Speaking at HITEC 2022 in Orlando, Florida, Michael Heflin, chief revenue officer at Stayntouch, described findings from Stayntouch and NYU’s Tisch Center of Hospitality’s recently released traveler sentiment report, linking traveler preferences and a move toward attribute-based shopping (ABS) for hotel accommodations. As Helfin told LODGING after participating in the Exhibitor Tutorial titled The Future of Booking: Presenting Traveler Sentiments on Attribute-Based Shopping, “What people want in attributes and what they’re willing to pay for are two drastically different things.” He shared some of the insights he gleaned from the study, which surveyed a representative sample of nearly 1000 U.S travelers on their opinions and sentiments regarding a more customized booking experience that would enable travelers to shop by selecting from a number of attributes and room features.
What was the main purpose of the study and its examination of attribute-based shopping versus traditional hotel shopping?
Knowing that there’s a big difference between what people want and what they are willing to pay for, we wanted to drill into those factors beyond a standard-size room with a bathroom —that is, attributes—so hoteliers could build an operating model that supports that.
In our study, a large majority (85 percent) of survey respondents indicated that booking rooms as they do currently via traditional hotel shopping (THS), with only a generic room description, creates levels of uncertainty that the rooms delivered will contain the features most important to them. Compared to THS, attribute-based shopping (ABS) is a move to offer greater transparency and trust. It applies a base plus revenue strategy, with the base being the available rooms with the lowest cost to serve. So, if you just want a bed and a bathroom, that’s what you get. Then everything beyond that is defined by the attribute instead of by traditional categories. This way, guests who are willing to pay more for attributes such as a bigger room, a better view, or distance from the elevator actually know what they are paying for.
What did the study reveal about the potential value of attribute-based shopping?
Respondents overwhelmingly believed that ABS would improve personalization, with 78 percent saying it would “provide features tailored to my preferences,” and 75 percent indicating that a room booked via ABS would likely “be designed specifically for my needs.” A further 56 percent of respondents indicated it would be a convenient way to ensure their most desired amenities and room elements are available and factored into their booking.
As to their willingness to pay for this certainty, the higher, the price point, the more willing they were to invest in additional certainty: According to the report, a large portion (63 percent) of travelers who pay $251 or more per night, as well as 48 percent of those who pay between $151 and $250 per night, are willing to pay more for preferred room features with ABS. In fact, I think one of the things that will be most interesting coming out of this process is the other side, which is how willing guests are to pay for a complete lack of certainty.
How do you expect inflation to impact what guests will pay for attributes?
This study was conducted before inflation had become a significant concern, but from a pricing decision standpoint, what we’d want to know is whether the higher price of a core room makes people less willing to pay for attributes or if people feel like as long as they’re paying more, they may as well get a better room. In a previous inflationary period, a luxury travel agency found that many people took fewer vacations—eg., three instead of four—but took some of the “savings” and applied it to making the vacations they did take nicer. In that scenario, there was lower occupancy but stable or higher ADR.
What is the role of ABS in revenue management?
I think that one of the things we’re learning through this study of ABS is that hotels have traditionally not been great at understanding the monetary value of the differences in their rooms. They have not been productizing. By using only a rough room description, what they are actually using are pricing strategies—not revenue management strategies—with a product that is variable. What we need to do is provide a variable product offering, then define pricing strategies around all of the different options. In this way, we can change the price depending on the attributes included in the purchasing process.
One of the things that ABS helps with more than anything is determining value. Hoteliers can productize their rooms by asking consumers to define the attributes they are in fact willing to pay for and assigning a value—that is, revenue manage—each attribute. For example, instead of assuming that a 700-square-foot room is worth more than a 500-square-foot room, you can actually value manage/revenue manage that extra 200 square feet and determine that it is worth an extra $25. This additional certainty about room rate, has an impact downstream, too, on loyalty programs, so when a guest is “upgraded” from a base room to a larger room, they understand the value of that, too.
How does this information contribute to the development of an operational model?
We went into this with the assumption that it would all be additive, that people would take a base room and then, with a clearer understanding of the value of each, add those attributes they care about. However, we also learned guests are willing to give up things that add operating expenses in exchange for a lower room rate. They can do this by taking a smaller room that uses less energy, but they can also save the hotel the cost of a distribution fee by booking direct, not through an OTA or channel. Understanding that we can save some of these costs that are no longer minor is something we would be able to operationalize.
