When it comes to choosing among several options like a long list of hotel rooms and rates, each with its own pricing point, conditions and inclusions, human psychology plays (again) a big role.
The problem is that most times we, hoteliers, do the opposite of what is needed. By far, the Paradox of Choice is the trap we all fall the most into.
The Paradox of Choice is, indeed, a paradox by which we tend to believe that the more options we present in front of our prospective customers, the more chances we have to turn that prospect into a paying guest.
Perfect recipe for disaster.
In fact, when facing too many options, our human mind gets scared, it literally and subtly freaks out, because it simply can’t handle, filter and digest so much information.
The result? Prospects running away, abandoning any tentative to even understand what the hotel is really offering and moving to the next available (and easier to understand) option, being it another channel (OTA) or another hotel.
In another video, which can be considered a sort of prequel of this present article, I presented some examples of hotels displaying too many room-rate combinations, which made it difficult for any prospect to choose from.
In that video I also mentioned that I would suggest every hotelier not to exceed 20 up 25 pricing points for any given booking search, no matter what the booking criteria are (selected arrival and departure dates, adults, children).
If this Paradox of Choice principle sounds too “psycho” for you, consider that the OTAs know it too very well, and make it work for them rather than against them.
In fact, even if you have more than 30 combinations of rooms and rates in their extranets, when showing them to their users, the OTAs barely exceed these 20-25 options. Sure, sometimes it still happens, but that’s the exception that proves the rule.
Why we fall into the Paradox-of-Choice trap?
It’s human nature: the less we know how to be specific, the more we tend to broaden our options, in the attempt to consequently broaden our chances to win the guest.
So now that we’ve understood that we should be doing the exact opposite, how can we limit our hotel proposition of rooms and rates, without offering too little, yet offering something of value that is not too limiting?
That’s exactly what we will be talking about in today’s post. So without further ado, let’s dig in.
The data-driven way.
A product is a combination of room and rate. And each product comes with a price.
So, first, we need to detect all the products that do not perform, because these are the ones that we can get rid of.
Now, the important thing to remember is that performance is not equal to number of reservations.
When talking about performance, we refer to what can be translate as appealing.
So why not the number of reservations? To me, one of the biggest misleading practices in revenue production based decision. Ultimately, revenue is pure math or mostly met, meaning that changing a single variable of the equation, the final result will be totally different.
So this is mathematically speaking, the reason why I don’t necessarily trust production based decision because they lack certain variables and number of reservations is a production based value that doesn’t really tell us anything about the actual demand.
So meaning all those other users potentially interested in our hotel who bounced and didn’t complete the reservation.
So to media appealed formula looks like this appeal equals product bookings divided by product views. So product booking is simple as that as the number of bookings are received for a specific product.
While product views is the number of times that that product has been viewed.
Put another way, a simple version of the equation is appeal equals product conversion rate.
Okay, let’s get practical, though, by pulling out the following report either in Google Analytics or Google Data Studio.
This one is Google Analytics, but the report is sorted by product list views, meaning the products that have the highest number of views are listed on top.
Now the list is way longer, of course, but let’s stick to these 1314 products.
Now let’s start identifying all those products at this hotel didn’t have any reservation for and here they are, which is quite a lot.
Six out of 13 already an almost 50% of the top viewed product that didn’t bring any reservation any business.
These are the first ones to be deleted for the simple fact that the prospects are essentially not interested in these rooms and rate at all.
Now, like I said, though, all those rooms on rates that are not appealing, meaning have a low conversion rate should be deleted to and in the above, for instance, number ten. So C to D minus Dr, which is essentially C to D is the room type.
Dr is essentially day. Great is one of those, even though it generated a reservation.
Now, most times when hotel get one single reservation for a certain product, even on a very long period of time, or they become reluctant to get rid of it with the fear of losing the business coming from that single reservation.
With other understanding. Most likely that reservation would come through anyway, but differently that product may have cannibalized another product now, which are the rules to filter low appealing products because product conversion rate may be enough. So those with a very low conversion rate with litem.
However, if you get a product that gets very few reservations or no reservations at all, but at the same time it also gets very little visibility, meaning a very low number of views you might want to test in more more and waited for it to get more views.
