In this Pegasus partner report, George Roukas with Hudson Crossing examines what attribute-based shopping is, what it means for hotels, and what benefits consumers can expect from this new technology.
Background
Two modes of shopping commonly carry the name attribute based shopping (ABS). In the older form, widely used today, a consumer begins by choosing a hotel and stay dates and receives a list of rates. These rates correspond to combinations of room types and rate plans and each combination has a price.
Both the room type and the rate plan for each combination have attributes. For example, a room type might have attributes like the bedding, maximum guest capacity or whether it has a view or a balcony. Rate plans have attributes like cancellation policies or the inclusion of certain features like meals or prepaid Wi-Fi.
Consumers are not searching for those specific attributes, rather they’re filtering what’s been retrieved to find the best specific room type and rate plan for their needs. We’ll refer to this older mode as attribute-based filtering.
In the new attribute-based shopping model, consumers don’t see the room type or rate plan combinations; they see a list of attributes they can put into a shopping cart to build the product they want. For example, if Jon wants to stay at a particular hotel with his wife and they’re interested in a king bed with an ocean view and a balcony, then he can specify those attributes without knowing the room type or the rate plan. Each time he adds an attribute to the cart, the ABS engine prices that attribute separately and the consumer can see how each attribute affects the total price of the room.
What’s going on behind the scenes is very different from the attribute-based filtering example. With attribute-based shopping, the hotel is not promising any particular room type or rate plan. It must determine the price at which it will offer each attribute, based on the total inventory in the property that meets the consumer’s needs. As each attribute is added to the cart, it narrows the list of rooms that can meet the consumer’s need, so the CRS in real time must determine the price of that next attribute going into the cart and whether there are any rooms that meet the request.
This has two immediate effects: First, it allows the consumer to choose exactly what they want to pay for and nothing more. Second, by giving the hotel more flexibility in how it meets those needs, it could offer the consumer a lower price than for a specific room type or rate plan all while earning higher overall revenue. If the hotel has flexibility in terms of the room types that can be assigned, there are opportunities to optimize the room assignments and improve conversion. For example, consider the below ‘traditional’ availability chart. For simplicity, let’s assume these are the only rooms in the hotel.
Application
First, let’s assume we’re shopping in the filtering model and we present the consumer with room types and rate plans that include the below options in the chart. If the consumer is interested in an ocean view king that has Wi-Fi and is cancelable, she will choose room 1001, thus removing it from availability for those nights. If the next consumer wants a king room with ocean view and a balcony, there is no room left that meets his needs. The second traveler may continue with a different product but they may also search other hotels or chains or other types of accommodations (home sharing) to meet their needs.
