Hotels Test Custom Room Rates That Appeal to Guest Tastes

If you’ve ever shopped on a hotel’s own website for a room, you may have seen vague descriptions like “standard,” “deluxe,” and “premium” — along with photos that may or may not represent the amenities and traits of the particular guest room you’ll stay in. The vagueness causes confusion, which is why many hotel executives are talking about moving to a more customized booking process.

In a new survey, 85 percent of respondents found the traditional method of booking hotel rooms created “uncertainty.” The study of 1,000 U.S. travelers was released last week by the New York University School of Professional Studies Jonathan M. Tisch Center of Hospitality (NYU) and was sponsored by software maker Stayntouch.

Some hoteliers are testing a booking process called attribute-based pricing. In this approach, a traveler picks the things they want in a room — such as a king-size bed, extra-soft pillows, or a location on a high floor and in a quiet zone of the hotel — à la carte. Once they’ve selected a bundle of options, the hotel provides a custom price.

The biggest adopter of attribute-based pricing is IHG (InterContinental Hotels Group), which uses technology from Amadeus to do it. Earlier this year, about 95 percent of properties completed detailed room inventory assessments in preparation for the full rollout.

“We have set up the foundational aspects, which required us to touch every single hotel around the world and organize their data,” said IHG CEO Keith Barr in February during an investor call. “Now we’re beginning to a phased rollout of that, which will basically enhance the booking and searching experience for our guests and will be driving incremental revenue to our owners as it progresses. But it’s still early days.”

The ultimate goal is for guests to be able to choose specific room characteristics when booking systemwide across IHG’s network.

The NYU survey implied that luxury hotels may stand to benefit the most by adopting the new techniques. Among travelers who pay $251 or more per night, 63 percent of respondents were willing to pay more for preferred room features via newer booking paths. Consumer interest dropped off the simpler their needs.

Many hotel leaders remain wary of the change, however.

“The number-one question that comes up is ‘Is this going to turn people off because there are too many options through the booking process?’,” said Klaus Kohlmayr, chief evangelist and development officer at IDeaS, a maker of revenue management software.

A simpler alternative might be to offer customers a few bundled offerings instead, Kohlmayr said, during last week’s Hospitality Industry Technology Exposition and Conference, or HITEC, in Orlando.

Either way, hotels would have to change some of their business processes to accommodate the new booking method.

“Attribute-based selling slightly changes the typical hotel operating model,” said Michael Heflin, chief revenue officer for Stayntouch. “Today prices are set by market dynamics and rate categories. Tomorrow it’s about what it actually costs to service any room in the hotel at a base minimum, such as knowing if you have housekeeping staff to support it. Costs to fill a room become your base price.”

Changes would also require cooperation among a hotel’s property management system, its central reservation system, its website designer, and revenue management tools.

“Attribute-based booking can’t work if systems only share availability, rates, and inventory to third-party channels,” said Kevin King, the chief operating officer of software maker Shiji, during a recent Skift interview. Shiji has endorsed attribute-based booking and said it’s working to test it with some of its partners.

But integrations between flexible systems can enable even small, independent hotel owners a chance to experiment with attribute-based selling.

Hotels will also have to be better at making sure they’re fulfilling their promises when their promises get more specific. Did the customer that asked for a “great view” actually get one?

Given the technological and operational challenges, any adoption of customized booking processes would take many years.