This is why I usually consider two combined value process which products I will delete or not, and these are the ones high number of views in combination with the low product conversion rate.
So for instance, depending on of course, how long the period of analysis is and the size of the tail.
But something like this may be reasonable. Using the advanced filters of Google Analytics, I cannot pull out a report that that least all those products that have respect Idly at least 1000 views and less than zero zero one product conversion rate.
And I keep saying get rid of them or delete them, which may sound extreme to some, especially if you have been offering certain products for quite a long time.
I understand that you might be a little reluctant, but the point is low performing products are essentially low performing, so that is to say, they don’t sell or they barely sell.
So either with least those rooms and rates, or we change them.
And by changing, we need to change the way or what is that make up the real value of that product, which means it attributes. What is the prospects and customers value of your products?
Why do they buy them from you? And the reason is because their attributes, more specifically, the value that you assigned to each of these attributes and how your customers perceive them.
Now, I guess it might be still a little bit confusing.
So let’s see them together. Attributes are at two levels, hotel level attributes and product level attributes.
Hotel level attributes, maybe location, category of details, or the number of the stars, for example, proximity to a certain point of interest AST hotel services, hotel amenities.
There may be many different, many more, but these are actually the most important ones.
Next to them, we have a product level attributes, and these are the ones, for example, room size or the backing type.
So being bed, double bed, the Kings are bad. The price is, of course, an attribute policies.
So cancellation policies and payment policies are attributes, meals included or not. For example, breakfast is it breakfast included is not included.
Helbar full board D and the room specific amenities meaning amenities that changes depending on what kind of room type of room categories you choose.
Now, the difference between hotel and product level attributes stand in the fact that the former hotel product or hotel level attributes do not change based on the room and the rate is selected by the prospect.
Think about, for example, the location or the distance of the hotel at a certain point of interest in your city, then mean the same, no matter whether customers select single or double or advanced purchase rate or daily rate remain the same.
So the sum of the two hotel and product level attributes and the value that you assigned to each of them is what makes up your product Optimizely and what you sell. And this is visually speaking, what I think is best represented.
Now, if the values of attributes a hotel level remain unchanged, well, you can change. Is the value assigned to your product level attributes?
Again, a product is a combination of rooms and rate because you may face a situation where, for example, you have your Deluxe room sells quite well in combination with the advanced purchase rate, but it doesn’t sell at all. For example, in combination with a special offer.
So that the reason why I’ll always talk about products.
I mean specific combination of rooms and rates as opposed to individual rooms on individual rate.
What do you do when you face a low performing product? Generally speaking, do you lower your price? That’s quite common.
And if so, you are changing the value of the product level attribute name, price, you see, everyone has already been doing that.
But what I also want to say is that it’s not all about the price. Now, lowering prices is actually the most common thing.
Everyone does it, but it’s the first thing that pops up to our mind when especially sales don’t go well.
But there is a bunch of other attributes.
Buts though that you can play around with and this is the exact reason of this post, price is often times overrated.
Take me, for example.
All right, so assume I am one of your prospects. Breakfast to me is sacred and breakfast is one of the attributes.
I don’t even stand up in the morning if I know that I’m not going to have my breakfast.
By the way, breakfast to me is not simply a cup of coffee or an express, so it’s way more way, way more.
I’m the kind of guy who would rather pay $10 $15 in $20 more knowing that I’m going to have a propably favorite fast rather than going on budget and settling for what I called dirty water. So called coffee at Starbucks.
Don’t touch my breakfast. Therefore give me breakfast. There is an attribute.
There a value a lot. And if you think I’m the only idiot who thinks this way, oh, if you think I’m the only idiot and therefore it doesn’t make any sense going down this way, then try out the way.
For instance, an upgrade upgrade for free to a higher room category.
So simply put, if your said suffer, it means that you have plenty of room to hell.
So upgrade rather, in a standard room, offer a superior room or Deluxe room as your bottom press room.
So rather than lowering your price, you higher your quality.
Clearly, you need to make clear mention of the upgrade as a super benefit that eventually you’re going to offer only to those who book direct.
So not through OTAs is a bad direct through your site and booking engine.
