unique experience based on each guest's priorities — whether it's cost savings, premium amenities, special experiences, or other elements.
Despite these advantages, ABS has unique challenges with which many hoteliers are struggling. Sales tools that support ABS are limited for hoteliers—too often they are restricted to selling "one thing" (e.g., a "bundle" of products) where upselling and cross-selling are not possible.
With this in mind, hoteliers must define their strategic approach to ABS, enabling them to create a more personalized and differentiated experience for each guest while ensuring a profitable pricing model. So let´s explore the opportunities ABS provides hoteliers with and identify common barriers to successful attribute-based selling.
ABS introduces new financial opportunities for hoteliers
What does ABS look like in practice? With attribute-based selling—also called attribute-based pricing—a hotel might offer a base room rate plus the option to add on premium Wi-Fi, early check-in, or late checkout, each for additional fees. Or, a hotel could include a basic breakfast as part of the room rate, but give guests the option to upgrade to a continental or full breakfast buffet for an additional cost.
This model began with airlines who "unbundled" features such as checked baggage, in-flight meals, and in-flight entertainment from their core offerings; airlines provided them as add-ons and premiums instead. This allowed for more affordable pricing of featureless bookings alongside higher pricing for personalized combinations of add-ons, premiums, and services. Even in the midst of the pandemic, unbundled ancillary sales represented a significant source of revenue for airlines, accounting for $58.1 billion in 2020 according to recent research from IdeaWorks.
Boosting room revenue
Now, hoteliers are realizing the potential advantages of this model. Instead of differentiating pricing based on the types of rooms alone, a hotel can offer a more affordable or more exclusive rate for a room based on its location in the hotel or its proximity to certain benefits or amenities (e.g., conference rooms, desirable views of the exterior landscape). Attributes may also include add-on personalized services to meet people at different price points.
Attribute-based selling aligns with a broader movement towards personalization in hospitality, which is foundational to this new revenue opportunity. It is up to hotels to define the attributes by which guests can build their personalized experiences and align availability and pricing.
Barriers to successful ABS in the hospitality industry
ABS is still in its early stages for hoteliers. Barriers such as a lack of data, difficulty managing guest expectations, insufficient technology capabilities, and inadequate representation of inventory may make ABS for a single company inconsistent, difficult, or impossible. Here is a closer look at how each of these barriers impacts hoteliers:
- Lack of data. Without clearly defined guest and attributes data, it's difficult to identify which attributes are most important to guests and what they're willing to pay for them. Additionally, without the right data, hotels may have difficulty understanding how differentiating prices based on attributes will impact their overall revenue and competitive value.
- Insufficient technology capabilities. Hoteliers who wish to sell attributes successfully need to have a robust and user-friendly technology platform that can support the sale of multiple attributes. Additionally, hotels need to have the ability to track and manage data associated with ABS. Unfortunately, most hotels' central reservation systems (CRSs) and property management systems (PMSs) are not designed to support ABS in these ways. Hoteliers may also struggle with outside sellers who cannot integrate ABS functionalities as part of their platforms.
- Inadequate representation of inventory. Hoteliers may struggle to represent their unbundled inventory due to the inertia of the industry's existing, decades-long sales model focused on property types and room types alone. Third-party partners also may struggle to break from this traditional inventory model. The resulting misrepresentation can create a frustrating experience for shoppers that can lead to lost business. What's more, a hotel may be limited via one channel versus the other, effectively offering two different shopping experiences.Difficulty managing guest expectations. The transition to ABS is unconventional; it may be confusing to guests if hoteliers fail to explain their new value propositions effectively. Hoteliers who don't prioritize a strategic marketing plan associated with ABS may put themselves at risk.
Many hoteliers remain in the early or pre-development stages of attribute-based selling. Attributes become diluted or excluded when they are not managed correctly, leading to lost revenue and jeopardizing guest experiences as a result.
The next stage of hospitality's digital transformation
Even so, the world's most innovative hoteliers are adopting next-generation technologies that include attribute management systems (AMS). Leading cloud-native tools are providing these hoteliers with partner, CRM, and loyalty systems integrations, boosting dynamic upsell and cross-sell opportunities as part of a more mature ABS operation.
If you would like to learn more about how to adopt leading ABS solutions for your own organization, stay tuned for my next blog: I will explore four essential techniques hoteliers can use to transition to and succeed with ABS among evolving guest expectations and a new hospitality ecosystem. In the meantime, feel free to check out our latest white paper "How unbundling and re-bundling enable personalized guest experiences and increased revenues in hospitality".