In this 3-part series, Pegasus partners with Hudson Crossing to examine what attribute-based shopping is, what it means for hotels, and what benefits hotels and consumers can expect from this new technology.
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By George Roukas, Partner, Hudson Crossing
In a recent article, we introduced and explained the newest iteration of attribute-based shopping (ABS), which is technology that allows guests to choose from a list of attributes to build the hotel experience they want. This reimagined booking flow functionality stands out from today’s widely used model – attribute-based filtering – because it no longer simply sorts customers’ desired attributes in a reactive way, based on a specific room type and rate plan. Instead, ABS now allows customers to proactively search for attributes at the beginning of the booking experience, regardless of room type or rate plan. This build-your-own method allows consumers to choose exactly what they want to pay for and nothing more, while giving hotels more flexibility. The financial benefits exist on both sides of the transaction; customers can pay a lower price than for a specific room type or rate plan, and hotels gain opportunities to earn higher overall revenue.
In Part 2 of our attribute-based shopping series, we’ll examine the widespread impact of ABS on hotel systems. How will ABS functionality change the way hotels engage with the booking process via their existing systems?
Central Reservation System (CRS): While changes to the CRS will likely be significant, they will be incremental. ABS functionality will not require a complete refactoring of the current data model, and for the foreseeable future, the room type and rate plan filtering model and the attribute-based shopping model will continue side by side.
Property Management System (PMS): The greatest impact on PMS is that hotels will no longer be able to hold inventory at the property level without fully exposing it to the CRS. The CRS will need a complete view of inventory, both allocated (for traditional shopping) and unallocated (for ABS shopping.) Many of the internal functions for PMS, such as housekeeping scheduling and room assignments, will also have to adapt.
Room assignments: Traditional room assignments today are often manual processes and done the day or evening before check-in. In the ABS world, room assignments are the result of an optimization algorithm that will have to run at the CRS level with full knowledge of all inventory that will be sold through ABS. Assignments would ideally be run before each room is sold, though it may be possible to use approximations that will work between optimizations.
Pricing: Today’s revenue management systems operate with RT/RP in mind. Adopting ABS will require new processes to price attributes based on attribute inventory, forecasted demand, and other factors unrelated to RT/RP combinations.
Loyalty systems and CRM: ABS offers a unique opportunity to morph loyalty programs into something much more effective and specific to the consumer. With ABS, hotels can now see exactly what their customers really want when they’re not being forced into the RT/RP combinations available today. Hotels will be able to tailor offers in the moment, based on earlier attribute purchases combined with current behavior.
Internet shopping: CRS-connected internet booking engines are the likely first place ABS will appear but GDS will be able to offer it as well. Because ABS must be done at the CRS level and the CRS must work with the pricing, room assignment, and loyalty functions in real time, it’s not possible to push attribute prices to an OTA cache through an ARI upload. That means that the bigger OTAs that shop their own caches Pcan’t offer ABS—only entities that shop directly through to the CRS will be able to do it. OTAs that cache will be restricted to offering the conventional RT/RP options they do today.
Rate comparison shopping: ABS presents a problem and an opportunity: It’s a problem in that hotels will not be able to compare ABS pricing with competitors, though they will still be able to compare RT/RP products as they do today. It’s an opportunity since hotels will be able to offer lower priced ABS products without the bigger OTAs or other distributors claiming they’re not getting the best available rates. The ABS model can’t be compared to RT/RP products, nor can it be effectively rate shopped because of its fully dynamic nature and the huge number of possible attribute combinations.
What can hotels can consumers expect from ABS technology? In Part 3 of the ABS article series, we’ll explore and summarize benefits.
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