Now, one more thing, not always the lowest or the cheapest attributes win if you check again, the Screen hotel, the Screen Asia before her below.
Again, no, not necessarily the rate or the product with the lowest displayed price got the highest number of reservations.
Generally speaking, yes, of course, the better the price of the higher possible.
But it’s not always decade.
Think, for example, are advanced purchase rate because the advanced purchase rate usually come with the most restrictive policies.
Cancellation policies, a payment policies, usual advanced purchase rate is not cancelable, no modifiable payment upfront. So there is nothing more restrictive than that.
However, we personally have access to more than 250 or tells the date of more than 250 or ten, and I can see that advanced purchase rate most of the times outperform any other rate, no matter whether Tallis, globally speaking.
But okay, this is the practice on why do we do this? So what do we do this for?
Because the main most frequent argument that are getting return when I suggest doing this thing when I suggest going down, this part of the living and changing products is that removing rooms and rates kind of seems to clash with the fear of losing business opportunities.
Put differently, getting rid of products that goes against the logical thought of offering more to get more like I said before, the less we know how to do something, the more we tend to broaden our options by doing everything or by offering everything so translated.
In our case, the less we know about our prospects and our preferences, the more we tend to offer the vastest set of options for them to choose from, hoping that one of these combinations fit their wishes and needs.
That’s why we end up offering a 30 plus 50 plus 80 plus products through our booking engine. But our brains human brain cannot handle it.
Our brain human brain is like a computer Ram. This is a good metaphor or at a computer REM in a nutshell, is a temporary manual memory in which all my current activity is everything that I’ve been doing with my laptop is storing, but simply Ram can be compared to a person short term memory.
And do you know why humans short term memory is short?
Because it’s limited, very, very limited. Plus, we who try to get our message through whe OTAs are trying to get our message through and stored in our prospects.
Rum have access to a teeny tiny little part of an already teeny tiny little space.
So pretending the recipients of our messages meaning our prospects to be able to store more information that can possibly handle is like trying to save, for example, I don’t know one0 high quality photos that you should shoot with your high quality camera or another, whether you remember the three inch floppy disk.
I guess if you are in the generation action, why, you certainly have no idea what I’m talking about.
A millennia I’m 35. So I guess as of you of my age and older, you probably know what I’m talking about, but yes, I mean, this is the reason why the one and only reason why, yes, we need to delete rooms as much as rooms and rates as much as possible.
The less the better, the more specific, the better. Not only offering too many rooms and rates use less, but the higher the quantity, the lower the quality.
Because quantity generates confusion in the eyes of someone who is simply interested in one thing, only one product, one room and one rate our customer.
No matter whether we offer 30 plus 50 plus 80 plus, our prospects are simply there looking for one single thing, one room sorry, one product minimum room, and one day when there’s too much, there is two Weedle space and Ram capacity to focus on what your prosper may be really interested in.
Which is that one product that perfectly fits their needs. So you offering 30 plus 50 plus 80 plus product in your prospect’s eyes.
Your booking engine looks something like this, which is essentially a bunch of perfectly identical capsules, even though when look at them a little closer.
Sir, they may be different one from another.
Have you ever heard the saying people on Internet are lazy? I said that too often times.
I also say people on Internet are freaking lazy because our three five inch floppy disk that we have in our hands that we call memory. Being so small makes us lazy.
Essentially, there is no space for storing more. That is physical capacity. That’s why when we finally reduce the size of our message, meaning the size of our offer the number of products that we offer.
Not only do prospects feel less overwhelmed, but actually the racoon humans, they automatically and naturally improve their capacity to better understand and most importantly, perceive the value and the difference among the few products that we have been offering, so they do not look the same and not only white.
But I don’t see a product that is blue, that we see product that is green, that we see a product that is pink, the Spear product.
It is black, 1 Gy and so on and so forth.
To wrap up high quantity. To me equals high confusion.
Low quantity instead means higher quality, which is equals to higher value, which is equal to you can even hire your fats and I’m gonna say something that I mean I said many times I will never strike that out enough.
It’s never about the costs.
It’s always about the value unless you are being seen as a commodity.
Alright, this is it for today’s video. I guess you enjoyed it and I’m gonna see you again next time with another video.
Right.
Take care, Chacha.
