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Merchandising the Room: New Possibilities for Personalization within Hospitality

July 5th, 2017 | Posted by APT in Hospitality & Travel

Retailers are no strangers to refining their assortment of merchandise, but this concept is new territory for hotels. Traditionally, many hospitality brands have had a largely uniform product offering – standard rooms with minor differences in amenities, and varying tiers of suites – but now, their business model is shifting. Hotels are beginning to “merchandise the room” through customized design and amenities to provide guests with greater choice and appeal to different guest segments.

Hotels have historically focused on personalization through targeted marketing intended to drive bookings. However, research shows that now, in the face of industry disruptors like AirBnB, 27 percent of hotels are rethinking hotel and room design to be more “apartmentlike.” As a result, personalization is becoming increasingly oriented toward the room experience, as hotels seek to provide amenities and services catered to guests’ specialized lifestyles.

This approach of merchandising the room is still developing throughout the industry, but has already manifested in the form of a variety of room offerings. For example, Hilton is bringing fitness directly to its guests with a new category of rooms equipped with workout gear, while Westin has partnered with exercise bike company Peloton to offer stationary bikes in-room in some locations, along with live-streamed studio cycling classes. Some brands also offer hypoallergenic rooms that are cleaned more frequently, while others have begun to offer a limited number of luxury rooms within budget-brand hotels.

Hotels are also innovating by offering cutting-edge gadgets to appeal to tech-savvy guests. So far, these include devices such as intelligent assistants – software that uses artificial intelligence to perform different tasks – to emulate guests’ at-home Amazon Alexa experience, and smart speakers, which Marriott is testing in some locations. One app now even allows guests to personalize the length of their stay down to the minute, so they are checked in exactly as long as they want to be.

As hotels seize on the opportunity to merchandise the room, they must also carefully tailor their offerings. With the variety of new room options available – and more innovative ones surely in the pipeline – executives need to ask themselves several key questions before investing in a new room category introduction:

  1. What types of rooms should we offer?
  2. What specific amenities should be included in each new room category?
  3. In which locations should we offer this category of room?
  4. How should our room inventory vary by location?
  5. To which guest segments should we market the new room offering?

Hotels can answer these questions through business experimentation, by testing different iterations of new room categories in different locations. By determining which rooms have the greatest overall positive impact, and in which locations, hotels can make informed decisions on where to roll out new room categories for maximum profit – as well as which variations of room inventory will be most effective in driving guest satisfaction. They can also leverage this approach to refine the messaging of marketing efforts around new offerings, to ensure they reach the right guest segments with the right outreach.

For example, consider a hotel that wanted to introduce a new, fitness-oriented room category that would feature workout equipment in-room. Understanding that there would be significant upfront costs required to roll out this room category, the chain could first implement fitness rooms in a subset of their hotel locations, and compare their performance against that of other, similar hotels that did not receive the new fitness rooms.

Based on these insights, the hotel could achieve a full-picture view of not only whether the room category was successful, but where and by whom it would be best received, as well as how it can be improved. The chain could also develop an understanding about the new category’s long-term impact on guest stays with the brand. For instance, a guest may be satisfied by a stay in a room from a new category, then, due to this positive experience, plan future stays at other brand locations. In this case, analysis can unlock insights not just on how the new room impacted that individual property, but also how it is affecting the guests who experience it over time.

Overall, as hotels embrace new possibilities for personalization and work to merchandise their rooms, taking the Test & Learn approach of experimenting with new room categories before broader rollout will help inform their efforts and drive both financial success and guest satisfaction.

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