Think ABS To Grow Long-Term Revenues
Hotels Need To Reconsider Selling Strategies To Compete With Home Sharing Sites
When hoteliers refer to ABS it isn’t a car pun which implies that you should put the brakes on operations or CapEx. By ABS, we’re referring to attribute-based selling or, more specifically for hotels, the ability to sell guestrooms on more than just their room categories by allowing customers to search for specific in-room features or even by offering upsell opportunities.
Some of these to consider are:
- Adjoining rooms or configurable spaces for cribs or remote work;
- Technological enhancements and IoT integrations;
- Connected rooms with shared common areas;
- Key amenities like a jacuzzi, terrace or private pools;
- Unique furnishings or curated artwork;
- Proximity to the elevator;
- Proximity to amenities;
- View orientation or high floor versus low floor;
- Club or loyalty floor access;
- Kitchenettes or in-room laundry;
- Enlarged work desks or workstations;
- Themed or named suites;
Maybe we do need to apply the brakes as most hotels are still recovering and trying to grow occupancies, with ABS seemingly like a ‘nice to have’ rather than a ‘must have.’ So, why now for ABS?
In a word: Airbnb. Notably, with its IPO and the treasure hoard of fresh capital, this lodging behemoth will have an increasingly significant influence on guest expectations, particularly as one of its advantages is in how it promotes the unique features within each listing to drive more users to the website.
Put another way, accommodations sold via Airbnb are perceived as more exceptional than what a prospective guest will find through an OTA or by booking direct on a brand.com. This makes searching for the right room, apartment or house a fun activity in its own right—what we call the ‘sense of discovery’—while at the same time giving users a higher degree of confidence that the platform will have an accommodation that suits one’s specific needs or travel behaviors.
Airbnb may list a few standard double-bed hotel rooms or king-bed private rooms to appease the midweek corporate traveler who fits the typical ‘heads in beds’ mold. But the platform also has a vast assortment of villas to host mid-sized groups with their own common spaces as well as ‘ghost hotels,’ which are mostly just Ikea-furnished condominium units with a full kitchen and on-site laundry.
In other words, what makes Airbnb so powerful is its flexibility in accommodating a worldwide emergence of travelers who are fed up with the cookie-cutter big box hotels and how each of its listings comes with its own set of features or attributes. Scarily for hotels, this becomes a bit of a positive feedback loop. As more consumers opt to use Airbnb, they come to expect both more unique accommodations across the board, as well as the ability to query based upon specific attributes.
Thus, if hotels and resorts want to survive in the coming decade, they have to adopt an ABS model, where it’s no longer just about the bed size that influences booking and the rates that a property can command, but also any number of other in-room features.
Luckily, many properties already have many exceptional room types; it’s now a matter of coding them as such in the PMS or CRS and giving customers the ability to search in an ABS fashion (and not just the traditional rooms-first manner).
Thinking in terms of an ABS model, Airbnb’s market cap is less a signal of its strength as a pure accommodations company and more as a data company. This is because with each new search and reservation put through its ABS-oriented inventory database, Airbnb is better than its competitors at learning about what each traveler’s accommodations preferences are. It can then leverage that data to develop more accurate travel recommendations and predictions about what other travel-adjacent or non-travel products its users will want in the future. Ultimately, it is the value of this data that will lever further partnerships and greater use of their platform.
As a trend that the pandemic has only accelerated, gone are the days where your guests are content with merely a standard, cookie-cutter hotel room. Guests want variety; they want their lodgings to feel different from one territory to the next, perhaps even from one floor to the next!
And therein lies the opportunity for hotels to not only appease this burgeoning trend, but also to boost ancillary revenues, position rooms for better ADR growth and increase the overall segment diversification for long-term asset stability. ABS is a necessary evolution for our industry, so best look to the world leader in accommodations to see what else you can learn.