As per the title, the point here is to explain why attribute-based selling (ABS) is mission-critical for 2021 and the decade ahead. To properly understand this, though, we must first look at a landmark event in hospitality that occurred in early December 2020.

We all watched the Airbnb IPO as the home sharing platform debuted to a $100+ billion market capitalization on its opening day. For reference, that's more than its closest compartment of Booking Holdings at roughly $85 billion or the likes of Marriott, Hilton, IHG and Wyndham combined. Understanding what led to Airbnb's gargantuan valuation will help tell you the direction of traveler behavior and what you need to do in the coming years to stand a chance against this industry titan.

Some might be quick to shrug off Airbnb's stock price as mere post-pandemic tech company hype. After all, the company doesn't own (yet!) any of the inventory listed on its platform, so in that regard it's no different from an OTA or a major brand which only takes a paltry ownership stake in any of its flagged properties. But unlike other recent IPOs in that sector, Airbnb has an easily digestible USP for consumers that's evident by analyzing its loyalty metrics versus competition.

Without getting into the numbers - which can verify yourself through a number of third-party resources like Transparent - Airbnb users spend more time on its website than users on an OTA or a and they are much more likely to arrive directly onto the website instead of coming via a Google search, referral or paid ad. So, why are Airbnb users more loyal? Why has it quickly become the platform of choice for accommodation searches?

Perhaps you answer these questions by saying that Airbnb has a better user interface than others, both for desktop and mobile. Or maybe it's the two-way rating system which engenders a profound sense of trust between host and guest. A third explanation might be that Airbnb isn't the actual operator, thereby enabling it to keep costs down, even while scaling, because it doesn't have to allocate cash towards operations like a front desk or concierge. Drill deeper, though.

Listings on Airbnb are perceived as more unique and more exceptional than what one will find through an OTA or by booking direct. This makes searching for the right room, apartment or house a fun activity in its own right - what I call a 'sense of discovery' - while at the same time giving a diverse range of users a higher degree of confidence that the platform will have an accommodation that suits their 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 midsized groups with their own common spaces and 'ghost hotels' which are mostly just Ikea-furnished condominium units with a full kitchen and onsite 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.

This becomes a positive feedback loop. As more consumers opt to use Airbnb, they come to expect more unique accommodations across the board and have the ability to query based upon specific attributes, rather than still viewing this as a value-add.

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 but also any number of other in-room features. 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 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
  • Fireplaces

This is just a broad and brief start of the attributes that hotels should start to consider for promoting and upselling their products. Important to understand is that 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.

Gone are the days where your guests are content with merely a standard, cookie-cutter hotel room. They want variety; they want their accommodations 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 popular trend but also boost ancillary revenues, position rooms for better ADR growth and increase the overall segment diversification for long-term asset stability. It's a necessary evolution of our industry, so best look to the world leader in accommodations to see what else you can learn.

Larry Mogelonsky
Hotel Mogel Consulting Limited

View source