The public’s understanding of room types may be limiting hotel revenue potential.
Hoteliers love their room types and think that their guests do too. But the fact is that standard rooms are the most popular room type booked by guests. If people love premium room types so much, why are there so few of them and so few premium bookings? The fact is that most people don’t love interesting room types – they love the lowest cost room available. The typical rationale is that anything more than standard is not needed – a waste of money perhaps.
A sizable portion of consumers feel uncomfortable purchasing premium products or services, such as a premium room (even if they can afford to) because they believe it is a privilege which is undue and undeserved.
When encountering room type names with words like, Deluxe, Premier, Luxury, Suite, Parlor, Executive, Chairman’s, Presidential, it is easy to see how many believe that such luxury is excessive given that they are most likely in town for something other than staying in the hotel.
A consumer’s perception of what the appropriate price is has been made even harder by the power of the OTAs. With rate shopping, OTA’s promote direct cost comparison by establishing price as the single differentiator. As such, consumers have become conditioned to think “price first.” – The hotel room shopping experience is just not designed to prioritize experience over price.
Re-Framing Value: What Attribute-based Selling (ABS) Can Do
We know that guests are fixated on price – and of course, price will always matter. But, hotels have the opportunity to reposition price as just one factor of their overall decision. Instead of the traditional method of offering rooms by room type – where consumers routinely end up picking the lowest priced option – with ABS hoteliers can “unbundle” room inventory and merchandise individual attributes of a room to the guest. This new shopping experience benefits both guests and hoteliers:
- Guests can now easily correlate price with things they truly value – the tangible features and unique room attributes. Guests have the choice to spend their money on the bundle of features that gives them the most pleasure.
- With ABS, hotels can monetize more of their assets and in the process increase the perceived value of their product without increasing their objective costs.
- Room features that currently go unnoticed now drive differentiation and minimize direct price comparison for products that are actually different.
Any marketer can tell you that the presentation method of an offer, product, or service, can make a huge difference in our decision-making. For a hotel, your room product might just be the “best,” but it won’t be the best if the consumer can’t see its value. To the consumer, it is just another room. Something needs to be done to better showcase – and derive appropriate value from – our premium rooms. ABS holds the answer.