In the ever-evolving landscape of hospitality, staying ahead of the curve is essential. That’s why at Hospitality Labs we are proud to introduce this edition’s guest contributor, Fermín Carmona Fernández, CEO of Hotelverse . 

With over two decades of experience driving innovation in our industry, Fermín brings a unique perspective on the transformative power of technology in redefining guest experiences and boosting profitability.

In this article, Fermín dives deep into the world of Attribute-Based Selling (ABS) and Digital Twins, exploring how these emerging technologies are set to revolutionize the way we approach hyper-personalization in hospitality. If you recall, we previously explored the concept of ABS in one of my earlier newsletters, highlighting its potential to offer more personalization and flexibility to guests. 

Now, Fermín takes this discussion to the next level, providing a practical look at how these innovations can be applied to enhance guest satisfaction and create new revenue streams.

Let’s explore together how these advancements can propel our industry forward.

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Fernando Vives 

The Hotel Revolution: How Attribute Based Selling and Digital Twins Are Boosting Profitability by Redefining the Hiper-Customization.

Do you think the industry has already reached its peak profitability? You might be surprised to see how technology can open new revenue streams through hyper-personalization. 

The hospitality industry is evolving rapidly, and the perfect match is within reach – if we avoid stumbling along the way.

In the hotel industry, technological evolution is redefining how bookings are managed and revenue is optimized. Attribute-based selling (ABS) and digital twins are emerging as key tools for hyper-personalizing hotel stays, transforming the guest experience, and creating new opportunities for revenue and differentiation. For years, technological and process legacies have weighed heavily on the industry, hindering progress toward a transactional customer experience comparable to retail or streaming platforms like Amazon and Netflix.

Innovation and Disruption: Opportunities for the Industry

The introduction of attribute-based selling and digital twins is driving significant disruption in the hotel industry. This innovation presents a consumer-centric vision of opportunity, where personalization and transparency become fundamental pillars of the guest experience. The ability to fully customize a stay based on specific preferences not only enhances guest satisfaction but also offers hotels a significant competitive advantage.

Hotels need unique value propositions that intermediaries cannot replicate and that they can offer exclusively on their websites. 

The ability to select a room based on specific attributes and visualize it through a digital twin is a significant differentiator. This tool not only enhances the guest experience but also capitalizes on the "billboard effect," where guests visit the hotel’s website before booking on an OTA and end up booking directly on the hotel’s website.

This disintermediation approach not only reduces commissions paid to intermediaries but also improves the hotel's overall profitability. Moreover, the ability to sell specific room attributes and numbers adds incremental value, directly increasing per-reservation revenue.

The New Era of Revenue Management

Traditional revenue management has focused on maximizing revenue through dynamic pricing strategies and inventory management, sometimes personalizing offers but always with a one-size-fits-all approach using room typologies. 

However, the new trend towards attribute-based selling is taking this practice to a new level. Now, technology is enabling hotels to offer supplements for specific room attributes, allowing guests to customize their stay to an unprecedented degree. 

From selecting the exact room number to choosing the precise balcony views, noise level, floor, size, bed type, and more, guests can build their ideal product and pay for the added value they themselves have created – a simple price=value equation that the industry had not yet managed to solve.

This hyper-personalization capability not only enhances the guest experience but also opens new revenue streams beyond traditional upselling. Hotels can charge additional fees for specific personalization options on already purchased products, thus increasing the average ticket and, ultimately, the GOP (Gross Operating Profit). Studies indicate that guests are willing to pay up to 10% more for the ability to select specific room attributes, which can translate into a significant increase in GOP, reaching up to 30%.

Comparison with the Airline Industry

To better understand the potential of attribute-based selling in the hotel industry, we can look at the evolution of airlines. In this sector, particularly low-cost airlines, up to 50% of GOP contribution comes from the sale of extras like seat selection or extra baggage. 

Passengers pay, on average, an additional 5% to choose their seat on flights that are typically less than three hours long. Moreover, more than 30% of passengers already opt for this personalization, paying for a product based on avoiding discomfort 

Nobody wants the middle seat. In comparison, leisure hotel guests spend an average of two nights in city hotels and more than five nights in vacation hotels, often with several occupants per room, making hyper-personalization of their room far more valuable than a three-hour flight.

How could you implement similar strategies in your hotel to increase revenue and enhance guest satisfaction?

Digital Twins: A Window to Reality

Implementing digital twins in the hotel industry is revolutionizing how consumers interact with properties. These virtual models allow guests to explore the hotel and its surroundings in detail and with transparency. They can see the nearby beach, gardens, restaurants, and even specific room details, such as the amount of sunlight they receive or how quiet they are. This detailed visualization allows guests to make more informed and rational booking decisions, resolving uncertainties. Here lies an opportunity to generate additional revenue by offering specific room selections.

Furthermore, digital twins can also be used during check-in, redefining the current upselling experience by showing guests the exact location of their current room, its views, and its location within the resort. 

