ABS Performance Results Are In
YoY Upselling Revenue and Number of Transactions Accelerates
At ITB Berlin we officially announced our ROOMDEX ABS Upselling product for hoteliers. But as of the beginning of February, five hotels located in the U.S. and Europe have been using our ABS solution on site at their properties. The initial results are in and we can’t wait any longer to tell you how it’s been performing. We are beyond excited – and we think you will be too.
What exactly do we mean when we say “ABS”?
Before we dive in, let’s recap exactly what we mean when we say “attribute-based selling.” In its purest form, ABS is about selling individual room features that are immutable and attached to the room – not room services. For example, this would include (but not be limited to!) items such as bedding configuration, square footage, a particular room layout, specific views, a fireplace, a balcony, high ceilings, or even distance to the elevator. All are attributes that are completely fixed and “glued” to an individual bedroom.
Some property management systems and distribution systems claim to support ABS because they can presell things besides rooms. However, these systems are usually more a form of dynamic packaging than attribute-based selling. Similarly, many hotels allow a guest to “request” specific room features but not only do they require manual intervention to fulfill, fulfillment is never guaranteed nor are the items dynamically priced based on demand.
ABS has been talked about much in the industry but has never been realized due to technological challenges. Some say that in a true ABS ecosystem, the PMS, RMS, CRS, booking engine and even the OTAs all need to be transformed to truly sell by room attribute.
Our approach has been to focus on the primary goals of ABS, namely improved hotel revenue and a better, more personalized user experience. The question was, can we achieve the benefits through the existing room category-centric hotel tech stack? The answer is yes.
ROOMDEX ABS Upsell Pilot: The results are in – and we are beyond excited
To do achieve our goals, we had to create a proprietary means to calculate attribute availability and price.
The good news was that we had already established a way to determine True AvailabilityTM in our launch version of automated upselling. True AvailabilityTM is a determination and forecast of the real operational availability of specific rooms at any given time. With our deep, 2-way integration with the PMS, we can accurately determine which rooms are not only safe to upsell into, but also safe for early arrival or late departure. With this algorithm, we can now sell and place guests into specific rooms with ZERO operational conflicts.
For price, we had already established demand-based dynamic pricing for room type upgrades. We then extended this capability to an automatic pricing of each room’s attributes. Specifically, this means that the price of, as an example, a balcony, will vary based on availability, demand, persona, other attributes selected and more.
Of course, with any new product, our ABS solution had to fly the nest, beyond the office walls and out into the real world. Five hotels, already clients of ROOMDEX, jumped at the opportunity to road test ABS at their properties. We now have over 2 months of performance data that we can compare YoY to our standard automated upselling.
The number one burning question is, of course, revenue. Has ABS delivered? The simple answer is, yes. All five hotels shown a positive increase in revenue, on average of 14% YOY*. All hotels experienced an increase in YoY upselling revenue for the period.
*Please note: All hotels partaking in the ROOMDEX ABS upsell pilot are all customers of ROOMDEX and have been using the ROOMDEX upsell platform for 1 year or more. This allows for direct YOY comparison of performance. The current performance results are bona fide with no optimization or tweaking of the product occurring or completed during the pilot phase. It should also be stated that the ABS on-site pilot has not caused any operational issues, including assigning rooms etc.
What was most interesting is that 32% of all ABS upsell revenue was directly attributed from upsells within the same room category. So, while 55% of guests upgraded to a higher room category via ABS, 45% of guests purchased an upsell within the same room category. That means the sale of an attribute associated with a specific room in the hotel. For example, within a single room category, you may have rooms: close to the elevator, or away from the elevator; on a high floor or low floor; near an amenity like the gym or the laundry; with a specific view, etc.
At the same time, the number of upsell purchases increased by 36%. This new level of engagement speaks to the popularity of personalizing your stay. Naturally the next thing everyone wants to know is what exactly did guest purchase? Initial results reveal that 45% of all guests purchased two or more features or room attributes via ABS. 40% of guests selected “a nicer view” as part of their overall purchase. Similarly, 29% of guests’ purchase included a higher floor. Other attributes purchased included a nicer bath/shower facilities and perhaps the most unforeseen popular feature purchased was…hardwood floors! The hotel in question was just as surprised at this as we were!
Are guests willing to pay extra? With a 36% increase in room related purchases over traditional room category upsell, we can conclude guests like purchasing by attribute. By offering and selling individual room attributes gives the guest a greater sense of control over their stay experience. There is higher level of engagement - guests enjoy managing and enhancing their stay.
With all the efforts hoteliers put into trying to determine what guests value through surveys and loyalty preference, it turns out the easiest way is to let guests purchase the attributes they like best. ABS reveals true guest preferences as well as a wealth of opportunity awaiting hoteliers.
The results also indicate that traditional room category names may not be merchandising the value of your hotel as well as possible. Need we mention the hardwood floors again? Room type names only imply value to the guest, whereas room features directly convey value to the guest. Your hotel likely has a plethora of attributes hidden in its room descriptions. ABS brings the best of your hotel’s investments to the forefront of the conversation. It re-imagines hotel inventory merchandising, allowing you to sell unique features of individual rooms. In doing so, you better align your customer needs with your property amenities – even with the same room type – and in the process you reap more revenue for features that were otherwise “bundled” under a room type name.
ROOMDEX ABS Performance: Conclusion
ABS works – it is the next logical step forward in hotel retailing, distribution, and fulfillment.
Hoteliers always try to guess what their guests want, and ABS does this for you. Guests have the opportunity to build their perfect room product for themselves and will happily pay for those features they want. For hoteliers, ABS improves upselling conversion and cart value and ultimately delivers more hotel revenue.
Curious? Skeptical? We want to hear what you think.