This offers a great opportunity to perform real-time upselling, showcasing other available rooms (within their category or others) and their characteristics, generating additional revenue instantly in a streamlined, frictionless check-in and upselling process.

Imagine the impact on guest satisfaction and the loyalty tool this could become.

A New Paradigm of Marketing and Customer Acquisition

Attribute-based selling and digital twins are generating a new product and segmentation variable that goes beyond the simple concept of a hotel. This hyper-personalization allows for marketing conversations based on specific lodging experiences, moving away from generic offers and creating a deeper connection with the guest.

Today's guests demand real personalization that reflects exactly what they are buying. Traditional personalization has focused on promotions and experiences, but the new trend targets the product itself: the hotel room and its specific attributes.

What impact will offering a unique and transparent personalization experience have on your marketing strategies?

Challenges and Technological Solutions

Despite the clear advantages, implementing attribute-based selling and digital twins is not without challenges. The hotel industry must balance the management of room typologies with attribute management, ensuring both operate efficiently and commercially viable without ending up with 70 combinations of room types and attributes in PMS and channel managers – something that is entirely unmanageable. 

This is where technological platforms and APIs play a crucial role. Agnostic booking engine and property management systems (PMS) solutions can standardize business intelligence applied to distribution, pricing, and operations, enabling seamless integration with layers of attribute and product intelligence. This will drive widespread adoption by allowing any platform to embrace this new approach without having to replicate these business rules on their own platforms.

The hospitality industry has a large legacy and a vast array of technology providers, far from the reality of other travel industries like airlines, where five major technology players and 30 airlines cover 80% of the offer and technology.

The hospitality industry is a patchwork of thousands of owners, managers, franchisors, and technology players with significant market shares in different countries. The industry's complexity makes the mass adoption of new technologies challenging.

Leading technology players like Amadeus and Sabre Corporation are paving the way by offering attribute-based selling functionalities, collaborating with renowned hotel chains such as Marriott International , Hilton , Accor , and IHG Hotels & Resorts . 

These alliances are creating an industry standard that accelerates the adoption of these technological innovations. 

Meanwhile, new technology players are democratizing access to attribute-based sales and digital twins through API platforms that integrate with major market players like Oracle , TravelClick , Mews , and EY, among others. As a result, companies like Radisson Hotel Group , Hyatt , Barcelo Hotel Group , and Iberostar Group , along with small chains and independent hotels, are starting to offer the option to request specific room numbers and personalize attributes, generating new revenue streams.

The wheel is starting to turn, but is the industry ready for this massive change in its marketing and operations? We will see in the next 2 to 3 years.

The Complexity of Implementation

High staff turnover in front desk teams and resistance to change in processes established over decades represent obstacles. However, training and the gradual implementation of new technologies can mitigate these challenges, facilitating a smoother transition to more advanced management methods. Here, AI is paving the way for the evolution of distribution and pricing strategies as well as inventory management in distribution and during the hotel stay.

The industry must evolve towards pricing based on attributes and room numbers using new algorithms that consider product indicators, segmentation, and user navigation. This will allow for more precise and efficient offer optimization, aligning prices with the value perceived by the guest.

Conclusions and Final Thoughts

Attribute-based selling and the use of digital twins are transforming the hotel industry, taking personalization and revenue management to new horizons by leveraging guest satisfaction. As technology continues to advance and the industry adopts these new approaches, hotels that implement these tools will be better positioned to offer personalized experiences and maximize their revenue. In an increasingly competitive market, the ability to differentiate through hyper-personalization and transparency will become a key success factor.

The hotel industry is at a turning point, and those who embrace this technological transformation will not only improve their profitability but also set new standards of excellence in the guest experience.

Are you ready for the new era of hospitality where every detail of the stay can be personalized to the maximum?

Fermín Carmona

CEO@Hotelverse

About Fermín Carmona

Fermín Carmona is a trailblazer in the hospitality industry, leading Hotelverse as its Founder & CEO. With over two decades of expertise, Fermín has driven innovation in hotel revenue, operations, product R&D, customer experience, data analytics, marketing, sales strategy, and e-commerce technology. He has held senior roles, including positions as Senior Vice President at leading hotel chains, leading teams across 12 countries and collaborating with C-suite executives, contributing transformative insights.

Currently, Fermín leads the shift towards hyper-personalization and profitability enhancement in his role as co-founder & CEO of Hotelverse, a company specializing in room number selection and attribute-based selling using digital twins through API technology. He is also a renowned industry speaker and a dedicated advocate for hospitality advancement.

The views and opinions expressed in this newsletter are solely those of Fernando Vives and collaborators and do not necessarily reflect those of any company or organization he works for or is affiliated with, nor those of their partners or suppliers. The data sources used are mostly public, ChatGPT may have been used for research assistance, copywriting or editing. If you find any discrepancies or errors in the data or insights shared, please reach out via LinkedIn for necessary adjustments. Thank you for following and being a part of this community